Journal Article

Should Policy-Based Lending Still Involve Conditionality?

Stefan G. Koeberle

in The World Bank Research Observer

Published on behalf of World Bank

Volume 18, issue 2, pages 249-273
Published in print September 2003 | ISSN: 0257-3032
Published online September 2003 | e-ISSN: 1564-6971 | DOI: https://dx.doi.org/10.1093/wbro/lkg009
Should Policy-Based Lending Still Involve Conditionality?

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Traditional conditionality in policy-based lending is often criticized as being ineffective, intrusive, and corrosive. Disillusionment has led to proposals to replace ex ante conditionality with ex post conditionality and to focus on ownership, selectivity, and partnerships. This article reviews experiences with conditionality in the World Bank's policy-based lending and explores the benefits and drawbacks of various approaches. It argues that conditionality should play a central role in policy-based lending—but cannot substitute for country ownership and good policies. Moreover, an exclusive focus on conditionality based on ex ante commitments or ex post results may not be practical or useful for the Bank's policy-based lending. Thus a key recommendation is to use conditionality selectively, tailored to country circumstances. Indeed, an eclectic mix of traditional and new approaches is already being used—with programmatic policy-based lending offering a particularly promising way to reconcile the debate between the traditional ex ante approach and the aspirations of a results-based approach to conditionality.

Journal Article.  0 words. 

Subjects: Development Planning and Policy

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