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Abstract
Raising national saving is a critical goal of many IMF-supported programs. Higher levels of national saving provide more resources for domestic investment—resources that are needed when increased reliance on foreign saving is either unlikely or undesirable. Yet raising national saving is often one of the most elusive goals of IMF-supported programs. The central problem is that, while ways to influence public saving are clear, public saving generally accounts for a small share—on average about 15 percent in the countries under review—of total national saving.1 Thus, sizable increases in total saving frequently must emanate from the private sector. However, because both the theoretical underpinnings and the empirical evidence on the effectiveness of policies to affect private saving are ambiguous, it has been difficult to identify and predict the effects of measures to meet this goal.
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