IMF Conditionality, Implementation and the New Political Economy of Ownership

Abstract

Recent attempts to explain the implementation of conditionality incorporated in IMF-supported programmes have used the concept of ‘ownership’. A literature on ownership has begun to emerge and, alongside this, policy changes in the form of streamlining conditionality and broadening participation in its design have been introduced to encourage ownership. However, ownership is difficult to define precisely and this limits its operational value. This paper focuses instead on implementation and suggests that wider participation will not guarantee better implementation. However, it stresses that political economy variables are important in assessing the chances of implementation and argues that these need to be considered more fully than they are at present when programmes are being negotiated. We suggest a narrow concept of ownership that focuses on prospects for implementation. One implication is that the Fund may have to make concessions on the technical design of programmes in order to maximise the chances that improved policies will be adopted. Comparative Economic Studies (2004) 46, 423–450. doi:10.1057/palgrave.ces.810006

IMF conditionality: theory and evidence

“…Today, "ownership" has been identified as important condition for successful implementation of IMF-supported policies (e.g., IMF 2001a;Boughton 2005;Paloni and Zanardi 2004; for a recent discussion see Bird and Willett 2004). As a consequence, pressure on the IMF to seriously reform its lending in a way that increases ownership has intensified.…”

“…Those models allow for disagreements among different ministries. Conditionality might then 'tip the balance' in favor of reformers or may allow reformers to use the Fund as a 'scapegoat' (Bird and Willett 2004). Governments are thus no longer modeled to be helpless victims of economic crisis when turning to the Fund.…”

“…When a condition is not met and a waiver is granted, the record is still "non-compliance" or 0. These data are not free of problems (Bird and Willett 2004): Only those programs are included in the MONA database, which have been reviewed by the Executive Board. Programs that are interrupted or permanently canceled will therefore not be covered-which might overstate compliance.…”

Does the IMF Influence Fiscal and Monetary Policy?

“…Killick finds that over the period 1979-93 compliance was higher in earlier programs; and also in Standby as compared to Extended Fund Facility (EFF) arrangements. Bird and Willett (2004) summarize the disadvantages of this approach. Resources may not be withdrawn, because of improvements in the economy.…”

Institutional Quality, Macroeconomic Stabilization and Economic Growth: A Case Study of IMF Programme Countries

“…Given this background while the Fund also realized and internalized this performance and criticism (IMF 2005a;IEO, 2007), researchers have criticised and asked IMF to improve its Financial Programming Framework (FPP) for better results for recipient countries in terms of consequences for macroeconomic stability and economic growth (IEO, 2007;Bird and Willett, 2004). For instance, Bird (2007) found the criticism to be legitimate since it found IMF programmes to be 'over simplistic'.…”