This paper investigates the impact of IMF programs on private capital flows in the assisted countries, taking into account the main characteristics of the programs and distinguishing between domestic and foreign investors. In order to assess the impact of IMF programs we compare capital movements from and to the assisted countries against those of a synthetic counterfactual obtained from other countries having similar characteristics.
The study shows that the impact varies across IMF program types. Exceptional access programs and those featuring a low level of compliance with IMF conditionality bring about a reduction in foreign investments. By contrast, precautionary programs, which allow assisted countries to draw on IMF resources in case of an actual crisis, encourage domestic investors to repatriate part of their assets held abroad, while the effect on foreign investments is muted.