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Public debt sustainability

Author

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  • Martner Fanta, Ricardo
  • Tromben, Varinia

Abstract

Although in Latin America public debt-to-GDP ratios continue to be generally lower than in other emerging countries, it has nevertheless not been possible to avoid liquidity problems, which some authors attribute to the low level and high volatility of public revenue, the weakness of domestic financial systems, and the mediocre quality of fiscal institutions. This article also emphasizes some exogenous factors, however. The combination of low economic growth rates and devaluations in a context of dollarized liabilities has given rise to a huge "snowball effect", which is what has come to be called "original sin": the impossibility for an emerging country of borrowing abroad in its own currency. Although the effort to control the dynamics of the public debt will continue to be mainly at the internal level, the medium-term sustainability of that debt will depend on actions by international financial institutions aimed at improving the public debt conditions of emerging countries. /

Suggested Citation

  • Martner Fanta, Ricardo & Tromben, Varinia, 2004. "Public debt sustainability," Revista CEPAL, Naciones Unidas Comisión Económica para América Latina y el Caribe (CEPAL), December.
  • Handle: RePEc:ecr:col070:11049
    Note: Includes bibliography
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    File URL: http://repositorio.cepal.org/handle/11362/11049
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    References listed on IDEAS

    as
    1. Guillermo A. Calvo & Carmen M. Reinhart, 2002. "Fear of Floating," The Quarterly Journal of Economics, Oxford University Press, vol. 117(2), pages 379-408.
    2. Alejandro Izquierdo & Ernesto Talvi & Guillermo A. Calvo, 2002. "Sudden Stops, the Real Exchange Rate and Fiscal Sustainability: Argentina's Lessons," Research Department Publications 4299, Inter-American Development Bank, Research Department.
    3. Alejandro Izquierdo & Ernesto Talvi & Guillermo A. Calvo, 2002. "Sudden Stops, the Real Exchange Rate and Fiscal Sustainability: Argentina's Lessons," Research Department Publications 4299, Inter-American Development Bank, Research Department.
    4. Axel Schimmelpfennig & Nouriel Roubini & Paolo Manasse, 2003. "Predicting Sovereign Debt Crises," IMF Working Papers 03/221, International Monetary Fund.
    5. Alejandro Izquierdo, 2002. "Sudden Stops, the Real Exchange Rate and Fiscal Sustainability in Argentina," The World Economy, Wiley Blackwell, vol. 25(7), pages 903-923, July.
    Full references (including those not matched with items on IDEAS)

    Citations

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    Cited by:

    1. Dany Jaimovich & Ugo Panizza, 2010. "Public debt around the world: a new data set of central government debt," Applied Economics Letters, Taylor & Francis Journals, vol. 17(1), pages 19-24, January.
    2. Dany Jaimovich & Ugo Panizza, 2006. "La deuda pública en el mundo," Research Department Publications 4462, Inter-American Development Bank, Research Department.

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