Government Arrears in Fiscal Adjustment Programs

36 Pages Posted: 15 Feb 2006

See all articles by Jack Diamond

Jack Diamond

International Monetary Fund (IMF) - Fiscal Affairs Department

Christian Schiller

affiliation not provided to SSRN

Date Written: February 10, 1987

Abstract

Expenditure arrears, signifying prolonged delays in the government meeting its financial obligations to suppliers and creditors, have become an increasingly common feature of government operations in many developing countries. This paper indicates the significance of arrears in distorting typical measures of fiscal stance as well as their potential role in facilitating the delay of desired fiscal adjustment measures. Following a discussion of the issues involved in defining and measuring different types of arrears, an approach to incorporating arrears into the presentation of government accounts is described. After a brief discussion of the macroeconomic effects of government arrears, the paper concludes with a discussion of the treatment of arrears in programs of fiscal adjustment. A strategy of combining a program of arrears reduction with an appropriate monitoring system for broad aggregates of government expenditure is recommended, with the objective of preventing the emergence of further arrears.

Suggested Citation

Diamond, Jack and Schiller, Christian, Government Arrears in Fiscal Adjustment Programs (February 10, 1987). IMF Working Paper, Vol. , pp. 1-36, 1987. Available at SSRN: https://ssrn.com/abstract=884517

Jack Diamond (Contact Author)

International Monetary Fund (IMF) - Fiscal Affairs Department ( email )

700 19th Street, NW
Washington, DC 20431
United States

Christian Schiller

affiliation not provided to SSRN

No Address Available

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