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Stabex versus IMF compensatory financing: impact on fiscal policy

Author

Listed:
  • Jean-Francois Brun

    (Maître 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

    (Maître de Conférences, CERDI, University of Auvergne, Clermont-Ferrand, France)

Abstract

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.

Suggested Citation

  • Jean-Francois Brun & Gérard Chambas & Bertrand Laporte, 2001. "Stabex versus IMF compensatory financing: impact on fiscal policy," Journal of International Development, John Wiley & Sons, Ltd., vol. 13(5), pages 571-581.
  • Handle: RePEc:wly:jintdv:v:13:y:2001:i:5:p:571-581
    DOI: 10.1002/jid.779
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    References listed on IDEAS

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    1. Guillaumont, Patrick & Jeanneney, Sylviane Guillaumont & Brun, Jean-Francois, 1999. "How Instability Lowers African Growth," Journal of African Economies, Centre for the Study of African Economies (CSAE), vol. 8(1), pages 87-107, March.
    2. Tanzi, Vito, 1986. "Fiscal Policy Responses to Exogenous Shocks in Developing Countries," American Economic Review, American Economic Association, vol. 76(2), pages 88-91, May.
    3. A. Bhargava & L. Franzini & W. Narendranathan, 2006. "Serial Correlation and the Fixed Effects Model," World Scientific Book Chapters,in: Econometrics, Statistics And Computational Approaches In Food And Health Sciences, chapter 4, pages 61-77 World Scientific Publishing Co. Pte. Ltd..
    4. Alberto Alesina & Roberto Perotti, 1994. "The Political Economy of Budget Deficits," NBER Working Papers 4637, National Bureau of Economic Research, Inc.
    5. Schuknecht, Ludger, 2000. "Fiscal Policy Cycles and Public Expenditure in Developing Countries," Public Choice, Springer, vol. 102(1-2), pages 115-130, January.
    6. Corden, W Max & Neary, J Peter, 1982. "Booming Sector and De-Industrialisation in a Small Open Economy," Economic Journal, Royal Economic Society, vol. 92(368), pages 825-848, December.
    7. Maizels, Alfred, 1987. "Commodities in crisis: An overview of the main issues," World Development, Elsevier, vol. 15(5), pages 537-549, May.
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    9. Raja J. Chelliah, 1971. "Trends in Taxation in Developing Countries (Les tendances de la fiscalité dans les pays en voie de développement) (Tendencias tributarias en los países en desarrollo)," IMF Staff Papers, Palgrave Macmillan, vol. 18(2), pages 254-331, July.
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    Citations

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    Cited by:

    1. Daniel Cohen & Thibault Fally & Sébastien Villemot, 2007. "Commodity Funds: How To Fix Them?," OECD Development Centre Policy Briefs 32, OECD Publishing.
    2. Jean-Louis COMBES & Gérard CHAMBAS & Jean-François BRUN, 2006. "Recettes publiques des pays en développement. Méthode d’évaluation," Working Papers 200611, CERDI.
    3. Francesco Aiello, 2009. "Experiences With Traditional Compensatory Finance Schemes And Lessons From Flex," Working Papers 200912, Università della Calabria, Dipartimento di Economia, Statistica e Finanza "Giovanni Anania" - DESF.
    4. Daniel Cohen & Hélène Djoufelkit-Cottenet & Pierre Jacquet & Cécile Valadier, 2008. "Lending to the Poorest Countries: A New Counter-Cyclical Debt Instrument," OECD Development Centre Working Papers 269, OECD Publishing.
    5. Aiello, Francesco Aiello, 2010. "Experiences with Traditional Compensatory Finance Scheme and Lessons from FLEX - Esperienze dei tradizionali sistemi di compensazione finanziaria e lezioni dal caso FLEX," Economia Internazionale / International Economics, Camera di Commercio Industria Artigianato Agricoltura di Genova, vol. 63(1), pages 1-52.

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