Public Debt and Fiscal Policy in Developing Countries

Abstract

Over the past decade the growth of public spending has generated large fiscal deficits in many countries, leading to increases in the share of public debt relative to gross domestic product (GDP). This happened in both industrial and developing countries. With the exception of a few, small countries such as Ireland and Denmark, the increase in public debt in industrial countries has been mostly domestic. In the developing countries, on the other hand, the public debt has been mostly external, although some countries, including Brazil and Mexico, have also accumulated sizeable domestic debts.

The views presented in this chapter are strictly personal and do not necessarily reflect official Fund positions. The authors are grateful to L. Leiderman, A. Mohammed, M. Xafa, and the participants of the Conference for useful comments, and to Z. Farhadian for her valuable assistance.