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Revisiting the Foreign Debt Problem and the "External Constraint" in the Periphery: An MMT Perspective

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  • Ndongo Samba Sylla

Abstract

Most debates and policy proposals about Global South countries' external debt problem take for granted the view that it is normal for their governments to issue debts denominated in foreign currencies. This paper tries to challenge this widely held and usually unquestioned assumption by relying on Modern Money Theory (MMT) insights. The author argues that the MMT lens helps us understand the root causes of the foreign debt problem of Southern countries, those located in Africa in particular, to clarify the ordinarily mis-specified concept of "external constraint" or "balance-of-payments constraint" and to envisage progressive domestic policy measures that are under their control. Originally issued as EDI Working Paper No. 16, March 2024.

Suggested Citation

  • Ndongo Samba Sylla, 2024. "Revisiting the Foreign Debt Problem and the "External Constraint" in the Periphery: An MMT Perspective," Economics Working Paper Archive wp_1067, Levy Economics Institute.
    • Handle: RePEc:lev:wrkpap:wp_1067
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    References listed on IDEAS

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    1. Jan Kregel, 2004. "Can we create a stable international financial environment that ensures net resource transfers to developing countries?," Journal of Post Keynesian Economics, Taylor & Francis Journals, vol. 26(4), pages 573-590.
    2. Mauro Boianovsky & Ricardo Sol�s, 2014. "The Origins and Development of the Latin American Structuralist Approach to the Balance of Payments, 1944-1964," Review of Political Economy, Taylor & Francis Journals, vol. 26(1), pages 23-59, January.
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