IMF conditionalities, liquidity provision, and incentives for fiscal adjustment

  title={IMF conditionalities, liquidity provision, and incentives for fiscal adjustment},
  author={Bernardo Guimaraes and Oz Solon Chovghi Iazdi},
  journal={International Tax and Public Finance},
This paper proposes a model to study how conditional lending and immediate liquidity provision affect incentives for fiscal adjustment in a country facing the risk of sovereign default. Conditional lending provides explicit incentives for fiscal adjustment but immediate liquidity provision is more effective in reducing liquidation costs. For some parameters, immediate liquidity provision induces fiscal adjustment and debt repayment, while conditional lending does not (and vice-versa… 
2 Citations

The determinants of IMF fiscal conditionality: Economics or politics?

Conditionalites, measures that a borrowing country should adopt to obtain loans from the International Monetary Fund (IMF), are pervasive in IMF programs. This paper estimates the effects of

Recent Reforms of RBI towards NPA Management in Corporate Banking – An Empirical Study

This paper attempts to identify the determinants of NPAs across Indian Financial Sector prior to their turning into bad loans. Most academicians have examined NPA determinants, and these determinants



Fiscal Policy and Default Risk in Emerging Markets

Emerging market economies typically exhibit a procyclical fiscal policy: public expenditures rise (fall) in economic expansions (recessions), whereas tax rates rise (fall) in bad (good) times.

The Economics and Law of Sovereign Debt and Default

This paper surveys the recent literature on sovereign debt and relates it to the evolution of the legal principles underlying the sovereign debt market and the experience of the most recent debt

Capital Flows and Capital-Market Crises: The Simple Economics of Sudden Stops

The paper studies mechanisms through which a sudden stop in international credit flows may bring about financial and balance of payments crises. It is shown that these crises can occur even though

One Reason Countries Pay Their Debts: Renegotiation and International Trade

This paper estimates the effect of sovereign debt renegotiation on international trade. Sovereign default may be associated with a subsequent decline in international trade either because creditors

What Did Structural Adjustment Adjust? The Association of Policies and Growth with Repeated IMF and World Bank Adjustment Loans

One feature of adjustment loans that has been often overlooked in their evaluation is their frequent repetition to the same country, with such extremes as the 30 IMF and World Bank adjustment loans