THE CONCEPT of a foreign exchange budget and the use which may be made of it are not so well known or so generally understood as are the more common types of budget, such as the corporation or national budget.1 The use of foreign exchange budgets in various Latin American countries during recent years is reviewed by the present study. Without expressing any judgment on the desirability of exchange controls and restrictions, the study attempts merely to explain the role of exchange budgets where such restrictions exist. The actual use and operation of such budgets in Latin America vary widely, the purpose ranging from a simple statistical control to the application of severe restrictions. A body of literature on this subject has yet to be developed. The objectives of an exchange budget could be more effectively realized if the experiences and techniques of various countries were carefully analyzed, and the results of the analysis made generally available to those responsible for the preparation and implementation of the budget.
Exchange budgets are prepared in most countries where there is a need for controls or restrictions in the foreign exchange market, but also in some countries where there is a substantial measure of exchange freedom. The present review concentrates particularly on those countries where restrictions are so extensive that the role played by the foreign exchange budget is of great importance. It does not cover all the situations in which exchange budgets are used in Latin America, nor does it discuss exhaustively the role of the budget in each particular case.
Mr. Mattera, economist in the Multiple Currency Practices Division, is a graduate of the University of Rochester and of the Graduate School of Business Administration, New York University. He was formerly with the Irving Trust Company of New York.
This paper was presented to the Fourth Meeting of Technicians of Central Banks of the American Continent, held in Washington, D.C., May 1954.