Conditionality, Debt Relief, and the Developing Country Debt Crisis
in Developing Country Debt and Economic Performance, Volume 1: The International Financial System
This chapter examines the role of high-conditionality lending by the International Monetary Fund and the World Bank as a part of the overall management of the debt crisis. High-conditionality lending refers to the process in which the international institutions make loans based on the promise of the borrowing countries to pursue a specified set of policies. High-conditionality lending by both institutions has played a key role in the management of the crisis since 1982, though the results of such lending have rarely lived up to the advertised hopes. One major theme of this chapter is that the role for high-conditionality lending is more restricted than generally believed, since the efficacy of conditionality is inherently limited.