Implicit Transfers in IMF Lending, 1973-2003

Abstract

We compute realized transfers implicit in IMF lending from 1973-2003, based on 2003 IMF repayment projections and promised debt relief. IMF lending rates to high-and middleincome countries fell short of industrial country borrowing rates by 30-150 basis points over the period as a whole, but exhibited a small premium after 1987. The subsidy received by low-income and HIPC countries was much higher (400-600 basis points, respectively). In 2002 NPV terms, cumulative transfers were 12-15 percent of 2002 GDP for the HIPCs, 2-3 percent for low income countries, and less than ¾ percent for the emerging market countries.International Monetary Fund;Moral hazard;HIPC Initiative;Subsidies;Heavily indebted poor countries;debt, debt relief, interest, repayment, loans, bond, present value, bonds, net present value, discounting, bond rate, cash flows, yield curve, government bond, debts, payments, default risk, creditor, credit risk, interest rate risk, obligations, creditor countries, government bonds, multilateral debt, internal rate of return, bond rates, creditors, net cash flows, money market, overdue obligations, borrowing costs, discount rate, bond markets, debt forgiveness, debt reduction, bond yields, sovereign bonds, taxpayers, money market interest rates, interest charges, money market interest, debtors, denominated bond, global ? bond index, financial system, term bond, private debt, long term loans, money market rate, debt sustainability, international financial system, bailouts, bond index, debtor countries, medium term bonds, bond yield, rate bonds, yield curves, global ? bond, money market rates, international reserves, risk premium, international financial architecture, short interest, term bonds, debt problems, debt outstanding, currency crises, medium term bond, financial safety net, overdue charges, debt flows