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Experiences With Traditional Compensatory Finance Schemes And Lessons From Flex


  • Francesco Aiello

    () (Dipartimento di Economia e Statistica, Università della Calabria)


This paper describes some policy instruments set up by the IMF and the European Union in order to provide financial assistance to developing countries whose economies are affected by exogenous shocks from exports side. After briefly reviewing the IMF’s CFF and the EU’s STABEX, the paper presents the operational rules of FLEX and comments on how it functioned from 2000 to 2007. The analysis shows that the FLEX facility suffered from there being inadequate finance allocated to ACPs and from delays in the financing procedure. While these constraints greatly limited the impact of FLEX in the application years 2000-2006, the 2008 FLEX revision eased them and, now, FLEX can guarantee financial support more rapidly than in the past and may more satisfactorily cover the financial requirements of ACPs coping with export earnings instability.

Suggested Citation

  • Francesco Aiello, 2009. "Experiences With Traditional Compensatory Finance Schemes And Lessons From Flex," Working Papers 200912, Università della Calabria, Dipartimento di Economia, Statistica e Finanza "Giovanni Anania" - DESF.
  • Handle: RePEc:clb:wpaper:200912

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    References listed on IDEAS

    1. Aiello, Francesco, 2002. "Financial stabilization systems, economic growth of developing countries and EU’s STABEX," MPRA Paper 38099, University Library of Munich, Germany.
    2. Patrick GUILLAUMONT, 2005. "Macro vulnerability in low income countries and aid responses," Working Papers 200530, CERDI.
    3. Francesco Aiello, 1999. "The Stabilisation of LDCs' Export Earnings. The impact of the EU STABEX programme," International Review of Applied Economics, Taylor & Francis Journals, vol. 13(1), pages 71-85.
    4. Jean-Francois Brun & Gérard Chambas & Bertrand Laporte, 2001. "Stabex versus IMF compensatory financing: impact on fiscal policy," Journal of International Development, John Wiley & Sons, Ltd., vol. 13(5), pages 571-581.
    5. Jean-Louis COMBES & Patrick GUILLAUMONT, 2000. "Commodity Price Volatility, Vulnerability and Development," Working Papers 200015, CERDI.
    6. Francesco Aiello, 1999. "Effects of STABEX on ACPs' economic growth: Further evidence," Applied Economics, Taylor & Francis Journals, vol. 31(9), pages 1033-1042.
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    More about this item


    Developing Countries; Export Earnings Instability; Budget Support;

    JEL classification:

    • F35 - International Economics - - International Finance - - - Foreign Aid
    • O19 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - International Linkages to Development; Role of International Organizations

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