conditionality n : the state of being conditional

Conditionality is a concept in international development, political economy and international relations and describes the use of conditions attached to a loan, debt relief, bilateral aid or membership of international organisations, typically by the international financial institutions, regional organisations or donor countries.

International financial institutions

Conditionality is typically employed by the International Monetary Fund, the World Bank or a donor country with respect to loans, debt relief and financial aid. Conditionalities may involve relatively uncontroversial requirements to enhance aid effectiveness, such as anti-corruption measures, but they may involve highly controversial ones, such as austerity or the privatization of key public services, which may provoke strong political opposition in the recipient country. These conditionalities are often grouped under the label structural adjustment as they were prominent in the structural adjustment programs following the debt crisis of the 1980s.

'Tied' aid

Other types of conditionality that often occur are aid which is tied to be used on a specific way. For example, many countries tie aid to the purchasing of domestic products, although this practice has drastically decreased over the past 15 years. The United Nations Human Development Report in 2005 estimated that only about 8 per cent of bilateral aid is 'tied', down from 27 per cent in 1990. This however varies from country to country with the United Kingdom, Ireland and Norway giving 100 per cent of their aid untied, and Canada, Austria and Spain giving less than 60 per cent. http://hdr.undp.org/reports/global/2005/pdf/HDR05_HDI.pdf

European Union

The European Union also employs conditionality with respect to enlargement, with membership conditional on candidate countries meeting the Copenhagen criteria and adopting the acquis communautaire.

See also

• Development aid
• Heavily Indebted Poor Countries
• Structural adjustment

References

External links

• World Bank conditionality http://www.worldbank.org/conditionality
• Conditionality in IMF-supported programs - overview http://www.imf.org/external/np/pdr/cond/2001/eng/overview/
• David Hall and Robin de la Motte, Dogmatic Development: Privatisation and conditionalities in six countries, War on Want http://www.waronwant.org/?lid=7540
• "The Future of Aid Conditionality", Globalization Institute http://www.globalizationinstitute.org/blog/000445.php
• Big Picture TV Free video clip of Martin Khor (Director, Third World Network) speaking about structural adjustment
• ActionAid, April 2004, "Money talks: How aid conditions continue to drive utility privatisation in poor countries"
• Eurodad, November 2007, http://www.eurodad.org/aid/report.aspx?id=130&item=01804Untying the knots - How the World Bank is failing to deliver real change on conditionality