^*At the time this paper was prepared, Atish Ghosh was division chief, and Juan Zalduendo a deputy division chief, of the Policy Review Division of the IMF's Policy Development and Review Department. Manuela Goretti and Bikas Joshi were economists, and Alun Thomas a senior economist, with the Policy Review Division. The authors would like to thank Mark Allen, Jorge Márquez-Ruarte, Russell Kincaid, Jonathan Ostry, Gary Schinasi, Jim Boughton, Andy Berg, and other IMF colleagues for useful suggestions during the preparation of this paper, and Sibabrata Das for research assistance. Comments and suggestions from an anonymous referee are also deeply appreciated. The literature survey (Appendix II) is an abbreviated version of a survey prepared by Patricia Brukoff, Julie Kozack, Alex Pitt, and Björn Rother.

Abstract

This paper presents two approaches to modeling the use of IMF resources from the General Resources Account in order to gauge whether the recent decline in credit outstanding is a temporary or a permanent phenomenon. The two approaches—the time-series behavior of credit outstanding and a two-stage program selection and access model—yield the same conclusion: the use of IMF resources is likely to decline sharply. Specifically, credit outstanding is projected to decline from an average of SDR 50 billion over 2000–05 to an average of about SDR 8 billion over 2006–10. Stochastic simulations suggest that it is unlikely to be much higher. These results are based on the IMF's World Economic Outlook projections with a correction for historically observed overoptimistic biases. In addition, alternative scenarios assuming weaker economic performance or a less benign global economic environment do not materially alter these results.