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Commonwealth Secretariat press release

IMF and World Bank Conditionalities Under Review

18 July 2001

A joint Commonwealth-International Monetary Fund-World Bank seminar is to be held in London on 23-24 July to discuss current reviews of IMF and World Bank policies related to conditionalities attached to their loans. The objective of the reviews is to improve the focus of conditionality and to make it as practical, straightforward and as helpful to member countries as possible.

Participants will include many senior officials and ex-ministers from African and other Commonwealth countries with experience of negotiating with the Fund and Bank, as well as representatives of several Commonwealth and non-Commonwealth creditor countries. The seminar will be an opportunity to discuss how conditionality is working in practice, and a number of current proposals for reform designed to make the conditions attached to IMF and World Bank loans simpler, more focused and more useful to borrowing countries.

The international seminar will be hosted by the Commonwealth Secretariat and co-chaired by Winston Cox, Commonwealth Deputy Secretary-General in charge of Development Co-operation, Masood Ahmed, Deputy Director of the Policy Development and Review Department of the Fund, and Joanne Salop, Vice-President for Operations Policy and Country Services of the World Bank.

For the IMF it is the third in a series of international seminars being held this summer as part of a review exercise that commenced last autumn. The Fund Executive Board discussed the issues in March 2001, and the staff analyses and a summary of the Board's discussion were then made available to the public (see http://www.imf.org/external/np/pdr/cond/2001/eng/overview/index.htm) along with a request for comments and suggestions. Finance Ministers discussed the issues of streamlining conditionality and strengthening ownership at the April meeting of the International Monetary and Financial Committee (see paragraph 15 of the 29 April 2001 communiqué, at http://www.imf.org/external/np/cm/2001/010429b.htm).

Experience with conditionality in World Bank-supported adjustment lending has been subject to a number of reviews and considerable research, especially in the broader context of aid effectiveness. The Bank has begun to incorporate the lessons of experience and of research in the design and implementation of adjustment lending. A review of experience with adjustment lending (World Bank, Adjustment Lending Retrospective, 15 June 2001, available on the World Bank's web site at http://www.worldbank.org/whatwedo/svc-adjlend.htm), which takes stock of the major trends and developments in adjustment lending, finds that the number of individual policy conditions in adjustment loans has been significantly reduced in recent years.

Reviews in both the Fund and Bank stem from the recognition that national ownership of economic policies is essential for success. At the same time, the Bank and Fund have a responsibility to their members to ensure that resources are being used effectively and for the intended purpose. Conditionality serves as a commitment between parties, providing assurances on the one hand to the Bank or Fund Board that the objectives of an operation will be met through the implementation of agreed reforms and public actions by the borrower, and on the other hand to the country that implementation of the conditions will result in the agreed financing becoming available. There has been an ongoing process of adaptation and experimentation to find the right balance and focus for policy conditionality. The results of the seminar will feed into Board discussions at the Fund and Bank, and into decisions made as the reviews are carried forward.

Apart from representatives of governments, participants at the seminar will include academics, financial sector people with experience of investing in countries with Fund and other Bank-supported programmes, and representatives of non-governmental organisations.

This seminar is the latest in a series of initiatives in which the Commonwealth Secretariat has been involved over the years, designed to promote an effective dialogue between the Bretton Woods institutions and Commonwealth developing countries.


Note to Editors:
There will be a press conference at the conclusion of the seminar on 24 July. Media enquiries:
Ajoa Yeboah-Afari (Ms) Public Affairs Officer,
Commonwealth Secretariat.
Tel: +44 (0)20 7747 6535
Fax: +44 (0)20 7839 9081






01/44 18 July 2001


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ISSUED BY THE COMMUNICATIONS AND PUBLIC AFFAIRS DIVISION
Commonwealth Secretariat Marlborough House Pall Mall London SW1Y 5HX United Kingdom
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