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Repeated Use of IMF-Supported Programs: Determinants and Forecasting
Author:
Martin Iseringhausennull

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Ms. Mwanza Nkusu
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Wellian Wirantonull

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Series:
IMF Working Papers
Volume/Issue:
Volume 2019: Issue 245
Language:
English
Publication Date:
08 Nov 2019
DOI:
https://doi.org/10.5089/9781513511689.001
ISBN:
9781513511689
ISSN:
1018-5941
Pages:
48
Keywords:
WP; explanatory variable; country; regime; IMF lending; Fund resources; GRA arrangements; program success; IMF quota; IMF support; adjustment program; lending practice; IMF arrangement; successor program; IMF-supported adjustment program; program period; IMF-supported programs consist; program failure; quota share; Current account balance; Exchange rate arrangements; Arrears; International reserves; Global
Legal-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.
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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.
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Cover IMF Working Papers
IMF Working Papers
ISSN:
1018-5941
Publisher:
International Monetary Fund
Volume 2019: Issue 245