How Does the Global Economic Environment Influence the Demand for IMF Resources

The main objective of this paper is to quantify the relationship between the global economic environment and the number of Stand-By Arrangements (SBAs). The results suggest that oil prices, world interest rates, and the global business cycle are the most influential indicators that affect the number of SBAs being requested. In addition, the empirical model seems to have reasonable accuracy when predicting SBAs. Furthermore, when oil prices, interest rates, and the global business cycle are adversely shocked by one standard deviation, the conditional probability of a SBA nearly doubles, implying an increase from about six to 12 SBAs. More critically, the model suggests that even a steady deterioration of the global economic climate would imply increasingly harsher conditions for developing and emerging market countries which may in turn significantly increase the demand for IMF resources.Economic indicators;probability, current account, predictions, current account balance, credit tranches, balance of payments, statistics, credit tranche, prediction, linear trend, standard deviation, debt restructuring, independent variables, fixed effects estimator, debt service, surveys, equations, general resources account, dummy variable, sovereign debt, optimization, standard deviations, sample size, external debt, descriptive statistics, estimation procedure, debt crises, external shocks, sovereign debt crises, external debt position, reserve assets, empirical framework, repurchases, repayments, samples, imf credit outstanding, statistic, independent variable, cumulative distribution function, domestic currency, private creditors, debt relief, debt burden, external debt burden, correlation, debt problems, forecasting, current account deficits, government deficits, bilateral creditors, time series, covariance, equation, correlations, debt service obligations, debt servicing, sensitivity analysis, budget balance, debt rescheduling, international lending, logarithm, empirical model, econometrics