Chapter 4 Macroeconomic Adjustment in IMF-Supported Programs: Projections and Reality1
Author:
Ruben V Atoyan
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Language:
English
Print Publication Date:
03 Apr 2006
Keywords:
SEM; IMF program; country; IMF-supported program; program implementation; IMF effort; current account ratio; Current account; Capital flows; Private capital flows; Fiscal stance; Global; Sub-Saharan Africa; East Asia; Africa; Europe; projection error; confidence level; fiscal ratio; GDP ratio; IMF projection; Current account surpluses; Macroeconomic and fiscal forecasts; Private savings

Abstract

This paper examines the accuracy of IMF projections in 175 programs approved in the period 1993–2001, focusing specifically on ratios of the fiscal surplus to GDP and external current account surplus to GDP. Four potential reasons for the divergence of projections from actual values are identified: (a) mismeasured data on initial conditions; (b) differences between the “model” underlying the IMF projections and the “model” suggested by the data on outturns; (c) differences between reforms and measures underlying the projections and those actually undertaken; and (d) random errors in the actual data. Our analysis suggests that while all are important, incomplete information on initial conditions is the largest contributor to projection inaccuracy. We also investigate the role of revisions over time in projection error, and find that they improve projections for fiscal account data, while the current account continues to in dicate a great deal of variability in the revision process.

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IMF-Supported Programs
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ISBN:
9781589063617
Publication Date:
03 Apr 2006
Publisher:
International Monetary Fund
DOI:
https://doi.org/10.5089/9781589063617.072
Pages:
292

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