ABSTRACT
This chapter evaluates the financial compensation arrangements, the three commodity agreements and the protocols. A comparison of the compensatory financing schemes has to include common features as well as their differences. The grant ratios in the IMF scheme are lower but still important. From the donor’s point of view, both compensatory financing schemes must be criticized in that the resulting income transfers appear arbitrary and untargeted. In particular, indicators of neediness appear to be unimportant for income redistribution under the compensatory financing schemes. Developing countries do have to choose between the two systems but can apply for transfers under both arrangements. The case of coffee is different in that the reduction of export supply was made ‘by decree’ rather than by something like buffer stock purchases. A specific aspect in the case of coffee is the importance of the parallel market and the related issue of membership was analysed separately.
