As the IMF reviews how it designs lending programs, reforms to policy conditions, contingency planning and country ownership could better support economic recovery, development and democratic accountability.

The International Monetary Fund’s guidelines for program design are more salient than ever, given widespread debt distress in developing countries. As the Fund undertakes its first major evaluation since 2019, it should focus on three features of its lending, all of which need to be reformed.

The International Monetary Fund is conducting a Review of Program Design and Conditionality, its first major evaluation since 2019, before the COVID-19 pandemic. With so many countries suffering from macroeconomic imbalances and debt distress that are severely weakening their development prospects, the IMF guidelines for program design, while always important, are more salient than ever.

The IMF review should address at least three critical features of IMF program design – with a view to reforming all of them.

The first is policy conditionality. IMF financing is supposed to play a stabilising role, meaning that it should enable countercyclical macroeconomic policies in countries that do not have access to other sources of financing. It should never be used to meet payments on unsustainable debt.

The IMF’s own rules establish that, in order to access Fund resources, a country’s debt must be sustainable, or else the country must commit to efforts to restore debt........

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