ABSTRACT
This chapter examines the CFF realizes its primary objective, the stabilization of export earnings, and how the economic performance of the system can be evaluated from the donor’s as well as from the individual recipient country’s point of view. The International Monetary Fund’s Compensatory Financing Facility (CFF) was established in 1963 and is the oldest of the existing compensatory financing schemes.1 It is oriented towards the stabilization of national export earnings. The disturbance has to be temporary and largely beyond the member’s control. As it is a basic idea of compensatory financing schemes to be flexible enough to react quickly to instabihty, it is consistent that credits from the CFF have a lower degree of con-ditionahty than credits from other IMF sources, for example from the stand-by facility. The instabihty measure used in the following analysis can be interpreted as an indicator of uncertainty under specific assumptions.
