Compliance with IMF Program Indicators and Growth in Transition Economies

Abstract

The views expressed in this Working Paper are those of the authors and do not necessarily represent those of the IlvIF or IlvIF policy. Working Papers describe research in progress by the authors and are published to elicit comments and to further debate.This paper makes use of the IMF's Database for Monitoring Fund Arrangements (MONA) to investigate whether transition countries that more successfully implement the conditionality ofIMF programs tend to show a better performance on recovery and growth. It is not possible to determine a clear -cut relationship between the index that determines the level of compliance with structural benchmarks in IMF programs and growth. However, the paper finds a definite, positive relationship between the index of compliance with performance criteria and growth, even after controlling for the extent of stabilization of the transition countries.

Why Do Countries Request Assistance from International Monetary Fund? An Empirical Analysis

“…It includes macroeconomic and structural policies and specific tools used to monitor the progress of a country towards its goals, defined by the country in collaboration with the IMF. The purpose of policy adjustment is to overcome balance-of-payment deficits without resorting to measures that are harmful to the country's stability, and to ensure that the country will be able to pay back its loan (Unigovskaya and Mercer-Blackman 2000). The participating country is responsible for implementing adjustment policies adequately to make the IMF-supported program successful.…”