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lends funds based on ex-post criteria, which might induce moral hazard behavior by the borrowing country. The moral hazard problem appears when a government behaves in a risky manner in the anticipation that it can turn to the IMF in the case of a crisis. Institutional reforms of the
International
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they receive the aid. Later follow-ups determine whether they might receive more aid. If conditions are not met or other political differences between the donor and recipient materialize, aid may be suspended. Ex-ante conditionality requires a country to meet certain conditions and prove it can
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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.
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Other types of conditionality that often occur are aid which is tied to be used in 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
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Much debate in types of conditionality centers around ex-ante versus ex-post conditionality. In ex-post conditionality, the country receiving aid agrees to conditions set by the donor or lender that they will carry out
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Monetary Fund, such as the
Flexible Credit Line (FCL) in 1999, attempt to reduce moral hazard by relying more on pre-set qualification criteria (i.e. ex-ante).
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or a donor country with respect to loans, debt relief and financial aid. Conditionalities may involve relatively uncontroversial requirements to enhance
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Susan M. Collins, University of
Michigan Ford School of Public Policy. Public Policy 201 Lecture on Global Poverty
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or regional organizations and are intended to improve economic conditions within the recipient country.
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as they were prominent in the structural adjustment programs following the debt crisis of the 1980s.
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Free video clip of Martin Khor (Director, Third World
Network) speaking about structural adjustment
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317:"Money talks: How aid conditions continue to drive utility privatisation in poor countries"
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Untying the knots - How the World Bank is failing to deliver real change on conditionality
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230:"Carrots as Sticks: How Effective Are Foreign Aid Suspensions and Economic Sanctions?"
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European
Network on Debt and Development reports, news and links on conditionality.
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Stefan
Koeberle; Harold Bedoya; Peter Silarsky; Gero Verheyen, eds. (2005).
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Dogmatic
Development: Privatisation and conditionalities in six countries
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is the use of conditions attached to the provision of benefits such as a
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measures, but they may involve highly controversial ones, such as
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294:"The Future of Aid Conditionality", Globalization Institute
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Conditionality
Revisited: Concepts, Experiences, and Lessons
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Conditionality in IMF-supported programs - overview
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149:also employs conditionality with respect to
62:Conditionality is typically employed by the
50:. These conditions are typically imposed by
23:Conditions imposed on international benefits
261:"IMF Conditionality: Theory and Evidence"
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58:International financial institutions
52:international financial institutions
285:David Hall and Robin de la Motte,
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228:Mertens, Claas (28 March 2024).
234:International Studies Quarterly
181:Heavily Indebted Poor Countries
18:Conditionality (disambiguation)
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263:, Public Choice, 141, 233-267
64:International Monetary Fund
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275:World Bank conditionality
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346:International development
112:it will receive any aid.
351:Anti-corruption measures
134:Human Development Report
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32:international relations
186:Structural adjustment
92:structural adjustment
159:acquis communautaire
16:For other uses, see
259:Dreher, A. (2009),
155:Copenhagen criteria
115:Traditionally, the
98:Ex-ante vs. ex-post
305:2016-03-18 at the
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157:and adopting the
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151:enlargement
44:debt relief
340:Categories
192:References
124:'Tied' aid
76:corruption
68:World Bank
313:ActionAid
80:austerity
303:Archived
165:See also
322:Eurodad
86:of key
82:or the
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110:before
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204:(PDF)
105:after
240:(2).
208:ISBN
145:The
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117:IMF
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