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Stabex versus IMF compensatory financing: impact on fiscal policy

  • Jean-Francois Brun

    (Ma�tre de Conférences, CERDI and University Blaise Pascal, Clermont-Ferrand, France)

  • Gérard Chambas

    (Chargé de recherches CNRS, CERDI, University of Auvergne, Clermont-Ferrand, France)

  • Bertrand Laporte

    (Ma�tre de Conférences, CERDI, University of Auvergne, Clermont-Ferrand, France)

The supply of external financing to developing countries generally tends to increase in periods when export earnings are booming and thus, in periods of increasing government revenues. Conversely, Stabex and IMF Compensatory Financing transfers are primarily designed to take place in response to a fall in export earnings, and thus, in periods when government revenues are decreasing. However, these transfers occur in an unsteady way with respect to the cycle of government revenues. When occurring in periods of decreasing government revenues, only Stabex transfers are used to finance additional primary expenditures (i.e. expenditures other than interest on public debt). This effect contrasts with the effects usually reported for other instruments of external financing. In periods of increasing government revenues, Stabex and Compensatory Financing transfers have no impact on fiscal deficit. Copyright © 2001 John Wiley & Sons, Ltd.

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Article provided by John Wiley & Sons, Ltd. in its journal Journal of International Development.

Volume (Year): 13 (2001)
Issue (Month): 5 ()
Pages: 571-581

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Handle: RePEc:wly:jintdv:v:13:y:2001:i:5:p:571-581
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