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Obstacles to progress

Realities

"Loan conditions are on the rise again"

"Structural Adjustment Is Dead, Long Live Structural Adjustment," 259
Bretton Woods Project.

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2018 Review of Program Design and Conditionality

Extracts from accompanying PRESS RELEASE (May 20, 2019)
“ Directors shared the assessment that growth assumptions were often too optimistic, driven
largely by global forecasting errors and the underestimation of the impact of policy adjustment

and overestimation of structural reform payoffs.
***
they stressed the need to retain sufficient flexibility and take due account of member countries'
implementation capacity. Where relevant, Directors also supported focusing on the quality of

social spending and prioritizing structural conditions on social issues.
***
Noting the marked increase in the volume of structural conditions, Directors called for further
prioritization of reforms critical to specific program objectives to ensure both the parsimony

and depth of structural conditionality.
***
Given difficulties with implementation of structural conditions, Directors stressed the need for
more realistic implementation timetables and estimates of reform payoffs.

***
However, they saw scope for better tailoring and streamlining program objectives and

structural conditions, particularly for fragile and small states, in light of their economic
circumstances and capacity constraints.

Extracts from EXECUTIVE SUMMARY 260
Program growth assumptions were often too optimistic
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Although most programs targeted growth-friendly fiscal consolidation, the adjustment that
materialized was often of lower quality than envisaged
***
Nevertheless, in several programs, most of which went off track, debt overshot projections by a
significant margin, reflecting disappointing growth, unexpected exchange rate depreciation,

higher fiscal deficits, and other residual factors
***
The number of structural conditions (SCs) increased, reflecting the rising structural challenges.
Conditionality remained largely focused on the Fund's core areas of responsibility, despite