IMF reforms its conditionality

The IMF has announced reforms in its lending practices, reported on their website here. Rigid conditionality will be replaced with a more open approach where continued funding depends on a country's success in meeting agreed objectives rather than strict conditions set before lending. The idea is to give countries more freedom to decide their own policies; one could give the further justification that country governments are better placed to assess individual conditions than an international body. The IMF report also points out that the approach avoids the market receiving clear signals of failure if rigid conditionality is not met.

The approach has been used by some bilateral donors in the last ten years.