2. Empirical studies on the determinants of Fund
arrangements and on external debt repayment
performance
2.1. Fund arrangements
The existing empirical literature about IMF programmes has mainly focused, so
far, on the macroeconomic impact ofsuch programmes (see, for example, the brief
survey in Killick, 1995). However, a recent stream of research has also tried to
specify and estimateamodel including the factors which lead developing countries
to borrow from the IMF in the ...rst place. There is a demand for participation by
the developing country and there is as well a process of evaluation by the IMF to
determine ifa lending programme is accepted. The resulting negotiation gives the
equilibrium outcome. Actually, the Fund’s main target is to enable its members
to overcome their balance of payment problems and, in order to gain access to
any Fund resources at all, a member has to be able to demonstrate a balance of
payment need.
Table 1 below reports a summary of the studies which tried to model the
adoption of a Fund programme by developing countries. Some of them estimated
the size of loans under Fund arrangement (for eg., Bird and Orme, 1981; Bird,
1995), whi le some others estimated countries’ adoption of a Fund programme
using binary-choice models (for eg., Joyce, 1992; Knight and Santaella, 1997).
One early study (Bird and Orme, 1981) uses OLS regression to .nd a sta-
tistical relationship between drawings on the Fund and key country economic
characteristics, including the bal ance of payments, the debt service ratio, the rate
of in≠ation, per capita GNP, the level of reserves, the value of imports and the
access to private capital markets (in particular the Eurocurrency market).