Proposals for new methods of recycling funds to deficit countries, and for increasing the roles of the IMF and World Bank in the process, now make the economic theory behind adjustment programmes a vital matter for Idcs. Lending on explicitly conditional terms seems likely to grow—has IMF conditionality changed in response to criticism? It is argued that the symptoms of conditionality have been examined more often than the underlying theory (the ‘monetary approach to the balance of payments’). Alternative and less uniform adjustment programmes are urgently needed, based on stronger links between macro‐economic policy and development strategy.