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The determinants of IMF fiscal conditionalities: economics or politics?

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  • Guimarães, Bernardo de Vasconcellos
  • Ladeira, Carlos Eduardo de Almeida

Abstract

Conditionalites, measures that a borrowing country should adopt to obtain loans from the IMF, are pervasive in IMF programs. This paper estimates the effects of political and economic factors on the number of conditionalities and on the fiscal adjustment requested by the IMF. As found in the literature, political proximity of the borrowing country to the Fund’s major shareholders has an important effect on the number of conditions in an agreement. However, the fiscal adjusment requested by the IMF is strongly affected by the size of a country’s fiscal deficit but not by political proximity. We also find a very small correlation between the number of conditions and the fiscal adjustment requested by the IMF

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  • Guimarães, Bernardo de Vasconcellos & Ladeira, Carlos Eduardo de Almeida, 2015. "The determinants of IMF fiscal conditionalities: economics or politics?," Textos para discussão 391, FGV EESP - Escola de Economia de São Paulo, Fundação Getulio Vargas (Brazil).
    • Handle: RePEc:fgv:eesptd:391
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    More about this item

    JEL classification:

    • F33 - International Economics - - International Finance - - - International Monetary Arrangements and Institutions
    • F53 - International Economics - - International Relations, National Security, and International Political Economy - - - International Agreements and Observance; International Organizations
    • H62 - Public Economics - - National Budget, Deficit, and Debt - - - Deficit; Surplus
    • H63 - Public Economics - - National Budget, Deficit, and Debt - - - Debt; Debt Management; Sovereign Debt

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