Skip to main content
Kent Academic Repository

Studies in the Theory and Practice of IMF Conditionality and Devaluation in Developing Countries

Hussain, Mohemmed Nureldin (1983) Studies in the Theory and Practice of IMF Conditionality and Devaluation in Developing Countries. Doctor of Philosophy (PhD) thesis, University of Kent. (doi:10.22024/UniKent/01.02.99677) (KAR id:99677)


The International Monetary Fund imposes conditions on the use of its credit facilities. The IMF conditions are economic policies which the borrowing country must undertake to qualify for the use of its resources. The Fund claims that such policies would restore internal and external equilibrium and promote economic development. An alternative view suggests that the IMF conditions would create a "liberalized" foreign exchange and trade system which is wholly dependent on the continuous flow of foreign aid. To achieve its claimed objectives, the IMF imposes devaluation supported by anti-inflationary policies and liberalization of trade. In correcting payment deficits the IMF devaluation model attaches great importance to the mechanisms of relative prices, income distribution, and real money balances. The corrective mechanism of devaluation, in the context of the IMF devaluation model, will be impaired if infla­tion accelerates in the devaluing countries. Serious doubt is cast on the appropriateness of the IMF diagnosis of Balance of Payments disequilibria and the effectiveness of its policy prescriptions. The IMF diagnosis does not attempt to distinguish the underlying causes of payments deficit from their effects, and its policy prescriptions are not suitable for developing economies. Owing to its adverse effect on the terms of trade, and the low price and income elasticities of demand for imports, devaluation would not be successful in improving the balance of payments. Recently the IMF has adopted what is called a supply-side approach to exchange rate determination. The coefficient of competitiveness is measured as the ratio of foreign exchange earnings per unit of domestic resource used in the export sector. Export supply is regarded as "unprofitable" if the coefficient of competitiveness is lower than the prevailing exchange rate. Devaluation is justified to make activities profitable in this sense. Owing to the inflationary repercussions of devaluation, and the low export supply elasticity» serious doubt is cast on the relevance of the supply side approach in developing countries.

Item Type: Thesis (Doctor of Philosophy (PhD))
Thesis advisor: Thirlwall, A.P.
DOI/Identification number: 10.22024/UniKent/01.02.99677
Additional information: This thesis has been digitised by EThOS, the British Library digitisation service, for purposes of preservation and dissemination. It was uploaded to KAR on 25 April 2022 in order to hold its content and record within University of Kent systems. It is available Open Access using a Creative Commons Attribution, Non-commercial, No Derivatives ( licence so that the thesis and its author, can benefit from opportunities for increased readership and citation. This was done in line with University of Kent policies ( If you feel that your rights are compromised by open access to this thesis, or if you would like more information about its availability, please contact us at and we will seriously consider your claim under the terms of our Take-Down Policy (
Uncontrolled keywords: IMF, International Monetary Fund, Conditionality, Devaluation, Developing Countries
Subjects: H Social Sciences > HB Economic Theory
Divisions: Divisions > Division of Human and Social Sciences > School of Economics
Depositing User: Matthias Werner
Date Deposited: 24 Jan 2023 10:52 UTC
Last Modified: 24 Jan 2023 10:52 UTC
Resource URI: (The current URI for this page, for reference purposes)

University of Kent Author Information

  • Depositors only (login required):

Total unique views for this document in KAR since July 2020. For more details click on the image.