We empirically check whether IMF financial support (granted vis-à-vis balance of payments needs or to avoid them, in the event of precautionary programmes) induces higher borrowing costs for emerging market countries. This effect, usually referred to as 'stigma' and linked to the evaluations of international financial markets, is often used to explain the reluctance of many countries to resort to the IMF.
Countries that receive balance of payments support from the IMF face on average higher borrowing costs than countries in a similar situation but without IMF support. This effect tends to dissipate towards the end of the programmes and is less evident for successful programmes. On the other hand, we find that countries with precautionary programmes have lower borrowing costs in comparison with similar countries.
