Repeated Use of IMF-Supported Programs: Determinants and Forecasting

By Martin Iseringhausen, Mwanza Nkusu, Wellian Wiranto

November 8, 2019

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Martin Iseringhausen, Mwanza Nkusu, and Wellian Wiranto. Repeated Use of IMF-Supported Programs: Determinants and Forecasting, (USA: International Monetary Fund, 2019) accessed December 21, 2024

Disclaimer: IMF Working Papers describe research in progress by the author(s) and are published to elicit comments and to encourage debate. The views expressed in IMF Working Papers are those of the author(s) and do not necessarily represent the views of the IMF, its Executive Board, or IMF management.

Summary

This paper studies the determinants of repeated use of Fund-supported programs in a large sample covering virtually all General Resources Account (GRA) arrangements that were approved between 1952 and 2012. Generally, the revolving nature of the IMF’s resources calls for the temporary sup-port of member countries to address balance of payments problems while repeated use has often been viewed as program failure. First, using probit models we show that a small number of country-specific variables such as growth, the current account balance, the international reserves position, and the institutional framework play a significant role in explaining repeated use. Second, we discuss the role of IMF-specific and program-specific variables and find evidence that a country’s track record with the Fund is a good predictor of repeated use. Finally, we conduct an out-of-sample forecasting exer-cise. While our approach has predictive power for repeated use, exact forecasting remains challenging. From a policy perspective, the results could prove useful to assess the risk IMF programs pose to the revolving nature of the Fund’s financial resources.

Subject: Arrears, Balance of payments, Central banks, Current account balance, Exchange rate adjustments, Exchange rate arrangements, External debt, Foreign exchange, International reserves, Public debt

Keywords: Adjustment program, Arrears, Country, Current account balance, Exchange rate arrangements, Explanatory variable, Fund resources, Global, GRA arrangements, IMF arrangement, IMF lending, IMF quota, IMF support, IMF-supported adjustment program, IMF-supported programs consist, International reserves, Lending practice, Program failure, Program period, Program success, Quota share, Regime, Successor program, WP

Publication Details

Pages:

48
Volume:

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DOI:

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Issue:

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Series:

Working Paper No. 2019/245
Stock No:

WPIEA2019245
ISBN:

9781513511689
ISSN:

1018-5941

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