conditionality

Definition

The practice of attaching specific conditions or requirements to financial assistance, loans, or agreements, most notably used by international financial institutions. It's the global economic version of "you can have dessert after you eat your vegetables," except the vegetables are structural reforms and the dessert is billions in credit. The IMF's favorite way to ensure countries follow through on promises.

Example Usage

The loan came with strict conditionality requiring the government to reduce public spending and reform its tax system.

Source: Common international finance terminology

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