Whose programme is it? Policy ownership and conditional lending

Abstract

Introduction IMF lending to countries is generally conditional on the government and Central Bank carrying out specified policies and achieving specified outcomes. Some of these conditions might be prerequisites for an initial disbursement, while others will be requirements for subsequent drawings on a standby arrangement. In discussions of the appropriate conditions, IMF and country officials often disagree, sometimes diametrically. Economic programmes supported by IMF resources usually are negotiated compromises between the policies initially favoured by the Fund and those favoured by the country's authorities. In some cases, having gone through this process of negotiation, the authorities might be reasonably happy with the outcome and may be said to ‘own’ the programme even though it was not their original preference. In other cases, they might be swallowing a bitter pill simply because it is the only way to get the IMF to cough up the money. This chapter tackles two questions raised by the distinction between ‘owned’ and ‘imposed’ outcomes. Is the distinction empirically meaningful? If so, what can be done to operationalise it? First, it is necessary to define ‘policy ownership’. Several definitions have been offered in the literature, but it is not easy to devise a definition that is empirically relevant. For a government to own a set of policies does not require that officials think up the policies by themselves, nor that the policies be independent of conditionality.

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