Definition of 'Conditionality'
The requirements placed on the usage or distribution of money lent to another country. Conditionality is most often associated with aid money. International organizations, such as the International Monetary Fund (IMF) and World Bank, or individual countries can use conditionality when lending money to another country. The donor country requires that the country receiving the funds adhere certain rules directing the use of funds.
Conditions can range from provisions to reduce corruption to more controversial requests, such as improvement in human rights or reduction in deficit spending. The donor organization may also require that the funds be used toward a specific project rather than being left to the discretion of the receiving country.
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