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The Effects of IMF Loan Condition Compliance on GDP Growth

Lauren Hackler, Frank Hefner and Mark Witte ()

The American Economist, 2020, vol. 65, issue 1, 88-96

Abstract: Since beginning operations in 1947, the International Monetary Fund (IMF) has evolved from its original purpose of overseeing the world’s monetary system to becoming a loan administrator for member nations facing extreme economic crises. Today, the IMF provides conditional lending programs to catalyze economic recovery and growth in recipient countries. Critics of these programs cite various reasons for conditional loan program failures, naming the borrowing countries, creditor countries, and/or the IMF itself as responsible. Using data from 8,377 loan conditions associated with 93 countries’ IMF loan arrangements from 2000 to 2014, this article studies the effects of complying with individual conditions on the borrowing countries’ real gross domestic product (GDP) growth rate. Our results suggest that real GDP growth rates are directly affected by meeting the compliance standards of select loan conditions. JEL Classifications : 019, F35

Keywords: IMF; foreign aid; conditionality (search for similar items in EconPapers)
Date: 2020
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DOI: 10.1177/0569434519836994

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Handle: RePEc:sae:amerec:v:65:y:2020:i:1:p:88-96