Conditionality

Conditionality refers to the set of requirements and policies that the International Monetary Fund (IMF) and the World Bank impose on borrowing countries as a condition for financial assistance. The IMF and World Bank Conditionality is a framework designed to ensure economic stability and structural reforms in recipient nations. Typically, conditions involve fiscal and monetary policies, exchange rate adjustments, and structural reforms aimed at addressing macroeconomic imbalances and enhancing long-term growth. While critics argue that such conditions may lead to austerity measures and social hardships, proponents assert that they promote responsible economic governance and sustainable development. The effectiveness of conditionality remains a subject of debate, with ongoing discussions about balancing the need for economic stability with the potential social costs associated with stringent policy measures.