Public sector debt, fiscal deficits, and economic adjustment: a comparative study of six EMENA countries

Alfredo E. Thorne and Azita Dastgheib

No 840, Policy Research Working Paper Series from The World Bank

Abstract: The authors analyzed the experience of six countries (Algeria, Morocco, Pakistan, Portugal, Turkey, and Yugoslavia) and compared it with the experiences of Latin American countries. They conclude that some countries successfully absorbed the external shock of the 1980s by: (a) minimizing the effects of the external shock by combining external and domestic debt strategies; (b) adjusting their fiscal deficits; (c) experiencing a positive external shock; and (d) fostering growth by stimulating export growth and developing domestic financial markets. No single country fully implemented this strategy; those most successful in doing so were Morocco, Portugal, and Turkey. Their experience contrasts with that of some Latin American countries that experienced a similar external shock but failed to undertake fiscal adjustment and financed most of their deficit through money finance - thus experiencing high inflation levels and overburdening their private sector. In some respects, Yugoslavia had the same experience.

Keywords: Environmental Economics&Policies; Economic Theory&Research; Strategic Debt Management; Economic Stabilization; Public Sector Economics&Finance (search for similar items in EconPapers)
Date: 1992-01-31
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