The Macro-Fiscal Impacts of Post-Disaster IMF Financing: Evidence from a Synthetic Control Approach

Pedro Juarros and Junko Mochizuki

No 2026/091, IMF Working Papers from International Monetary Fund

Abstract: The IMF provides macro-stabilizing liquidity when others cannot. The IMF has developed a set of instruments designed to provide rapid financial assistance to countries facing urgent balance of payments needs without requiring a full-fledged economic program, triggered by exogenous natural disasters shocks. We evaluate the impact of IMF emergency financing after natural disaster using a synthetic control method. The results show that IMF post-disaster financing supports a faster GDP recovery, with an implied average IMF post-disaster multiplier larger than 1. The findings suggest strong liquidity and catalytic effects, enabling countercyclical fiscal responses. However, the resulting increase in public debt underscores the need for credible medium-term fiscal plans and post-disaster consolidation to maintain debt sustainability.

Keywords: IMF; Post-disaster financing; extreme natural disasters; synthetic control; IMF working papers; IMF-post disaster; PostDisaster IMF; IMF emergency; disaster IMF; Natural disasters; Emergency assistance; Disaster aid; Liquidity; Global; Western Hemisphere (search for similar items in EconPapers)
Pages: 32
Date: 2026-05-08
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