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The catalytic role of IMF programs to Low Income Countries

Author

Listed:
  • Alessandro Schiavone

    (Bank of Italy)

  • Claudia Maurini

    (Bank of Italy)

Abstract

This paper investigates whether IMF programmes have had a catalytic effect on flows of development aid to low-income countries (LICs) between 2002 and 2019. We use an entropy balancing methodology to obtain correct estimates, taking account of the characteristics of the countries assisted by the IMF. The findings suggest that IMF programmes catalyse development aid to LICs and, according to our baseline estimates, for each year of programme activity this catalytic effect amounts to 1.6 per cent of the GDP of assisted LICs. These findings apply to both multilateral and bilateral donors. However, the effect is significantly smaller for countries that fail to fulfil the IMF conditionality by not meeting the quantitative performance criteria subject to programme review. Official donors, especially multilateral ones, adopt a selective approach, allocating more development aid to relatively poorer, more institutionally reliable, and more politically stable countries.

Suggested Citation

  • Alessandro Schiavone & Claudia Maurini, 2023. "The catalytic role of IMF programs to Low Income Countries," Questioni di Economia e Finanza (Occasional Papers) 782, Bank of Italy, Economic Research and International Relations Area.
    • Handle: RePEc:bdi:opques:qef_782_23
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    References listed on IDEAS

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    More about this item

    Keywords

    International Monetary Fund; catalysis; official development assistance (ODA);
    All these keywords.

    JEL classification:

    • F33 - International Economics - - International Finance - - - International Monetary Arrangements and Institutions
    • F35 - International Economics - - International Finance - - - Foreign Aid
    • F53 - International Economics - - International Relations, National Security, and International Political Economy - - - International Agreements and Observance; International Organizations
    • F63 - International Economics - - Economic Impacts of Globalization - - - Economic Development
    • O19 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - International Linkages to Development; Role of International Organizations

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