Let's lessen conditionality in times of force majeure events. The archaic righteousness of the policy of conditionality of international Institutions amid COVID-19

Qerim Qerimi and Bruno S. Sergi

Research in International Business and Finance, 2021, vol. 58, issue C

Abstract: This article investigates how international decision-making's conditionality aids countries during strenuous economic conditions imposed by the COVID-19 pandemic. It examines and contrasts the European Union's conditionality policies, the International Monetary Fund, and the World Bank as the more influential and leading groups of institutions. The article reveals notable policy differences. As opposed to that of the IMF and WB, the EU's approach is more comprehensive and not confined to economic considerations. Those variations aside, the article draws on the same premise: expectations of compliance with the set conditions. While in-depth, structural requirements could guide ordinary decision-making and build up resilient national institutions and policies, this article questions the merits of large-scale comprehensive terms in the face of a situation created by a force majeure or a humanly uncontrollable event such as the COVID-19 pandemic. With no more initial research addressing the specific question of the application and adequacy of conditionality to force majeure emergencies or pandemic situations of the scale of COVID-19, this article argues in favor of a measured and targeted response limited to the development, design, or determination of policy choices that tackle the intended purpose. Also, for validly practical considerations that search for to ensure the better use of aid and avoid distracting or overburdening the recipient countries to the point of risking losses of devastating proportions, the article proposes to revise and limit conditionality during force majeure events to the essential aspects of transparent management of funds for the sole intended purpose. This in itself is a distinct democratic exercise of efficient and accountable public management decision-making.

Keywords: Policy of conditionality; Macro-economic assistance; COVID-19; EU; IMF; World Bank (search for similar items in EconPapers)
Date: 2021
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Persistent link: https://EconPapers.repec.org/RePEc:eee:riibaf:v:58:y:2021:i:c:s0275531921000805

DOI: 10.1016/j.ribaf.2021.101459

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