Author: Koeberle S.G.

Source: World Bank Research Observer, Volume 18, Number 2, 2003 , pp. 249-273(25)

Publisher: Oxford University Press

Abstract:

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.

Document Type: Research article

DOI: http://dx.doi.org/10.1093/wbro/lkg009

Publication date: 2003-01-01

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• The World Bank Research Observer seeks to inform nonspecialist readers about research being undertaken within the Bank and outside the Bank in areas of economics relevant for development policy. Requiring only a minimal background in economic analysis, its surveys and overviews of key issues in development economics research are intended for policymakers, project officers, journalists keeping up to date, and teachers and students of development economics and related disciplines. Papers for the Observer are not sent out to referees, but all articles published are assessed and approved by the Editorial Board, which includes three to four distinguished economists from outside the Bank. The Observer has nearly 1,500 subscribers in OECD countries and nearly 10,000 subscribers in developing countries.
  
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