Here’s a bit of news I never thought I’d see. According to a report on AllAfrica, the IMF has adopted a new framework for lending that removes the hated conditionality. Starting May 1, 2009, countries who are drawing on IMF resources will no longer have to apply for a formal waiver if they don’t meet performance criteria set by the IMF.
Before we begin to celebrate, though, there is some fine print. The IMF’s Executive Board will still assess a country’s progress before disbursing the next installments, but that assessment and review will happen in private negotiations with the country in question rather than through a formal application for a waiver.
The IMF will also create a Flexible Credit Line (FCL) for strong performers in the emerging markets category. Access to the FCL is limited to countries that meet strict criteria, but once approved, accessing funds will not depend on ongoing monitoring.
AllAfrica quotes the IMF Managing Director Dominique Strauss-Kahn: “These reforms represent a significant change in the way the Fund can help its member countries-which is especially needed at this time of global crisis. More flexibility in our lending along with streamlined conditionality will help us respond effectively to the various needs of members. This, in turn, will help them to weather the crisis and return to sustainable growth.”
