Cover IMF Working Papers
Policy Inconsistency and External Debt Service
Author:
International Monetary Fund
Search for other papers by International Monetary Fund in
Current site
Google Scholar
PubMedClose
Series:
IMF Working Papers
Volume/Issue:
Volume 1990: Issue 035
Language:
English
Publication Date:
01 Jan 1990
DOI:
https://doi.org/10.5089/9781451978322.001
ISBN:
9781451978322
ISSN:
1018-5941
Pages:
16
Keywords:
WP; investment; tax rate; investment equilibrium
Legal-disclaimer:
IMF Working Papers describe research in progress by the author(s) and are published to elicit comments and to encourage debate. The views expressed in IMF Working Papers are those of the author(s) and do not necessarily represent the views of the IMF, its Executive Board, or IMF management.
Download PDF (928.1 KB) Download Epub
In this paper it is argued that the willingness of debtors to make external debt-service payments reflects, in part, their inability to credibly and permanently suspend debt service. The benefits of a credible debt-service suspension would include increased private investment. But this would, in turn, tend to create conditions in which it would then be optimal for the government to resume payments. Thus, debt remains a threat even after the announcement of suspension of debt service. It follows that the expected benefits of such a suspension are limited and may be offset by penalties imposed by creditors.
  • Collapse
  • Expand
Cover IMF Working Papers
IMF Working Papers
ISSN:
1018-5941
Publisher:
International Monetary Fund
Volume 1990: Issue 035