Reconsidering External Financing of Domestic Budget Deficits : Debunking Some Received Wisdom

Author/Editor:

David Woo ; Simon T Gray

Publication Date:

July 1, 2000

Electronic Access:

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Disclaimer: This Policy Dicussion 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:

The past decade has witnessed a steady increase in outstanding external sovereign debt issued by emerging market economies. This paper examines some of the “received wisdom” regarding the benefits of external financing of domestic budget deficits and argues that it is often predicated on a narrow set of assumptions and incomplete evaluation of the underlying costs. The paper also suggests alternative sources of financing that can help capture some of the benefits associated with foreign financing without all of its costs.

Series:

Policy Discussion Paper No. 00/8

Subject:

English

Publication Date:

July 1, 2000

ISBN/ISSN:

9781451970951/1934-7456

Stock No:

PPIEA0082000

Format:

Paper

Pages:

24

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