Fiscal policy, fund supported adjustment programs, transition economies. A free powerpoint ppt presentation displayed as a flash slide show on id. Using a crosscountry sample of 169 imf supported programs and detailed studies of 15 programs, this evaluation report examines various aspects of fiscal adjustment in imfsupported programs. This paper is a quantitative study of the welfare implications of adjustment programs supported by the international monetary fund imf. The report sets a high standard for work of this kind. In this chapter, we turn to program documents submitted to the board to consider what light they shed on the rationale for and magnitude of the fiscal adjustment. The imf independent evaluation office, in their study on fiscal adjustment in imf supported programs acknowledged this problem, observing that much of the fiscal adjustment achieved is through measures that do not assure longterm sustainability and flexibility of fiscal systems to future shocks. Fiscal adjustment in imfsupported programs ebook, 2003.
Reforms in the fiscal area under imf supported programs. Do imf supported programs help make fiscal adjustment more durable soojin moon. Do imf supported programs help make fiscal adjustment more. Do imf supported programs boost private capital inflows. Fiscal adjustment in imfsupported programswashington, d. Factors determining the scale and nature of fiscal adjustment. Fiscal adjustment in imfsupported programs paperback. It presents evidence that does not support some critics view that imf supported programs typically adopt a onesizefitsall approach to fiscal adjustment, nor the perception that programs. This paper investigates fiscal developments in 112 countries during the 1990s. The theoretical foundation of the adjustment programs. Conditionality fiscal policy fund supported adjustment programs. Fiscal adjustment in imfsupported programs ebook por.
Inequality and fiscal policy international monetary fund. The initial fiscal positions, programmed adjustment, and outcomes across imf supported programs are summarized in table 4. Our central finding is that imf programs shrink the role played by domestic politics. There is little evidence of expansionary fiscal contractions, but fiscal contractions did not have a significantly negative impact on growth either. Bird, g 2004 fiscal adjustment in imfsupported programs.
It is comprehensive, careful, and balanced in its judgments. Programs targeted improvements in the overall balance during the first. The latest update of the fiscal monitor shows that fiscal adjustment is proceeding pretty quickly in the advanced economieson average the deficit is projected to fall by a total of 2 percentage points of gdp in 201112. Fiscal reforms in imfsupported programs imf elibrary. Imf supported programs include key objectives such as growth, inflation, and current account adjustment and the intermediate policy targets such as monetary and fiscal policies needed to. Military spending,the peace dividend,and fiscal adjustment 295 supported adjustment program presumably affects both the expenditure level and its composition. It presents evidence that does not support some critics view that imf supported programs typically adopt a onesizefitsall approach to fiscal adjustment, nor the perception that programs always involve. Fiscal discipline and social spending in imfsupported programs.
This article analyzes whether and to what extent reliance on conditionality is appropriate to guarantee the revolving character of the resources of the international monetary fund imf. It has been the subject of criticism from academics and civil society representatives, especially that it imposes unnecessarily high social costs. Adjustment episodes launched in countries where governments enjoy a parliamentary majority and do not face imminent elections, are found to be more successful. Imf supported programs are intended to address specific economic problems such as fostering macroeconomic stability and orderly external adjustment, promoting growth and poverty reduction, and. Fiscal adjustment in imfsupported programs typically includes an agenda of fiscal reforms, and in this chapter we focus on the experience with such reforms on. It finds that, while the overall fiscal balance improved in most of them, the composition of this improvement differed. Relevant considerations in determining the fiscal stance. Fiscal discipline and social spending in imfsupported programs, public economics 0504012, university library of munich, germany. Do imfsupported programs help make fiscal adjustments.
This issue is investigated empirically later in the paper. Fiscal consolidations undertaken under imf supported programs also have a higher probability of success. Fiscal adjustment in imfsupported programs imf elibrary. It summarizes the track record of program implementation and discusses the evidence of factors. Military spending, the peace dividend, and fiscal adjustment. Previous version published and the first background paper of the independent evaluation office of the international monetary fund. Evaluation of fiscal adjustment in imfsupported programs.
