IMF Conditionality and Country Ownership of Programs

September 1, 2001

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Format: Chicago

Mohsin S. Khan, and Sunil Sharma. IMF Conditionality and Country Ownership of Programs, (USA: International Monetary Fund, 2001) accessed November 21, 2024

Disclaimer: This Working Paper should not be reported as representing the views of the IMF.The views expressed in this Working Paper are those of the author(s) and do not necessarily represent those of the IMF or IMF policy. Working Papers describe research in progress by the author(s) and are published to elicit comments and to further debate

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. Hence, since both IMF conditionality and country ownership are necessary, the task is one of designing conditionality to maximize program ownership, subject to providing adequate safeguards for IMF lending. The paper discusses some recent proposals for enhancing ownership, and in particular, makes a case for incorporating floating tranches and outcomes-based conditionality in IMF-supported adjustment programs.

Subject: 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

Publication Details

Pages:

32
Volume:

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DOI:

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Issue:

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Series:

Working Paper No. 2001/142
Stock No:

WPIEA1422001
ISBN:

9781451856255
ISSN:

1018-5941

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