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Forum for the Future of Aid

Southern Voices for Change in the International Aid System Project

The Forum on the Future of Aid is an online community dedicated to research and opinions about how the international aid system currently works and where it should go next

organised by ODI

The Link between Multilaterals and Donor Governments through the International Monetary Fund (IMF)


The link between the multilaterals and donor governments through the IMF is known to many of those who are involved in development, but very few are ready to discuss its impact on the recipient countries.

Whether you are discussing the role of multilaterals or bilaterals at a country-level in most nations in the South, the International Monetary Fund (IMF) is a key link. It should be noted that multilaterals are largely funded through treasuries or aid agencies from developed countries. But at the same time these funders also provide bilateral aid to developing countries. While the above linkages are being widely discussed, refined and harmonized, however the role of the IMF in these linkages is not being discussed at all or it is being discussed at a very low profile level. Let us face it. Few if any of the PRSP (Poverty Reduction Strategy Paper) countries will have its PRSP funded from the multilateral or bilateral aid agencies without the IMF supervised PRGF (Poverty Reduction and Growth Facility)!

For those developing countries which have graduated from PRGF are still keeping the IMF – aid link through a newly established Policy Support Instrument (PSI). This type of aid-relationship is not sustainable and it undermines the ownership of a development process in the aid – recipient countries. It is high time the international community start thinking and planning for aid delivery without the IMF linkage as it is. This is a possible future scenario. What do you think?

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