THE IMPACT OF IMF BILATERAL SURVEILLANCE ON ALLOCATION OF BILATERAL AID

Abstract

This research project aims to identify the impact of IMF bilateral surveillance program on the allocation of foreign aid. In particular, the study focuses on the Staff-Managed Program, one type of IMF bilateral surveillance. This study implies the way low-income countries could use the leverage of IMF Staff experts to create and send “signals” to an international community. Signals are based on two main factors: the recipient's commitment to policy adjustments and creditworthiness. The recipient sends credible signals of lack of external assistance to the donor community through the release of IMF assessment, which leads to the overall increase of the aid to the state.