Fiscal Issues in Adjustment: An Introduction

Riccardo Faini and Jaime Melo
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Jaime Melo: Centre for Economic Policy Research

A chapter in Fiscal Issues in Adjustment in Developing Countries, 1993, pp 1-19 from Palgrave Macmillan

Abstract: Abstract Rising international interest rates, falling terms of trade, and the foreclosing of commercial credit, forced the majority of developing countries to pursue drastic adjustment policies. In spite of differences in initial conditions and in ideological predilections, common adjustment patterns were observed across many countries. Initially the focus was on short-run stabilization, in particular on restoring a viable balance of payments and on servicing the external debt. Soon it became apparent that short-run measures alone would be insufficient to restore sustainable long-run growth. Short-run measures were thus complemented by structural reforms aimed at increasing the efficiency of resource use. Yet, for many observers, the success of adjustment has been limited to containing the debt crisis. Growth has only resumed in a handful of countries. Severe macroeconomic imbalances subsist in the remainder.

Keywords: Fiscal Policy; Real Interest Rate; External Debt; Fiscal Deficit; Fiscal Revenue (search for similar items in EconPapers)
Date: 1993
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Working Paper: Fiscal issues in adjustment: an introduction (1991)
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DOI: 10.1007/978-1-349-22790-7_1

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