{
  "title": "IMF Conditionality and Country Ownership of Programs",
  "publication": "IMF Working Papers, September 1, 2001",
  "sourceUrl": "https://www.imf.org/en/publications/wp/issues/2016/12/30/imf-conditionality-and-country-ownership-of-programs-15374",
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  "summary": "The paper uses finance and agency theory to establish two main propositions: First, that the conditionality attached to adjustment programs supported by the IMF is justified. Second, that ownership of programs by the borrowing country is crucial for their success.",
  "sections": [
    {
      "heading": "Main propositions",
      "content": "- The paper uses finance and agency theory to establish two main propositions:\n  - The conditionality attached to adjustment programs supported by the IMF is justified.\n  - Ownership of programs by the borrowing country is crucial for their success.\n- Because both IMF conditionality and country ownership are necessary, the task is designing conditionality to maximize program ownership while providing adequate safeguards for IMF lending."
    },
    {
      "heading": "Key findings and analysis",
      "content": "- Conditionality is justified as a safeguard for IMF lending (moral hazard and principal-agent concerns are central to the analysis).\n- Country ownership is crucial for program success; lack of ownership undermines implementation and outcomes.\n- The interaction between conditionality and ownership is the core policy design challenge: conditionality must be crafted to preserve necessary safeguards without destroying ownership incentives."
    },
    {
      "heading": "Policy recommendations and design implications",
      "content": "- Design conditionality with the explicit objective of maximizing country ownership subject to adequate IMF safeguards.\n- Incorporate mechanisms that align incentives between the IMF (principal) and borrowing authorities (agents) to mitigate moral hazard while preserving country-led commitment to reforms."
    },
    {
      "heading": "Specific proposals discussed",
      "content": "- The paper discusses recent proposals for enhancing ownership and, in particular, makes a case for:\n  - Incorporating floating tranches in IMF-supported adjustment programs.\n  - Incorporating outcomes-based conditionality in IMF-supported adjustment programs."
    },
    {
      "heading": "Thematic coverage (subjects and keywords from the source)",
      "content": "- Subjects: Central banks, Collateral, Financial institutions, Financial sector policy and analysis, International reserves, Loans, Macrostructural analysis, Moral hazard, Structural reforms.\n- Keywords: adjustment program, Africa, borrowing country, borrowing government, Collateral, conditionality, country authorities, country ownership, country preference, country undertaking, democratized country environment, government's responsibility, IMF lending, IMF resource, IMF staff, IMF-supported programs, International reserves, Loans, Moral hazard, moral-hazard, negotiating position, ownership, ownership of program, principal-agent, Structural reforms, venture capitalist, WP.\n\nMohsin S. Khan; Sunil Sharma. September 1, 2001. https://www.imf.org/en/publications/wp/issues/2016/12/30/imf-conditionality-and-country-ownership-of-programs-15374\n\n---\n\n Content in this bundle\n\n- IMF Conditionality and Country Ownership of Programs - WP/01/142\n  - IMF Conditionality and Country Ownership of Programs - WP/01/142 (Markdown version){rel=\"alternate\" type=\"text/markdown\"}\n  - IMF Conditionality and Country Ownership of Programs - WP/01/142 (PDF){rel=\"external\" type=\"application/pdf\"}\n\n---\n\nSource: https://www.imf.org/en/publications/wp/issues/2016/12/30/imf-conditionality-and-country-ownership-of-programs-15374"
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    "Authors: Mohsin S. Khan, Sunil Sharma",
    "Published: September 1, 2001",
    "Series: IMF Working Papers",
    "DOI: https://doi.org/10.5089/9781451856255.001",
    "The paper uses finance and agency theory to establish two main propositions:",
    "Because both IMF conditionality and country ownership are necessary, the task is designing conditionality to maximize program ownership while providing adequate safeguards for IMF lending.",
    "Conditionality is justified as a safeguard for IMF lending (moral hazard and principal-agent concerns are central to the analysis).",
    "Country ownership is crucial for program success; lack of ownership undermines implementation and outcomes.",
    "The interaction between conditionality and ownership is the core policy design challenge: conditionality must be crafted to preserve necessary safeguards without destroying ownership incentives.",
    "Design conditionality with the explicit objective of maximizing country ownership subject to adequate IMF safeguards.",
    "Incorporate mechanisms that align incentives between the IMF (principal) and borrowing authorities (agents) to mitigate moral hazard while preserving country-led commitment to reforms.",
    "The paper discusses recent proposals for enhancing ownership and, in particular, makes a case for:",
    "Subjects: Central banks, Collateral, Financial institutions, Financial sector policy and analysis, International reserves, Loans, Macrostructural analysis, Moral hazard, Structural reforms.",
    "Keywords: adjustment program, Africa, borrowing country, borrowing government, Collateral, conditionality, country authorities, country ownership, country preference, country undertaking, democratized country environment, government's responsibility, IMF lending, IMF resource, IMF staff, IMF-supported programs, International reserves, Loans, Moral hazard, moral-hazard, negotiating position, ownership, ownership of program, principal-agent, Structural reforms, venture capitalist, WP.",
    "**IMF Conditionality and Country Ownership of Programs - WP/01/142**"
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