How Much Adjustment Do “IMF Adjustment Programs” Actually Require? An Empirical Analysis

Countries with unsustainable balance of payments problems may turn to the International Monetary Fund. IMF programs incorporate financing and adjustment: they are often referred to as “IMF adjustment programs”. But do they actually require governments to change macroeconomic policy? We empirically investigate this question by examining the required adjustment embedded in the Quantitative Performance Criteria that determine continued access to IMF resources. Using a sample of 185 programs covering 2000-2025, we discover that many require little, if any, adjustment. Where required, adjustment is concentrated on only a few policy instruments. Our results question many common assumptions about IMF programs.