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Adoption of an IMF Programme and Debt Rescheduling: An Empirical Analysis

Silvia Marchesi

CSGR Working Paper No. 56/00

June 2000

 

Abstract:

 

The existence of an empirical relationship between the adoption of an IMF programme and the concession of a debt rescheduling by commercial and official creditors is tested using a bivariate probit model. If countries who have arrangements with the IMF are more likely than others to obtain a rescheduling of their external debt we could conclude that the adoption of an IMF programme could work as a sort of signal of a country's "good willingness", which is thus rewarded with the debt relief. The results confirm the existence of a significant effect of the adoption of an IMF programme on the subsequent concession of a debt rescheduling by creditors.

Keywords: IMF Conditionality, Debt Rescheduling, Bivariate Probit.

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