Adoption of an IMF Programme and
Debt Rescheduling. An empirical
analysis
Silvia Marchesiα
Department of Economics
University of Warwick
January 11, 2001
Abstract
The existence of an empirical relationship between the adoption of an
IMF programme and the concession of a debt rescheduling by commer-
cial creditors is tested using a bivariate probit model. If countries who
have arrangements with the IMF are more likely than others to obtain a
reschedu ling of their external debt we could conclude that the adoption of
an IMF programme could work as a sort of signal of a country’s “good will-
ingness”, which is thus rewarded with the debt relief. The results con...rm
the existence of a signi...cant eɑeet of the adoption of an IMF programme
on the subsequent concession of a debt rescheduling by creditors.
JELclassi^cation: F34, C35
Keywords: IMF Conditionality, Debt Rescheduling, Bivariate probit.
π I am grateful to Wiji Arulampalam and Lorenzo Cappellari for very helpful comments
throughout all this work. I would also like to thank Giovanni Ferri, Eric Le Borgn e, Gre-
gorio Impavido, Emanuela M arrocu, Marcus Miller, Luca Papi, Annamaria Pinna, Jonathan
P. Thomas, Ken Wallis, John Whalley and participants at 1999 ESEM and EEA con fer-
ences in Santiago de Compostela and at seminars in Ancona, London, Warwick and Pisa.
All errors and omissions remain my own. F inancial help from the European Commission,
TM R M arie Curie Fellowship ERB4001 GT 973677, is gratefully acknowledged. Correspon-
dence: Department of Economics, University of Warwick, Coventry CV4 7AL, England. E-mail:
[email protected]