A Constrained Choice? Impact of Concessionality Requirements on Borrowing Behavior
42 Pages Posted: 22 Oct 2014
Date Written: September 2014
This paper uses the propensity matching score approach to assess the impact of the IMF's debt limits policy (DLP) on borrowing behavior in countries eligible to borrow from its concessional lending window. The paper finds that countries under the DLP borrow significantly higher amounts of concessional resources. However, there is no evidence that the DLP significantly impacts the level of non-concessional borrowing nor the terms of such borrowing. This result is confirmed by the heterogeneity analysis, suggesting that the level of development, rather than concessionality requirements, is the key driver of non-concessional borrowing.
Keywords: Concessional aid, Conditionality, Low-income developing countries, External borrowing, External debt limits, Concessionality, debt limits policy, IMF programs, propensity score matching., public debt, private creditors, debt relief, concessional debt, current account deficit, fiscal deficit, debt sustainability, multilateral debt relief, foreign aid, bilateral creditors, debt relief initiative, debt crises, public and publicly guaranteed, sovereign debt crises, debt burdens, capacity constraints, debt reporting, bilateral debt, debt overhang, bilateral loans, debt restructuring, country circumstances, crisis country, debt sustainability analysis, bond restructuring, debt data, ppg, debt prob
JEL Classification: F33, F34, F35, F53, O10
Suggested Citation: Suggested Citation