Economic Growth Effects of IMF Programs

Using data for 110 countries and GMM estimations, we examine the effects of IMF programs on economic growth. In this context, we focus on the effects of program participation, program type, and the size of IMF loans on growth. Our empirical results indicate that IMF program participation and general conditionality do not have any significant growth effect. Consistent with expectations, inflation rate, government consumption, and fertility rate have negative and statistically significant effects on the growth rate. However, we obtain an interesting result when we divide IMF programs into two as concessional and non-concessional ones. Our results point out that that concessional programs do not have any significant effect, while non-concessional programs exert a negative impact on the growth rate. This finding clearly indicates the importance of making a distinction between program types. Finally, we find a positive effect of IMF credits (as a share of GDP) on economic growth.