Credibility and financing problems are important reasons why countries may seek to involve external institutions in the design and implementation of stabilization programs. In particular, governments may rely on external institutions to "enforce" programs that would otherwise lack credibility....

This paper analyzes the initial economic conditions before IMF financial arrangements are adopted. Evidence from 104 IMF arrangements in 74 developing countries during 1973-91 indicates that there are important differences between the characteristics of countries about to undergo a program and...