Chapter 1: Introduction
1.1 Overview and Background of the study
After World War II the situation of the international system was distressed. To recover economic stability there was a crucial need of certain rules and procedures, and therefore new institutions emerged. One of them was the International Monetary Fund (IMF). It was mainly developed to encourage economic cooperation and to promote stability of the world economy, additionally it helps to prevent crises and resolve them when they do occur. IMF introduced different forms of the program with the changing nature of the problems in the world economy i.e. SBA, CFF, SRF, CLL, SAF, ESAF, PRGF. It has some regular facilities with commercial or in other words high interest rate like stand …show more content…
Systemic Transformation Facility (STF) (1993–95), Supplemental Reserve Facility (SRF) (1997) and Contingent Credit Lines (CCL) in 1999. These facilities are short period lending facilities.
IMF also introduced some concessionary lending facilities for least developing countries. Our concerns are more related to these facilities because the study is done on developing countries which utilize these facilities. The structural adjustment program introduced in 1986 basically aimed to reduce borrowing country’s fiscal imbalances in the short and medium term or in order to adjust the economy to long term growth, and for this purpose IMF implement stabilization policies. SAPs were designed to allow the developing countries to …show more content…
So we can say that IMF programs have two components (a) the loans (b) conditions attached to these loans. A lot of debate has been done on the effects of IMF programs and there is consensus that these programs are failing to encourage economic development (e.g., Dreher, 2006; Barro & Lee, 2005; Hutchison & Noy, 2003). But the question is that either these programs failed due to participating country's ignorance of IMF policy conditions or because of following the program conditions. Conditionality is basically a restriction imposed by the fund’s Executive Board decisions on the use of fund resources. Conditionality can be defined as a mean by which one offers funding and attempts to affect the policies of another in order to secure an agreement with a program of measures (Buria2003). The basic purpose of applying conditions is to ensure adequate safeguards for the accurate use of fund resources provided to any member country. As according to the IMF, conditions are the outcome of a bargaining process between the fund and the government. So there is a need to find out the rate of compliance of countries with the conditionalities of IMF programs. Compliance simply means the action of committing the wish or command i.e. loan
1.1 Overview and Background of the study
After World War II the situation of the international system was distressed. To recover economic stability there was a crucial need of certain rules and procedures, and therefore new institutions emerged. One of them was the International Monetary Fund (IMF). It was mainly developed to encourage economic cooperation and to promote stability of the world economy, additionally it helps to prevent crises and resolve them when they do occur. IMF introduced different forms of the program with the changing nature of the problems in the world economy i.e. SBA, CFF, SRF, CLL, SAF, ESAF, PRGF. It has some regular facilities with commercial or in other words high interest rate like stand …show more content…
Systemic Transformation Facility (STF) (1993–95), Supplemental Reserve Facility (SRF) (1997) and Contingent Credit Lines (CCL) in 1999. These facilities are short period lending facilities.
IMF also introduced some concessionary lending facilities for least developing countries. Our concerns are more related to these facilities because the study is done on developing countries which utilize these facilities. The structural adjustment program introduced in 1986 basically aimed to reduce borrowing country’s fiscal imbalances in the short and medium term or in order to adjust the economy to long term growth, and for this purpose IMF implement stabilization policies. SAPs were designed to allow the developing countries to …show more content…
So we can say that IMF programs have two components (a) the loans (b) conditions attached to these loans. A lot of debate has been done on the effects of IMF programs and there is consensus that these programs are failing to encourage economic development (e.g., Dreher, 2006; Barro & Lee, 2005; Hutchison & Noy, 2003). But the question is that either these programs failed due to participating country's ignorance of IMF policy conditions or because of following the program conditions. Conditionality is basically a restriction imposed by the fund’s Executive Board decisions on the use of fund resources. Conditionality can be defined as a mean by which one offers funding and attempts to affect the policies of another in order to secure an agreement with a program of measures (Buria2003). The basic purpose of applying conditions is to ensure adequate safeguards for the accurate use of fund resources provided to any member country. As according to the IMF, conditions are the outcome of a bargaining process between the fund and the government. So there is a need to find out the rate of compliance of countries with the conditionalities of IMF programs. Compliance simply means the action of committing the wish or command i.e. loan