Conditionality as an Instrument of Borrower Credibility

February 1, 1997

Preview Citation

Format: Chicago

Pierre Dhonte. Conditionality as an Instrument of Borrower Credibility, (USA: International Monetary Fund, 1997) accessed November 21, 2024

Summary

Fund member countries that adopt market-friendly policies often encounter a credibility problem—market-friendly policies are not effective in stimulating private investment as long as there remains a significant risk of policy reversal. The root of this risk lies in the discretionary policy-making authority of governments. Committing to a program with the Fund, and endorsing its conditionality, is one instrument available to governments to overcome this difficulty. The paper develops this interpretation of conditionality and indicates some of its operational implications for Fund programs.

Subject: Credit ratings, Money

Keywords: Conditionality/Credibility, Credit ratings, Financing, Fund, Fund arrangement, Fund program, Global, Market, Market credibility, Options vis-à-vis market participant, PDP, Policy, Policy framework underpinning IMF conditionality practice, Renewed appreciation

Publication Details

Pages:

18
Volume:

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DOI:

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Issue:

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Series:

Policy Discussion Paper No. 1997/002
Stock No:

PPIEA0021997
ISBN:

9781451974423
ISSN:

1564-5193

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