Imf fiscal adjustment requirements were introduced. We did not find evidence of a statistically significant impact of imf conditionality. It presents evidence that does not support some critics view that imf supported programs typically adopt a onesizefitsall approach to fiscal adjustment, nor the perception that programs always. Pdf the design of imfsupported programs researchgate. We ask how domestic political considerations shape the distribution of cuts made by governments in imf programs. What is the impact of imfsupported programs on fiscal adjustment. Imf supported programs should be primarily directed to solving the members bop problems and achieving medium term external viability while fostering sustainable economic growth. The decline is even larger in the euro areaabout 3 percentage points of gdp. Do imfsupported programs help make fiscal adjustment more durable. Independent evaluation office disponible en rakuten kobo. This paper analyzes the impact of imf supported programs on health and education spending in a large timeseries crosssection sample of countries.
It finds that the easing of international and regional tensions and the existence of imf supported adjustment programs are systematically related to lower military spending and a higher share of nonmilitary. Fiscal adjustment in imf supported programs washington, d. The independent evaluation office ieo was established by the imfs executive board in 2001. Lee fiscal adjustment in imf supported programs por international monetary fund. Fiscal discipline and social spending in imfsupported. Fiscal adjustment can also support current account adjustment through its effect on. As indicated in a 20 board paper, imf supported programs should therefore help maintain and. Fiscal policy often forms a key element of imfsupported programs in order to underpin stabilization efforts and to foster orderly external adjustment.
Fiscal adjustment in imfsupported programs ieo reportadvance. Evaluation report fiscal adjustment in imfsupported programs. Using a crosscountry sample of 169 imf supported programs and detailed studies of 15 programs, this evaluation report e. Fiscal consolidations undertaken under imf supported programs also have a higher. Fiscal adjustment in imfsupported programs the independent evaluation office ieo was established by the imf s executive board in 2001. The paper presents theoretical arguments in favor of conditionality, and those against the use of conditions. Fiscal adjustment is a key component of imf supported programs. The imf s attention to growth in the program context has increased over time and has received different emphasis under different facilities. Imf supported programs in indonesia, korea, and thailand. A central component of international monetary fund imf programs is reducing government budget deficits.
Using a crosscountry sample of 169 imfsupported programs and detailed studies of 15 programs, this evaluation report examines various aspects of fiscal. Fiscal adjustment in imfsupported programs ebook by. A survey of the impacts of imf structural adjustment in africa. The extended fund facility eff was created in 1974 to provide a longer program period for countries experiencing serious balance of. Using an arima model to model time dynamics and instrumental variables to correct for the wellknown endogeneity of imf supported programs, the paper finds, contrary to the conventional wisdom, that health and education do not.
This paper decomposes the sources of the peace dividend into global, regional, and countryspecific factors, and analyzes their relative importance. Using a crosscountry sample of 169 imf supported programs and detailed studies of 15 programs, this evaluation report examines various aspects of fiscal adjustment in imf supported programs. Fiscal adjustment for stability and growth, imf phamphlet 55, by. Fiscal adjustment in imf supported programs issues paper for an evaluation by the independent evaluation office ieo i. Pdf imfsupported programs in indonesia, korea, and.
Read fiscal adjustment in imfsupported programs by international monetary fund. The reader gets a sense of the interaction between imf staff and the government of the country in adjusting fiscal adjustment programs to events both foreseen and unforeseen at the time of the initial program. Independent evaluation office available from rakuten kobo. It provides objective and independent evaluation of issues related to the imf. Imf admits notable failures in bailout programs deepened. The reduced form model equations 9 and 10 are specified in loglinear form as follows. However, in countries with programs that included structural conditions the adjustment was effected primarily through sharp expenditure compression. In imf supported programs, the broadening of the focus to distributional issues was reflected in the creation of the poverty reduction and growth facility in 1999 replacing the extended structural adjustment facility, with the objectives of poverty reduction and growth figuring prominently in its lending operations for lowincome economies. Independent evaluation office ieo of the imf fiscal. It finds that the easing of international and regional tensions and the existence of imf supported adjustment programs are systematically related to lower military spending and a higher share of nonmilitary spending in total government outlays. A survey of the impacts of imf structural adjustment in.
Morever, fiscal improvements are strongly influenced by cyclical factors. Prepared by a team headed by marcelo selowsky and including ali mansoor and otherspage 3. Do imfsupported programs help make fiscal adjustment more. The purpose of this paper is to describe the analytical framework underlying the design of adjustment programs, which is supported by the international monetary fund imf. Fiscal adjustment in imfsupported programs international. Social spending in imf supported programs, public economics 0504011, university library of munich, germany. Fiscal adjustment in imfsupported programs, issues paper. Fiscal adjustment in countries with structural conditionality relative to countries.
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