IMF Programs and Borrowing Costs: Does Size Matter?

Salim Chahine, Ugo Panizza and Guilherme Suedekum

No 19015, CEPR Discussion Papers from C.E.P.R. Discussion Papers

Abstract: This paper studies whether IMF programs and their size affect borrowing costs by comparing the coupon of bonds issued around an IMF arrangement. By comparing bonds issued immediately before the inset of the program with bonds issued immediately after the program, we show that, on average, the approval of the program leads to a 72-basis points reduction in borrowing costs and program size matters. Our point estimates indicate that when program size increases by one percent of GDP, borrowing costs decrease by 23 basis points. We also show that program size only matters for ex-post programs (i.e., those implemented during crises). For precautionary ex-ante programs, borrowing costs increase with program size. However, the effect of program size is small and, therefore, ex-ante programs never lead to a statistically significant increase in borrowing costs and in most cases lead to a significant reduction in borrowing costs.

Keywords: Sovereign; debt (search for similar items in EconPapers)
JEL-codes: F22 (search for similar items in EconPapers)
Date: 2024-04
References: Add references at CitEc
Citations:

Downloads: (external link)
https://cepr.org/publications/DP19015 (application/pdf)
CEPR Discussion Papers are free to download for our researchers, subscribers and members. If you fall into one of these categories but have trouble downloading our papers, please contact us at subscribers@cepr.org

Related works:
Working Paper: IMF programs and borrowing costs: does size matter? (2024)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:cpr:ceprdp:19015

Ordering information: This working paper can be ordered from
https://cepr.org/publications/DP19015

Access Statistics for this paper

More papers in CEPR Discussion Papers from C.E.P.R. Discussion Papers Centre for Economic Policy Research, 33 Great Sutton Street, London EC1V 0DX.
Bibliographic data for series maintained by ().