Poland and IMF Conditionality Programs: 1990-1995

By Tiongson, Erwin R. | East European Quarterly, March 1997 | Go to article overview

Poland and IMF Conditionality Programs: 1990-1995


Tiongson, Erwin R., East European Quarterly


With the collapse of communism in 1989, the International Monetary Fund (IMF) found itself in a situation without historical parallels. A large number of new countries required immediate stabilization and liberalization, with economic systems sharply different from a free market system. Because Poland was the first to adopt a radical stabilization and restructuring program and the first to recover from post-reform recession, its relationship with the IMF is of particular interest, both to other transition economies contemplating viable strategies and to post-cold war economic literature rethinking the IMF role in the international policy process.

IMF OBJECTIVES

Following the Bretton Woods Conference in 1944, the IMF was founded in 1945 to regulate the postwar international monetary system. As assigned by the Conference participants, the three main functions of the IMF include: (1) the administration of a code of conduct concerning exchange rate policies and restrictions on payments for current account transactions; (2) the provision of financial assistance to member countries correcting imbalances; and (3) the creation of a forum for continued international consultation and cooperation.

While the IMF's main task of promoting international trade and balance of payments equilibrium is in theory, a politically-neutral task, this does not mean that IMF negotiations have no political undercurrents. For James Bjork (1995) every economic program is intimately linked with domestic political issues. Managing directors' votes, weighted relative to the size of their home country's contribution, are inevitably linked with broader political considerations -- such as the human rights record of a recipient country, its political alliances, its environmental track record, and so on. As James Mayall (Taylor, 1988, p. 53) stresses, the institutional purpose of postwar economic cooperation was to safeguard liberal capitalism.

The IMF is currently active in two areas: exchange rates and international liquidity. Since 1971, the IMF has lost formal control over exchange rate movements but member countries are still obliged to certain rules of good economic conduct, as prescribed by the IMF. Member countries are also given borrowing or drawing rights from the IMF's resources -- consisting of a pool of currencies and international reserve assets, including SDRs (Special Drawing Rights, a new reserve asset in the form of bookkeeping entries) that they can use to help finance a balance of payments deficit.

IMF CONDITIONALITY PROGRAMS

Since the 1970s, the IMF has functioned mainly as the manager of foreign exchange crises and organizer of international debt agreements. The IMF's approval of debtor countries' economic policies has also become a precondition for other debt agreements, as commercial banks and official creditors link rescheduling agree meets to IMF-endorsed creditworthiness. Both IMF conditionality lending and cross-conditionality lending (involving commercial banks and official creditors) refer to the process in which countries receive loans on the basis of a promise to enforce a set of IMF macroeconomic prescriptions. These macroeconomic measures concern stability in the short and medium term. The IMF, as regulator of international economic order, is neither centrally concerned with economic growth nor equity. Thus, policy objectives and performance criteria are related to internal and external macro economic stability and have less to do with restructuring and redistributive justice.

IMF prescriptions for correcting balance of payment problems invariably include a sharp recession aimed at stabilizing prices and promoting trade balance. For the IMF, links between inflation and external imbalances are strong. Inflation creates overvaluation, erodes the tax base, depresses foreign investment, and promotes capital flight. As Stanislaw Gomulka (1991) puts it, the IMF is an "institutional guardian of low inflation," with its own credibility among member countries inextricably linked with the discharge of such a role. …

The rest of this article is only available to active members of Questia

Already a member? Log in now.

Notes for this article

Add a new note
If you are trying to select text to create highlights or citations, remember that you must now click or tap on the first word, and then click or tap on the last word.
One moment ...
Default project is now your active project.
Project items

Items saved from this article

This article has been saved
Highlights (0)
Some of your highlights are legacy items.

Highlights saved before July 30, 2012 will not be displayed on their respective source pages.

You can easily re-create the highlights by opening the book page or article, selecting the text, and clicking “Highlight.”

Citations (0)
Some of your citations are legacy items.

Any citation created before July 30, 2012 will labeled as a “Cited page.” New citations will be saved as cited passages, pages or articles.

We also added the ability to view new citations from your projects or the book or article where you created them.

Notes (0)
Bookmarks (0)

You have no saved items from this article

Project items include:
  • Saved book/article
  • Highlights
  • Quotes/citations
  • Notes
  • Bookmarks
Notes
Cite this article

Cited article

Style
Citations are available only to our active members.
Buy instant access to cite pages or passages in MLA, APA and Chicago citation styles.

(Einhorn, 1992, p. 25)

(Einhorn 25)

1. Lois J. Einhorn, Abraham Lincoln, the Orator: Penetrating the Lincoln Legend (Westport, CT: Greenwood Press, 1992), 25, http://www.questia.com/read/27419298.

Cited article

Poland and IMF Conditionality Programs: 1990-1995
Settings

Settings

Typeface
Text size Smaller Larger Reset View mode
Search within

Search within this article

Look up

Look up a word

  • Dictionary
  • Thesaurus
Please submit a word or phrase above.
Print this page

Print this page

Why can't I print more than one page at a time?

Help
Full screen

matching results for page

    Questia reader help

    How to highlight and cite specific passages

    1. Click or tap the first word you want to select.
    2. Click or tap the last word you want to select, and you’ll see everything in between get selected.
    3. You’ll then get a menu of options like creating a highlight or a citation from that passage of text.

    OK, got it!

    Cited passage

    Style
    Citations are available only to our active members.
    Buy instant access to cite pages or passages in MLA, APA and Chicago citation styles.

    "Portraying himself as an honest, ordinary person helped Lincoln identify with his audiences." (Einhorn, 1992, p. 25).

    "Portraying himself as an honest, ordinary person helped Lincoln identify with his audiences." (Einhorn 25)

    "Portraying himself as an honest, ordinary person helped Lincoln identify with his audiences."1

    1. Lois J. Einhorn, Abraham Lincoln, the Orator: Penetrating the Lincoln Legend (Westport, CT: Greenwood Press, 1992), 25, http://www.questia.com/read/27419298.

    Cited passage

    Thanks for trying Questia!

    Please continue trying out our research tools, but please note, full functionality is available only to our active members.

    Your work will be lost once you leave this Web page.

    Buy instant access to save your work.

    Already a member? Log in now.

    Oops!

    An unknown error has occurred. Please click the button below to reload the page. If the problem persists, please try again in a little while.