Review Of Facilities For Low Income Countries Supplement 1

Download or read book Review of Facilities for Low-Income Countries - Supplement 1 written by International Monetary Fund. Strategy, Policy, & Review Department and published by International Monetary Fund. This book was released on 2012-07-26 with total page 38 pages. Available in PDF, EPUB and Kindle. Book excerpt: This supplement aims to assess the economic impact of the Fund’s support through its facilities for low-income countries (LICs). It relies on two complementary econometric analyses: the first investigates the longer-term impact of Fund engagement—primarily through successive medium-term programs under the Extended Credit Facility (ECF) and its predecessors (and more recently the Policy Support Instrument (PSI))—on economic growth and a range of other indicators and socio-economic outcomes; the second focuses on the role of IMF shock-related financing—through augmentations of ECF arrangements and short-term and emergency financing instruments—on short-term macroeconomic performance. The empirical results shed some light on two channels through which different Fund facilities may have helped LICs respond to the global financial crisis—(i) by supporting a gradual buildup of macroeconomic buffers in the decades prior to the crisis and (ii) by providing liquidity support at the height of the crisis. The combination of strong pre-crisis buffers and crisis financing allowed LICs to pursue counter-cyclical policy responses that preserved spending and facilitated a rapid recovery.