Modeling Aggregate Use of Fund Resources - Analytical Approaches and Medium-Term Projections

Abstract

This paper presents two approaches to modeling the use of IMF resources in order to gauge whether the recent decline in credit outstanding is a temporary or a permanent phenomenon. The two approaches - the time series behavior of credit outstanding and a two-stage program selection and access model - yield the same conclusion: the use of IMF resources is likely to decline sharply. Specifically, credit outstanding is projected to decline from an average of SDR 50 billion over 2000-05 to SDR 8 billion over 2006-10. Stochastic simulations suggest that it is unlikely to be much higher. These results are based on WEO projections with a correction for historically-observed over-optimistic biases. Alternative scenarios assuming a weaker economic performance or a less benign global environment do not alter these results.

Keywords: Stand-by arrangements, prediction, IMF lending capacity, IMF income position

JEL Classification: F01, F33, F34, F42