The International Monetary Fund (IMF) has said that conditionality in IMF-supported programmes has been significantly streamlined to focus on core objectives, particularly structural reforms.
In a letter dated April 27, addressed to civil society organizations, IMF Managing Director Dominique Strauss-Khan said the IMF does not put conditions in programmes that limit health and education spending. On the contrary, Mr. Strauss-Khan said about one-third of Fund-supported programmes in low-income countries have targets to preserve or increase social spending. In addition, he wrote that subsidies and other safety net programmes aimed at the poorest members of society are supported by the IMF in many countries.
Mr. Strauss-Khan said the IMF has sharply increased its concessional financing to low-income countries over the past year, including to assist in dealing with the sharp increase of food and fuel prices. Many countries have received augmented financial assistance. He added that the IMF has clearly and publicly stated its objective to triple concessional financing over the next two years and are working closely with donors to mobilize additional support. The IMF is also reforming its lending framework and external debt policies for low-income countries.
The IMF Executive Board has just approved a doubling of access limits for low-income countries under both the Poverty Reduction and Growth Facility (PRGF) and the Exogenous Shocks Facility which will make even more money available to individual countries. ‘We are coupling this financial assistance with programs that, in a majority of low-income countries, include higher levels of government spending, larger budget deficits and higher inflation targets,’ he stated, adding that the key is to meet the specific needs of each country.
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