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Therefore, the empirical analysis focuses on the traditional conditionality issues associated with Fund-supported stabilisation programmes and uses the above-mentioned variables that are deduced from the MBOP. (6)
This section examines whether variables that are derived from the MBOP discriminate between programme and nonprogramme countries.
As the MBOP suggests, under the pegged exchange rate regime and in the presence of expansionary fiscal and monetary policies, if the exchange rate is allowed to appreciate, this particular policy combination will eventually lead to balance of payments problems.
Even though the Fund's approach to balance of payments problems has been consistent with the predictions of the MBOP, the Fund's conditionality has not been implemented with vigour, which may rest on the nature of the interaction between the IMF and programme countries.
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