Roundtable Topic 1: Country Ownership

This page comprises information on background resources for Roundtable 1, compiled by the United Nations Development Programme. It does not necesserily represent the views of the Third High Level Forum organizers.

To access detailed information on the background resources for Conditionality listed below, please visit the UNDP Aid Effectiveness Portal.

Background Resources: Conditionality

Felix Zimmerman, Draft report on the Informal Expert’s Workshop “Ownership in Practice”, September 2007
The seminar revealed concerns that “ownership” might become a euphemism for the adoption by partner countries of externally conceived policies.The workshop drew a distinction between policy-based, process-based and performance-based conditionality. Policy-based conditionality was heavily criticised as a discredited approach from the 1980s and 90s. While there is some support for conditionality based on human rights and democratisation, there was strong consensus that developing countries should be free to choose their own economic policies. Process-based conditions (e.g., on participation) are considered more legitimate, but there is considerable doubt about their effectiveness. Some argue that they lead to a box-ticking approach to participation. There is more consensus on performance-based conditionality, where the level of disbursement is linked to achievement against an agreed set of indicators drawn from the country’s national development strategy, although allowance must be made for the effect of external shocks. The DAC website contains background papers produced for this event, including reports from Vietnam, Indonesia and Bangladesh.

World Bank, “Review of World Bank conditionality”, September 2005
This report documents the World Bank’s changing approach to conditionality in recent years, from an emphasis on policies for structural adjustment and growth, to a set of benchmarks designed to assess its borrowers’ commitment to their own development programmes. In principle, the Bank no longer uses conditionality to prescribe policies. The flip side is that the Bank should be more selective in its operations, engaging only where it sees clear evidence of prior commitment from the partner.  In that way, the Bank sees its conditionality policy as contributing to, rather than detracting from, country ownership. It sets out five good practice principles for conditionality: ownership; harmonisation; criticality; transparency; and predictability.

ActionAid, “What progress? A shadow review of World Bank conditionality”, 2006
This report reviews the World Bank against its 2005 conditionality review and good practice principles. It claims that the Bank has no implementation plan in place to ensure compliance with its policies, and that staff incentives still encourage the use of intrusive conditionality. It has a superficial approach towards country ownership, and still uses loan conditions to push controversial economic reforms. Harmonisation in practice means that other donors link their conditions to the Bank’s PRSC, rather than all donors linking to the national development plan.

Wilks, Alex & Fabien Lefrancois, “Blinding with science or encouraging debate? How World Bank analysis determines PRSP policies”, 2002
This article argues that the World Bank no longer has to rely on policy conditionality, because it is winning the policy debates upstream through its “near monopoly on development analysis”. It argues that the Bank and the IMF “often give the impression that there is consensus on the development agenda, and that only details remain to be worked out.”  “The Bank constantly talks about capacity-building and listening, but seems reluctant to cede control of policy formulation processes or to recognise contributions or perspectives that diverge markedly from core Washington thinking. Indeed, the Bank often appears to imply that there is a vacuum out there that it needs to fill: that few others are doing serious policy analysis.” Despite its commitment on principle to move away from one-size-fits-all development policies, in practice the Bank still acts as if there is a single, right answer to development challenges, making it averse to experimentation and debate.

Graham Bird and Thomas Willett, “IMF conditionality, implementation and the new political economy of ownership”, Comparative Economic Studies, Vol. 46(3), 2004
Along similar lines, Bird and Willett argue that the IMF has a perverse understanding of country ownership. IMF asserts that it uses conditionality to reinforce, rather than substitute for, national ownership, by acting as a “commitment device”, helping to strengthen the hand of reformers and sustain support during implementation. However, if national ownership is solid, then conditionality is not needed, and if it is not solid, then conditionality is unlikely to succeed. In effect, the IMF is using conditionality to try to generate country ownership of the IMG’s own policy agenda.

The European Union’s Cotonou Agreement
Under the Cotonou Agreement, the European Union is committed to providing finance in accordance with development outcomes. Its budget support agreements typically make provision for variable tranches: that is, disbursements where the amount is determined by outcome indicators negotiated with government and typically taken from the national development strategy. The greater the progress, the larger the disbursement. According to the EU, the use of outcome indicators (rather than prior policy actions) as conditions gives the country greater choice in the mix of policies and measures it takes towards achieving the MDGs, and therefore advances country ownership.  However, it has caused some concern among partner governments who fear they may lose support as a result of factors beyond their control.

European Network on Debt and Development (Eurodad)
Eurodad is a network of 54 European development NGOs. It provides a platform for information sharing, research and advocacy on debt, development finance and poverty reduction.  Its site contains a selection of articles on conditionality. Its November 2007 report, “Untying the knots: how the World Bank is failing to deliver real change on conditionality”, argues that, while there has been an overall reduction in the volume of World Bank conditions, it is still imposing policy conditions in sensitive areas like privatisation and trade liberalisation. It also offers a matrix analysing the conditionality in IMF PRGF programmes, as of 2003.