Global Policy Forum

The International Monetary Fund (IMF) is searching for ways to be less dictatorial when granting aid and loans to developing countries. The IMF said that it will look for ways to attach fewer conditions when allocating loans, and give countries more freedom in setting their own economic agenda.

The IMF has faced angry protests and much criticism for imposing economic reforms on developing countries which some observers say do more harm than good.

But although the IMF is showing willing to introduce a new element of freedom, it has also reiterated its determination to ensure that loans go hand in hand with stability and reform. "Conditionality remains indispensable," said IMF Deputy Managing Director Shigemitsu Sugisaki. Streamlined conditions

The signs of change came at a two-day conference on "ownership and conditionality" in Berlin, which will be followed by similar events in Tokyo and London. "We are soliciting comments globally," said Jack Boorman, the IMF's director of policy development and review. "We have received a good number of comments already and they are being distilled into a number of themes."

The international money lender has admitted that the number of conditions attached to its loans has been growing over the past 20 years. "We are convinced there is substantial scope to streamline conditionality," said Mr Sugisaki.

Uneven playing field

The IMF often demands the privatisation of state-owned monopolies and the removal of subsidies and import tariffs in return for handing over money. The move towards free trade is particularly controversial, as domestic industries have sometimes been forced to open themselves up to the global arena even when they were simply unable to compete effectively.

A major accusation is that the rich nations who fund the IMF are better suited to free economic trade than the poorer nations. By attaching fewer conditions to its loans, the IMF hopes countries will assume more ownership of their economic programmes rather than blindly following the instructions of foreign institutions.

Searching for the balance

But reform is likely to be a long and complex process. Any signs of being too liberal when issuing loans and grants to poorer countries risks being held up as irresponsible, and may then attract less money into the fund.

"If we sound tentative it is because these are not easy issues," said Mr Boorman. "You want to bring stability to a country... but you want to assist a country to get the structure right." "We have no hard and sharp line. We have to find a balance," he added.

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