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IMF-Supported Programmes: Stimulating Capital to Non-defaulting Countries


  • We are grateful to Martin Admiraal and Henk van Kerkhoff for collecting the data and to Marco Hoeberichts for excellent research advice. We thank Marloes Foudraine, Poonam Gupta, Pierre Lafourcade, Ashoka Mody, Marc Roovers, seminar participants at the 2010 EEA Annual Congress and De Nederlandsche Bank, and an anonymous referee for useful comments and discussions. The views expressed in this paper are those of the authors and do not necessarily represent those of the institutions with which they are affiliated.


International Monetary Fund (IMF)-supported programmes catalyse private capital to non-defaulting countries. We find the IMF to be effective in stimulating private capital flows to middle-income countries that participate in a Fund programme, but do not restructure their debt. IMF-supported programmes help non-defaulting countries to signal their willingness to reform and repay debts, thereby catalysing private capital. This signalling role appears to be more important for Fund catalysis, than the size of IMF lending.