Fiscal Sustainability in Remittance-Dependent Economies

By Ralph Chami, Yasser Abdih, Amine Mati, Michael T. Gapen

September 1, 2009

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Ralph Chami, Yasser Abdih, Amine Mati, and Michael T. Gapen Fiscal Sustainability in Remittance-Dependent Economies, (USA: International Monetary Fund, 2009) accessed September 19, 2024

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.

Subject: Debt sustainability, Fiscal consolidation, Public debt, Real interest rates, Remittances

Keywords: Debt-to-GDP, Debt-to-GDP ratio, GDP, Remittance, WP

Publication Details

Pages:

25
Volume:

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DOI:

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Issue:

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Series:

Working Paper No. 2009/190
Stock No:

WPIEA2009190
ISBN:

9781451873375
ISSN:

1018-5941

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