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Compliance with IMF conditions and economic growth

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Abstract

Using data for 110 countries and GMM estimations, we examine the effects of IMF programs on economic growth. In addition to the traditional focus on the effects of program participation, program type, and the size of IMF loans on growth, using the unique dataset MONA (Monitoring of Fund Arrangements), we add the novel angle of program compliance to the analysis by constructing compliance and noncompliance performance measures. Our empirical results indicate that IMF program participation, general conditionality, and having concessional programs do not have any significant growth effect. With respect to program compliance, compliance with fiscal balance and BOP/reserve conditions does not affect growth rates, whereas compliance with external debt, short-term debt, total domestic credit, and credit to government/public sector conditions contribute to growth. Therefore, our empirical results strongly indicate that compliance matters.

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Notes

  1. These estimations are available from the authors upon request.

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Acknowledgements

Taner Turan acknowledges support from the Scientific and Technological Research Council of Türkiye. Halit Yanikkaya acknowledges support from the Turkish Academy of Sciences.

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  1. Gebze Technical University, Southern Illinois University Edwardsville, Turkey, USA

    Ayşe Y. Evrensel, Taner Turan & Halit Yanıkkaya

  2. Department of Economics & Finance, Southern Illinois University Edwardsville, Edwardsville, USA

    Ayşe Y. Evrensel

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  1. Ayşe Y. Evrensel
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Evrensel, A.Y., Turan, T. & Yanıkkaya, H. Compliance with IMF conditions and economic growth. Econ Change Restruct 56, 4401–4420 (2023). https://doi.org/10.1007/s10644-023-09557-x

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