Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/329107 
Year of Publication: 
2024
Citation: 
[Journal:] Economies [ISSN:] 2227-7099 [Volume:] 12 [Issue:] 7 [Article No.:] 181 [Year:] 2024 [Pages:] 1-36
Publisher: 
MDPI, Basel
Abstract: 
According to the IMF, the current public debt makes up nearly 40 percent of the global debt, marking the highest share since the mid-1960s. Despite the vast research on alarming levels of sovereign default, the literature remains inconclusive. This paper investigates macroeconomic, financial, and political determinants of IMF credit use in the post-2010 era. The main contribution of our study lies in its temporal analysis as we investigate how the robustness of different factors has evolved. By utilizing an extensive dataset on 216 countries over the period of 2010-2021 and employing a variant of the Extreme Bounds Analysis (EBA) method, our study reveals that fluctuations in the IMF credit to external debt ratio can be attributed to changes in the total reserves to external debt ratio, where this relationship is statistically significant and reliable. However, high political risks seem to no longer affect the IMF's decision, post 2010. Furthermore, our findings demonstrate that excluding countries with low debt arrears strengthens the results' robustness. These findings contribute to a better understanding of the complexities surrounding IMF credit use in the contemporary global economic scene and offer new standpoints on the Fund's lending choices.
Subjects: 
extreme bound analysis
IMF
panel
sovereign debt default
JEL: 
F34
H63
Persistent Identifier of the first edition: 
Creative Commons License: 
cc-by Logo
Document Type: 
Article

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