1. Since UFR policies have been designed at least
to contain, if not entirely avoid, prolonged use, the
pervasiveness of the phenomenon raises questions
about the effectiveness of IMF-supported programs
in prolonged user countries. This chapter examines
this issue at two levels. We first examine available
evidence from cross sections of countries to see
whether there are any differences in program design
or implementation between prolonged and “tempo-
rary” users and what can be learned about the impact
of IMF-supported programs on growth and adjust-
ment in a prolonged use context.1 Next we focus on
lessons that can be drawn from our case studies
(Pakistan, the Philippines, Senegal, Morocco, and
Jamaica) and from responses to IEO questionnaires
sent to authorities in prolonged user countries and to
IMF staff.2 Some of the issues that have surfaced
from our investigation, especially from the case
studies, are of general relevance for program effec-
tiveness and not exclusive to prolonged users.
Results from Cross-Sectional Evidence
Cross-country evidence on the effects of
prolonged use
2. The empirical literature on the effects of IMF-
supported programs (see Haque and Khan, 1998) has
produced widely varying results depending upon the
time period covered and the methodology for estima-
tion. The more recent studies using the so-called
general evaluation estimator all suggest that pro-
grams contribute to improvements in the current
account balance and the overall balance of payments,
but the evidence with respect to the impact on growth
is mixed.3 Goldstein and Monteil (1986) and Khan
(1990) found negative effects on growth. Conway
(1994) finds that initial negative effects on growth are
offset by subsequent positive growth rates. However,
Przeworski and Vreeland (2000), using a broadly
similar approach, find significantly negative and per-
sistent effects on growth. A recent study, Barro and
Lee (2002), which used a different (instrumental
variable) approach to take account of the endogeneity
problem, conclude