Do IMF programs catalyze donor assistance to low-income countries?

This study explores whether IMF-supported programs in low-income countries (LICs) catalyze Official Development Assistance (ODA). Based on a comprehensive set of ODA measures and using the Propensity Score Matching approach to address selection bias, we show that programs addressing policy or exogenous shocks have a significant catalytic impact on both the size and the modality of ODA. Moreover, for gross disbursements the impact is greatest when LICs are faced with substantial macroeconomic imbalances or large shocks. Results indicate a sharp difference between the responsiveness of multilateral and bilateral donors to programs. While multilateral donors significantly raise their gross and net disbursements to program countries, the aid allocation by bilateral donors, on both a gross and net basis, does not seem to be affected by programs.