| WASHINGTON, April 2
WASHINGTON, April 2 The number of conditions the
International Monetary Fund attaches to its loans has grown in
recent years, despite promises to limit what critics see as
onerous requirements, according to a study released on
The Eurodad network of European development groups also said
nations desperate for cash are at a disadvantage in their
dealings with the IMF, likening them to negotiating "at the
barrel of a gun."
The IMF attached nearly 20 conditions on average to each
loan it approved in the past two years, Eurodad found. That was
more than the number the group had calculated in two prior
Many of the conditions also focused on politically
contentious areas, such as public sector wage cuts or private
sector reform, according to the report. Eurodad looked at the
period from October 2011 to August 2013, covering 23 loans.
In a 2011 review, the IMF promised to keep "conditionality
parsimonious and focused on macro-critical issues."
The Eurodad report said: "The IMF is going backwards -
increasing the number of structural conditions that mandate
policy changes per loan, and remaining heavily engaged in highly
sensitive and political policy areas."
The results were partly skewed by the biggest IMF loan
programs during the period covered. Loans to Cyprus, Greece and
Jamaica accounted for 87 percent of all funds approved, and had
an average of 35 conditions each, Eurodad said.
In the case of Cyprus and Greece, they were shaped by the
IMF's European-dominated executive board, which demanded strict
budget cuts in exchange for aid, said Eurodad's director, Jesse
The report comes six years after the IMF's own internal
watchdog urged the fund to dramatically reduce the conditions it
attaches to loans, arguing they were not entirely effective.
The IMF's loan conditions have long been a sore point for
many countries and grassroots groups, who have argued they are
excessive and harmful to the poor.
Many governments also complain IMF conditions are not
well-tailored to country circumstances and political
constraints, and may have unrealistic deadlines. They argue
conditions reduce a country's ability to effectively control its
Griffiths said nations in dire straits are at a disadvantage
in negotiating with the IMF. They are desperate to get cash and
show financial markets and other donors that their policies have
the IMF's seal of approval.
For example, Ukraine had long resisted the IMF's conditions,
but it finally agreed to them this year after saying it was
close to default. Ukraine's prime minister said his government
is on a "kamikaze" mission to make painful decisions.
"It's like at the barrel of a gun," Griffiths said. "Those
are decisions that are political and should be made in
consultation with the people in those countries, and not through
negotiations" with the IMF.
The IMF argues its conditions are necessary to put economies
on the growth track, and ensure it gets its money back.
Eurodad, however, found most countries were repeat
borrowers. Twenty out of the 22 countries with new IMF programs
from 2011 to 2013 had borrowed in the past decade, and a
majority had borrowed in the previous three years.
Some IMF conditions, such as drastic budget cuts that can
weigh on an economy, may also make it more difficult for
countries to repay their loans. The IMF in 2012 admitted it had
miscalculated the economic cost of government austerity.
Eurodad said deeper changes were needed, including
overhauling the IMF's governance structure to give developing
countries a bigger voice. The IMF in 2010 agreed to an initial
step to boost the power of emerging markets, but the reforms
have been held up by the opposition of the U.S. Congress.
See the full report at: here
(Reporting by Anna Yukhananov; Editing by Mohammad Zargham)