Time Present and Time Past: A Duration Analysis of IMF Program Spells

Abstract

The programs of the International Monetary Fund were originally designed to provide short-term assistance to countries implementing policies to address balance of payments disequilibria. In recent decades, however, the Fund has instituted new facilities with longer time horizons, while many developing countries have adopted consecutive programs. As a result, the length of time spent by countries in IMF programs has grown. This paper analyzes the IMF program spells for a group of emerging economies over the period of 1982 to 2000. Duration models are used to investigate the time dependence of the failure rate of the spells and the factors that affect the duration of program spells. The hazard ratio of program spells has a non-monotonic shape, first rising and then falling over time. A spell's duration is independent of a previous spell length or the number of previous spells. Program duration is extended for those countries with lower percapita income, exports concentrated in primary goods, landlocked geographic status and autocratic regimes. Governments that are ideologically divided have shorter spells, which may reflect a breakdown in governance.

Keywords: IMF programs

JEL Classification: F33, O19