A Fiscal Price Tag for International Reserves

30 Pages Posted: 3 Mar 2006

See all articles by David Hauner

David Hauner

International Monetary Fund (IMF) - African Department

Date Written: April 2005


This paper examines the (quasi-)fiscal impact of the (opportunity) cost of international reserves. It proposes a conceptual framework, with particular emphasis on two hitherto somewhat neglected aspects: a more appropriate measure of gross opportunity cost, and potential savings from lower external debt spreads that countries "buy" by holding reserves. The framework is then applied to 100 countries over 1990-2004. The results suggest that a turning point has been reached in recent years: while most countries made money on their reserves during 1990-2001, most have been losing money during 2002-2004.

Keywords: International reserves, opportunity cost, external debt, yield spreads

JEL Classification: F3, H54

Suggested Citation

Hauner, David, A Fiscal Price Tag for International Reserves (April 2005). IMF Working Paper, Vol. , pp. 1-30, 2005. Available at SSRN: https://ssrn.com/abstract=888127

David Hauner (Contact Author)

International Monetary Fund (IMF) - African Department ( email )

1700 19th Street, NW
Washington, DC 20431
United States

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