Many Happy Returns? Recidivism and the IMF

IMF programs are designed to provide a temporary source of finance for countries with balance of payments disequilibria. Consequently, borrowing from the IMF should occur infrequently and be widely distributed among member countries. However, some countries are recurrent users of Fund resources. This paper investigates which variables account for multiple borrowings from the IMF. We use models of count data to examine the impact of the need for financing, domestic policies, external shocks, and structural and institutional factors on borrowings between 1980 and 1996. We find that recidivist borrowers have lower reserve holdings, larger current account deficits and capital outflows, lower but less volatile terms of trade, larger debt service and external debt ratios, lower investment rates and per-capita income, and weak governance