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Mr. Christian Mumssen, Yasemin Bal Gunduz, Mr. Christian H Ebeke, and Ms. Linda Kaltani
This paper studies the short and longer-term impact of IMF engagement in Low-Income Countries (LICs) over nearly three decades. In contrast to earlier studies, we focus on a sample composed exclusively of LICs and disentangle the different effects of IMF longer-term engagement and short-term financing using a propensity score matching approach to control for selection bias. Our results indicate that longer-term IMF support (at least five years of program engagement per decade) helped LICs sustain economic growth and boost resilience by building fiscal buffers. Interestingly, the size of IMF financing has no significant impact on economic growth, possibly pointing to the prominent role of IMF policy advice and institutional capacity building in the context of longer-term engagement. We also present evidence that the short-term IMF engagement through augmentations of existing programs or short-term and emergency facilities is positively associated with a wide range of macroeconomic outcomes. Notably, the IMF financial support has the greatest impact on short-term growth when LICs are faced with substantial macroeconomic imbalances or exogenous shocks.
Yasemin Bal Gunduz, Mr. Christian H Ebeke, Ms. Burcu Hacibedel, Ms. Linda Kaltani, Ms. Vera V Kehayova, Mr. Chris Lane, Mr. Christian Mumssen, Miss Nkunde Mwase, and Mr. Joseph Thornton

in countries where development needs are vast. Furthermore, oftentimes LICs requesting IMF financial support face protracted balance of payments needs and the necessity to undertake major structural reforms, so the role of IMF-supported programs may not necessarily be to boost reserves. This is also suggested by the first-stage regression, which links long-term Fund engagement with initial levels of reserves. As for aid and debt, it is quite plausible that the effect of IMF engagement is weakened when measured as an average over the decade but may be nevertheless

Mr. Christian Mumssen, Yasemin Bal Gunduz, Mr. Christian H Ebeke, and Ms. Linda Kaltani

development needs are vast. Furthermore, oftentimes LICs requesting IMF financial support face protracted balance of payments needs and the necessity to undertake major structural reforms, so the role of Fund programs may not necessarily be to boost reserves. This is also suggested by the first-stage regression, which links long-term Fund engagement with initial levels of reserves. As for aid and debt, it is quite plausible that the effect of IMF engagement is weakened when measured as an average over the decade but may be nevertheless significant at the start of an IMF