Title Page
OCCASIONAL PAPER
277
The Economic Impact of IMF-Supported Programs in Low-Income Countries
Yasemin Bal Gündüz, Christian Ebeke, Burcu Hacibedel, Linda Kaltani, Vera Kehayova, Chris Lane, Christian Mumssen, Nkunde Mwase, and Joseph Thornton
Copyright
©2013 International Monetary Fund
Cover design: IMF Multimedia Services Division
Cataloging-in-Publication Data Joint Bank-Fund Library
The economic impact of IMF-supported programs in low-income countries / Yasemin Bal Gündüz … [et al.]. – Washington, D.C.: International Monetary Fund, 2013.
p.: col. ill., col. map ; cm.
Includes bibliographical references
Occasional papers series ; no. 277
1. International Monetary Fund – Developing countries. 2. Economic assistance – Developing countries. 3. Poverty – Developing countries. 4. Poverty – International cooperation. 5. Developing countries – Economic conditions. I. Bal-Gündüz, Yasemin. II. International Monetary Fund.
HG3881.5.I58E26 2013
ISBN: 978-1-48439-471-7 (print)
ISBN: 978-1-47555-903-3 (ePub)
ISBN: 978-1-48438-651-4 (Mobipocket)
ISBN: 978-1-47553-701-7 (PDF)
Disclaimer: The views expressed in this book are those of the authors and should not be reported as or attributed to the International Monetary Fund, its Executive Board, or the governments of any of its member countries.
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Contents
Preface
Acronyms
1. Overview
2. The Evolution of IMF Program Engagement
The Origins of IMF Engagement
Strengthened Focus on Poverty Reduction
The Global Financial Crisis and the IMF’s Response
3. The Impact of IMF Engagement in Low-Income Countries
Impact of Longer-Term IMF Engagement in Low-Income Countries
Impact of Short-Term IMF Financing in Low-Income Countries
Channels
4. Lessons for Future IMF Engagement in Low-Income Countries
Financing
Modalities
Policy Challenges
Annex 1: Propensity Score Matching Methodology
Addressing Selection Bias—Alternative Approaches
Methodology
Specification of the Selection Model
Annex 2: Panel Regression on the Determinants of Long-Term Growth
References
Boxes
2.1. Debt Relief
2.2. IMF Engagement in Georgia
2.3. IMF Engagement in Rwanda
2.4. IMF Program Conditionality
3.1. IMF Engagement in Senegal
3.2. IMF Engagement in Mozambique
Figures
1.1. Low-Income Countries: Number of Years of IMF-Supported Program Engagement, 1986–2011
2.1. Number of Low-Income Countries with an IMF Facility in Place, and New Concessional Commitments
2.2. Economic Performance of Low-Income Countries
2.3. Economic Performance of ESAF and Non-ESAF Low-Income Countries, 1981–85
2.4. Real GDP Growth, 1980–2012
2.5. Real Per Capita Growth and Fiscal Indicators
3.1. Changes in Average Decadal GDP Per Capita Growth and Poverty Gaps, 1986–2010
4.1. Projected Number of Countries Eligible for Support under the Poverty Reduction and Growth Trust
4.2. Poverty Reduction and Growth Trust Average Annual Lending Commitments, 1988–2035
A2.1 Macroeconomic Conditions in Low-Income Countries across Decades
A2.2 Macroeconomic Conditions in Low-Income Countries across Decades and Country Groupings
A2.3. Changes in Macroeconomic Performance of Low-Income Countries
Tables
2.1. Evolution of Eligibility for IMF Concessional Financing
2.2. Evolution of the IMF’s Concessional Facilities
3.1. Summary of Literature on the Impact of IMF-Supported Programs, 2000–12
3.2. Impact of Longer-Term IMF Engagement on Economic Performance
3.3. Determinants of Long-Term Real Per Capita GDP Growth
3.4. Results: Impact of Short-Term IMF Engagement by Propensity Score Matching
A1.1. Determinants of Longer-Term IMF Engagement
A1.2. Demand for IMF Financing in Response to Policy and/or Exogenous Shocks
Preface
This paper is based on studies that were conducted in 2012 and 2013 as part of the IMF’s review of its lending facilities aimed at low-income countries. The work was headed by Chris Lane and Christian Mumssen, with Yasemin Bal Gündüz, Christian Ebeke, and Linda Kaltani responsible for the econometric work and Joseph Thornton for much of the drafting. Burcu Hacibedel and Nkunde Mwase provided case studies, Vera Kehayova provided research assistance, and Merceditas San Pedro-Pribram finalized the text, figures, and tables. Hugh Bredenkamp provided overall supervision.
The authors are indebted to Dane Rowlands and Graham Bird for their helpful thoughts on the econometrics, as well as to numerous members of Fund departments for their detailed comments on the paper. David Einhorn edited the paper; Joanne Johnson and Michael Harrup of the Communications Department coordinated publication; and Jeremy Mark of the same department offered valuable assistance to the authors in navigating the publication process. The paper also builds upon previous work by IMF staff members on the role of the institution in low-income countries.
The opinions expressed in the paper are those of the authors, and do not necessarily reflect the views of national authorities, the IMF, or its Executive Directors.
Acronyms
| CFF | Compensatory Financing Facility |
| CPIA | Country Policy and Institutional Assessment |
| ECF | Extended Credit Facility |
| EFF | Extended Fund Facility |
| ENDA | Emergency Natural Disaster Assistance |
| EPCA | Emergency Post-Conflict Assistance |
| ESAF | Enhanced Structural Adjustment Facility |
| ESF | Exogenous Shocks Facility |
| FDI | foreign direct investment |
| GEE | Generalized Evaluation Estimator |
| HAC | High Access Component |
| HIPC | Heavily Indebted Poor Countries |
| IEO | Independent Evaluation Office |
| IMF | International Monetary Fund |
| LICs | low-income countries |
| MDRI | Multilateral Debt Relief Initiative |
| ODA | official development assistance |
| PRGF | Poverty Reduction and Growth Facility |
| PRGT | Poverty Reduction and Growth Trust |
| PSI | Policy Support Instrument |
| PSM | Propensity Score Matching |
| RAC | Rapid Access Component |
| RCF | Rapid Credit Facility |
| SAF | Structural Adjustment Facility |
| SBA | Stand-By Arrangement |
| SCF | Standby Credit Facility |
| SDR | Special Drawing Right |
| STF | Systemic Transformation Facility |