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


  • Thorne, Alfredo E.
  • Dastgheib, Azita


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.

Suggested Citation

  • Thorne, Alfredo E. & Dastgheib, Azita, 1992. "Public sector debt, fiscal deficits, and economic adjustment : a comparative study of six EMENA countries," Policy Research Working Paper Series 840, The World Bank.
  • Handle: RePEc:wbk:wbrwps:840

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    References listed on IDEAS

    1. Faini, Riccardo, 1991. "The macroeconomics of the public sector deficit : the case of Morocco," Policy Research Working Paper Series 631, The World Bank.
    2. Easterly, William & Schmidt-Hebbel, Klaus, 1991. "The macroeconomics of public sector deficits : a synthesis," Policy Research Working Paper Series 775, The World Bank.
    3. Fischer, Stanley & Easterly, William, 1990. "The Economic of the Government Budget Constraint," World Bank Research Observer, World Bank Group, vol. 5(2), pages 127-142, July.
    4. Jean-Claude Chouraqui & Brian Jones & Robert Bruce Montador, 1986. "Public Debt in a Medium-Term Context and Its Implications for Fiscal Policy," OECD Economics Department Working Papers 30, OECD Publishing.
    5. Vito Tanzi, 1977. "Inflation, Lags in Collection, and the Real Value of Tax Revenue (L'inflation, les retards de recouvrement et la valeur réelle des recettes fiscales) (Inflación, desfases en la recaudación y valor ," IMF Staff Papers, Palgrave Macmillan, vol. 24(1), pages 154-167, March.
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