Conditionality
n.
The quality of being conditional, or limited; limitation by certain terms.
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The quality of being conditional, or limited; limitation by certain terms.
Idea that external credit or funding should be advanced to a government only where a programme of economic or political reforms was to be implemented. The concept is associated with funding provided by the IMF, particularly since the 1970s, when conditionality was seen as a way of enhancing government credit without generating inflationary or foreign exchange pressures. Financial support would be forthcoming only with agreements on macro-economic policy and reform of trading policy, with the hope that such measures would enhance a government's economic credibility and credit-worthiness. Since the 1980s, as the IMF and World Bank have extended lending and funding programmes in the Third World and the post-communist states, the focus of conditionality has been on the establishment of open economies and other aspects of structural adjustment. Since conditionality is based on the existence of external constraints to ensure virtuous government behaviour in the long term, there are always likely to be tensions between short-term domestic incentives and the expectations of international funding bodies. Conditionality has been criticized for imposing the model of Western political liberalism on countries where it may not be appropriate or supported by the people; exposing poor countries to competition and exploitation from companies in wealthier countries; and for focusing on economic growth rather than promotion of social reform and equality. (See also development.)
— Alistair McMillan
The noun has one meaning:
Meaning #1:
the state of being conditional
A conditionality in international development is a condition attached to a loan or to debt relief, typically by the International Monetary Fund, World Bank or in the case of bilateral aid, the donor country. Conditionalities may involve relatively uncontroversial requirements to enhance aid effectiveness, such as anti-corruption measures, but they may involve highly controversial ones, such as austerity or the privatization of key public services, which may provoke strong political opposition in the recipient country. These conditionalities are often grouped under the label structural adjustment as they were prominent in the structural adjustment programs following the debt crisis of the 1980s.
Other types of conditionality that often occur are aid which is tied to be used on a specific way. For example, many countries tie aid to the purchasing of domestic products, although this practice has drastically decreased over the past 15 years. The United Nations Human Development Report in 2005 estimated that only about 8% of bilateral aid is 'tied', down from 27% in 1990. This however varies from country to country with the United Kingdom, Ireland and Norway giving 100% of their aid untied, and Canada, Austria and Spain giving less than 60%. [1]
Stefan Koeberle, Harold Bedoya, Peter Silarsky, and Gero Verheyen (editors) (2005). Conditionality Revisited: Concepts, Experiences, and Lessons. The World Bank. ISBN 0-8213-6013-2.
Axel Dreher (2002). The Development and Implementation of IMF and World Bank Conditionality. HWWA. ISSN 1616-4814.
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