The determinants of IMF fiscal conditionalities: economics or politics?

Bernardo Guimaraes and Carlos Eduardo Ladeira

LSE Research Online Documents on Economics from London School of Economics and Political Science, LSE Library

Abstract: Conditionalites, measures that a borrowing country should adopt to obtain loans from the International Monetary Fund (IMF), are pervasive in IMF programs. This paper estimates the effects of political and economic factors on the number of conditions and on the size of fiscal adjustment requested in an agreement. As found in the literature, political proximity of the borrowing country to the Fund’s major shareholders has an important effect on the number of conditions. However, the magnitude of fiscal adjustment requested by the IMF is strongly affected by the size of a country’s fiscal deficit but not by political proximity. We also find a very small correlation between the number of conditions and the requested fiscal adjustment.

Keywords: IMF; conditionalities; fiscal adjustment; political proximity; fiscal deficit (search for similar items in EconPapers)
JEL-codes: F33 F53 H62 H63 (search for similar items in EconPapers)
Pages: 27 pages
Date: 2017-01
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

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http://eprints.lse.ac.uk/86171/ Open access version. (application/pdf)

Related works:
Working Paper: The Determinants of IMF Fiscal Conditionalities: economics or politics? (2017)
Working Paper: The determinants of IMF fiscal conditionalities: economics or politics? (2015)
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Persistent link: https://EconPapers.repec.org/RePEc:ehl:lserod:86171

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