The Economic Impact of IMF-Supported Programs in Low-Income Countries

Abstract

Th e economic impact of IMF-supported programs in low-income countries / Yasemin Bal Gü ndü z … [et al.].

The Effect of IMF Programmes on Economic Growth in Low Income Countries: An Empirical Analysis

“…The positive and statistically significant growth effects are also more robustly associated with countries that have had recent prior agreements, and thus more likely to be engaged in a sustained period of adjustment. This result is consistent with one of the results reported by Bal Gunduz et al (2013). It implies that an important part of the positive effect occurs through the modality of sustained policy reform under the auspices of the IMF.…”

“…But unlike some of these studies, our estimations pass tests of statistical significance (Dicks-Mireaux et al, 2000) and address the problem of potential selection bias (Bird & Mosley, 2006). They also relate to regular concessional IMF programmes and not just those associated with shock-related lending (Bal Gunduz et al, 2013).…”

“…Some of these studies find that while the short-run effects of IMF programmes on economic growth are negative, the long-run effects are positive. A useful detailed summary of all the main studies is presented in tabular form by Bal Gunduz et al (2013).…”

Evaluating the Impact of Non-Financial IMF Programs Using the Synthetic Control Method

“…First, it is possible that the effectiveness of IMF-programs has changed over time: most earlier studies were conducted on data that spanned the 1970-2000 period, while IMF operations have changed considerably since. In particular, IMF programs have evolved from more prescriptive structural adjustment programs, toward programs that support country-led development agendas (Bal-Gunduz et al, 2013). In this light, Appendix B provides evidence suggesting that IMF programs have indeed become more effective over time.…”

“…One possible reason for this difference lies in the fact that these earlier studies largely analyzed data that were generated before the 1999 reforms to the IMF. As explained in Bal-Gunduz et al (2013), the 1999 reforms mainly focused on the Fund's engagement with low-income developing countries (LIDCs) and placed poverty reduction and country ownership of programs at the center, whilst relying less on conditionality.…”