Modeling Aggregate Use of IMF Resources—Analytical Approaches and Medium-Term Projections

Abstract

This paper presents two approaches to modeling the use of IMF resources from the General Resources Account in order to gauge whether the recent decline in credit outstanding is a temporary or a permanent phenomenon. The two approaches-the time-series behavior of credit outstanding and a two-stage program selection and access model-yield the same conclusion: the use of IMF resources is likely to decline sharply. Specifically, credit outstanding is projected to decline from an average of SDR 50 billion over 2000À05 to an average of about SDR 8 billion over 2006À10. Stochastic simulations suggest that it is unlikely to be much higher. These results are based on the IMF's World Economic Outlook projections with a correction for historically observed overoptimistic biases. In addition, alternative scenarios assuming weaker economic performance or a less benign global economic environment do not materially alter these results. Ã At the time this paper was prepared, Atish Ghosh was division chief, and Juan Zalduendo a deputy division chief, of the Policy Review Division of the IMF's Policy Development and Review Department. Manuela Goretti and Bikas Joshi were economists, and Alun Thomas a senior economist, with the Policy Review Division. The authors would like to thank Mark Allen, Jorge Ma´rquez-Ruarte, Russell Kincaid, Jonathan Ostry, Gary Schinasi, Jim Boughton, Andy Berg, and other IMF colleagues for useful suggestions during the preparation of this paper, and Sibabrata Das for research assistance. Comments and suggestions from an anonymous referee are also deeply appreciated. The literature survey (Appendix II) is an abbreviated version of a survey prepared by

Imf Drawing Programs: Participation Determinants and Forecasting

“…Elekdag (2006) finds that both the real interest rate and the world business cycle have the expected and significant effect on the probability of the approval of a SBA. In contrast, Ghosh et al (2007) do not find these variables significant in their estimation of the probability of having a SBA/EFF program.…”

“…Conway 1994, Przeworki and Vreeland 2000, Barro and Lee 2005. More recently, Elekdag (2006) and Ghosh et al (2007) focus on the evolution of IMF credit outstanding through the analysis of the determinants of the establishment of new IMF programs.…”

IMF lending arrangements in emerging and developing countries – participation and prediction

“…But the eligibility of a country itself is not enough to require a loan from the IMF. Comprehensive summaries of the studies regarding the determinants of IMF credit can be found in Sturm, Berger, and de Haan (2005) for the period 1992-1994, Ghosh, Goretti, Joshi, Thomas, and Zalduendo (Ghosh, Goretti, Joshi, Thomas, & Zalduendo, 2007) covering 1996-2006and Moser and Sturm (2011 for the 2005-2010 period.…”

IMF Lending in Times of Crisis: Political Influences and Crisis Prevention

“…In this view, it is reasonable to expect that larger foreign direct investments and banks' financial exposure are negatively correlated with the probability of IMF assistance but, once the endogenous selection has been taken into account, drive larger loans. 19 The set of control variables included in the model was chosen on the ground of the empirical findings of the most relevant literature on IMF lending, and reflects foreign imbalances, the levels of economic development and the relationships with the Fund (Bird, 2007;Ghosh et al, 2008;Steinwand & Stone, 2008). Specifically, we consider the current account balance over GDP (CAB) and an indicator of the level of international reserves in terms of months of imports (RESERVE) as measures of foreign imbalances.…”