IMF Stand-By Loan Conditions

IMF Stand-By Loan Conditions It is only to be hoped that in the next few months the government does not scramble to achieve the targets laid down by the IMF without reference to how this would affect the output level and future prospects for growth and stability. Unfortunately, the likelihood that unwise decisions may be taken, even within the leeway permitted by the IMF is all too real THE fact that the finance minister has kept his word and tabled in parliament the letter of intent he sent to the IMF for receiving the stand-by loan, is something that must be welcomed by everyone who values open democratic government. It is important to note, however, that the documents tabled refer to the programme of government policy intent for purposes only of the stand-by loan. This type of loan typically involves much less condi- tionality than the Extended Fund Facility (EFF) loan which, as the finance minister's letter to the IMF managing director makes clear, the government intends to seek later, possibly early next year. More significantly, it is well known that the Structural Adjustment Loans (SALs) of the World Bank usually involve the most detailed specifications of particular targets and have strict policy con- ditionalities, especially in areas such as trade reform and industrial policy. The government has already accepted a SAL for a relatively paltry sum of $ 500 million and therefore has clearly accepted some World Bank conditions which are as yet unknown. The same consideration which prompted the finance minister to table the letter of intent for the IMF stand-by loan should also have led to the revelation of the policy conditions required for the SAL, which must already have been pledged.