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IMF-Supported Programs in Low-Income Countries: Fragile versus Non-Fragile States

Author

Listed:
  • Kaihao Cai
  • Mr. Edouard Martin
  • Mr. Felix J Vardy

Abstract

This paper examines the macroeconomic frameworks of IMF-supported programs with low-income countries from 2009 to 2022, focusing on how macroeconomic targets and their achievement differ between fragile and conflicted-affected states (FCS) and non-FCS. Key findings include similar program targets for FCS and non-FCS, optimism in all dimensions considered other than inflation, and no significant correlation between targets and outcomes. For variables other than inflation, country-independent targets equal to the mean or median outcomes of other programs outperform program projections as predictors of actual outcomes. This underscores the challenges in setting realistic, country and program-specific targets in IMF-supported programs with low-income countries. Finally, we discuss potential caveats, including GDP rebenchmarking, non-linear relationship between initial conditions and targets, and repeat programs. We do not study, and make no claims about, causality.

Suggested Citation

  • Kaihao Cai & Mr. Edouard Martin & Mr. Felix J Vardy, 2024. "IMF-Supported Programs in Low-Income Countries: Fragile versus Non-Fragile States," IMF Working Papers 2024/221, International Monetary Fund.
    • Handle: RePEc:imf:imfwpa:2024/221
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