Fiscal Sustainability in Remittance-Dependent Economies

Author/Editor: Abdih, Yasser ; Chami, Ralph ; Gapen, Michael T. ; Mati, Amine
Publication Date: September 01, 2009
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Disclaimer: This Working Paper should not be reported as representing the views of the IMF. The views expressed in this Working Paper are those of the author(s) and do not necessarily represent those of the IMF or IMF policy. Working Papers describe research in progress by the author(s) and are published to elicit comments and to further debate
Summary: We investigate the impact of remittances on public debt sustainability and detail how the traditional debt-to-GDP ratio can be modified to create a more accurate representation of debt sustainability for a country that receives significant remittance inflows. The main result is that inclusion of remittances into the traditional debt sustainability analysis alters the amount of fiscal adjustment required to place debt on a sustainable path. While preliminary, these results are indicative of how a one-size-fits-all stability analysis may be inappropriate when evaluating the stance of fiscal policy for countries with different balance of payments characteristics.
Series: Working Paper No. 09/190
Subject(s): Capital inflows | Debt burden | Debt sustainability | Demand for money | Developing countries | Economic models | Fiscal management | Fiscal sustainability | Gross domestic product | Lebanon | Private savings | Public debt | Workers remittances

Author's Keyword(s): Remittances | fiscal sustainability | remittance-dependent economies
Publication Date: September 01, 2009
Format: Paper
Stock No: WPIEA2009190 Pages: 25
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