Do Financial Markets Value Quality of Fiscal Governance?

Author/Editor:

Kady Keita ; Gene L. Leon ; Frederico Lima

Publication Date:

October 11, 2019

Electronic Access:

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Disclaimer: IMF Working Papers describe research in progress by the author(s) and are published to elicit comments and to encourage debate. The views expressed in IMF Working Papers are those of the author(s) and do not necessarily represent the views of the IMF, its Executive Board, or IMF management.

Summary:

We examine the link between the quality of fiscal governance and access to market-based external finance. Stronger fiscal governance is associated with improvements in several indicators of market access, including a higher likelihood of issuing sovereign bonds and having a sovereign credit rating, receiving stronger ratings, and obtaining lower spreads. Using the more granular information on quality of fiscal governance from Public Expenditure and Financial Accountability (PEFA) assessments for 89 emerging and developing economies, we find that similar indicators of market access are correlated with sound public financial management practices, especially those that improve budget transparency and reporting, debt management, and fiscal strategy.

Series:

Working Paper No. 19/218

Subject:

English

Publication Date:

October 11, 2019

ISBN/ISSN:

9781513516127/1018-5941

Stock No:

WPIEA2019218

Price:

$18.00 (Academic Rate:$18.00)

Format:

Paper

Pages:

29

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