Policy Mix, Public Debt Management and Fiscal Rules : Lessons from the 2002 Brazilian Crisis
Despite significant progress in economic reform throughout the 1990s, and an exemplary development of the policymaking framework in the second part of the decade, Brazil suffered a major public debt and currency crisis in 2002. Though the political origin of the uncertainty cannot be ignored, the au...
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| Format: | Policy Research Working Paper |
| Language: | English |
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World Bank, Washington, DC
2012
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| Online Access: | http://documents.worldbank.org/curated/en/2005/02/5635025/policy-mix-public-debt-management-fiscal-rules-lessons-2002-brazilian-crisis http://hdl.handle.net/10986/8910 |
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okr-10986-89102021-04-23T14:02:42Z Policy Mix, Public Debt Management and Fiscal Rules : Lessons from the 2002 Brazilian Crisis Herrera, Santiago ACCOUNTING ASSET PRICES ASSET RETURNS BALANCE SHEETS BANK RUN BANKING CRISES BANKING SECTOR BOND PRICES BONDS BORROWING CAPITAL EXPENDITURES CAPITAL FLOWS CAPITAL MARKETS CENTRAL BANK CREDIT RISK CURRENCY DEALERS DEBT DEBT BURDEN DEBT INSTRUMENTS DEBT LEVEL DEBT MANAGEMENT DEBT REFINANCING DEBT SERVICE DEBT SUSTAINABILITY DEBTORS DEFICITS DEPOSITS DIRECT INVESTMENT DOMESTIC DEBT DOMESTIC PUBLIC DEBT DRAFTS ECONOMIC REFORM ENTITLEMENTS EQUILIBRIUM EXCESS LIQUIDITY EXCHANGE RATE EXCHANGE RATES EXPENDITURE EXPORTS EXTERNAL DEBT EXTERNAL FINANCING FACE VALUE FINANCIAL CRISES FINANCIAL INTERMEDIARIES FINANCIAL POLICIES FINANCIAL TRANSACTIONS FISCAL CONDITIONS FISCAL POLICY FISCAL REFORM FORECASTS FOREIGN BANKS FUTURE VALUE GDP GOVERNMENT BONDS GOVERNMENT EXPENDITURES GOVERNMENT SECURITIES GROWTH RATE HEDGING ILLIQUIDITY INCOME INDEBTEDNESS INDEXATION INFLATION INFLATION RATE INTEREST PAYMENTS INTEREST RATE INTEREST RATE RISK INTEREST RATES INTEREST/ INTERNATIONAL RESERVES LEGAL FRAMEWORK LIABILITY LIQUIDITY LIQUIDITY RISK LOCAL CURRENCY MANDATES MARKET POWER MARKET RISK MARKET VALUE MATURITY MONETARY AUTHORITIES MONETARY POLICY MUTUAL FUND NATIONAL INCOME NET WORTH OIL OPEN MARKET OPERATIONS PRESENT VALUE PRESENT VALUE OF DEBT PRICE CHANGES PRICE CONTROLS PRIMARY DEALERS PRIVATE DEBT PROBABILITY OF DEFAULT PUBLIC DEBT PUBLIC ENTERPRISES PUBLIC SAVINGS REDEMPTION REFINANCING REPO RESERVE REQUIREMENT RESERVE REQUIREMENTS REVENUE SHARING RISK AVERSION RISK MANAGEMENT RISK PREMIUM SAVINGS SECURITIES SOLVENCY SOVEREIGN DEBT SOVEREIGN RISK TAX REFORMS TAX REVENUE TAXPAYERS THEORETICAL MODELS WAGES WEALTH YIELD CURVE Despite significant progress in economic reform throughout the 1990s, and an exemplary development of the policymaking framework in the second part of the decade, Brazil suffered a major public debt and currency crisis in 2002. Though the political origin of the uncertainty cannot be ignored, the author identifies other sources of uncertainty emanating from the policymaking framework: fiscal policy was not responsive to the shocks, public debt instruments were used with several objectives (to stabilize the currency and to lengthen maturity) and there was inadequate supervision of agents holding public debt. Most of the flaws have been fixed following the crisis: a) The primary fiscal balance has been increased, sending the signal that it is a flexible instrument that will be used to ensure commitment of the sovereign to honor its obligations. b) The central bank formally transferred to the Treasury the remaining debt-issuance functions, facilitating a more adequate balancing of different risks involved in debt management. c) Mutual funds' public debt holdings are better regulated, ensuring that end-investors have the proper information to assess the risk of the institutions in which they invest. 2012-06-25T14:32:10Z 2012-06-25T14:32:10Z 2005-02 http://documents.worldbank.org/curated/en/2005/02/5635025/policy-mix-public-debt-management-fiscal-rules-lessons-2002-brazilian-crisis http://hdl.handle.net/10986/8910 English Policy Research Working Paper; No. 3512 CC BY 3.0 IGO http://creativecommons.org/licenses/by/3.0/igo/ World Bank World Bank, Washington, DC Publications & Research :: Policy Research Working Paper Publications & Research Latin America & Caribbean Brazil |
| repository_type |
Digital Repository |
| institution_category |
Foreign Institution |
| institution |
Digital Repositories |
| building |
World Bank Open Knowledge Repository |
| collection |
World Bank |
| language |
English |
| topic |
ACCOUNTING ASSET PRICES ASSET RETURNS BALANCE SHEETS BANK RUN BANKING CRISES BANKING SECTOR BOND PRICES BONDS BORROWING CAPITAL EXPENDITURES CAPITAL FLOWS CAPITAL MARKETS CENTRAL BANK CREDIT RISK CURRENCY DEALERS DEBT DEBT BURDEN DEBT INSTRUMENTS DEBT LEVEL DEBT MANAGEMENT DEBT REFINANCING DEBT SERVICE DEBT SUSTAINABILITY DEBTORS DEFICITS DEPOSITS DIRECT INVESTMENT DOMESTIC DEBT DOMESTIC PUBLIC DEBT DRAFTS ECONOMIC REFORM ENTITLEMENTS EQUILIBRIUM EXCESS LIQUIDITY EXCHANGE RATE EXCHANGE RATES EXPENDITURE EXPORTS EXTERNAL DEBT EXTERNAL FINANCING FACE VALUE FINANCIAL CRISES FINANCIAL INTERMEDIARIES FINANCIAL POLICIES FINANCIAL TRANSACTIONS FISCAL CONDITIONS FISCAL POLICY FISCAL REFORM FORECASTS FOREIGN BANKS FUTURE VALUE GDP GOVERNMENT BONDS GOVERNMENT EXPENDITURES GOVERNMENT SECURITIES GROWTH RATE HEDGING ILLIQUIDITY INCOME INDEBTEDNESS INDEXATION INFLATION INFLATION RATE INTEREST PAYMENTS INTEREST RATE INTEREST RATE RISK INTEREST RATES INTEREST/ INTERNATIONAL RESERVES LEGAL FRAMEWORK LIABILITY LIQUIDITY LIQUIDITY RISK LOCAL CURRENCY MANDATES MARKET POWER MARKET RISK MARKET VALUE MATURITY MONETARY AUTHORITIES MONETARY POLICY MUTUAL FUND NATIONAL INCOME NET WORTH OIL OPEN MARKET OPERATIONS PRESENT VALUE PRESENT VALUE OF DEBT PRICE CHANGES PRICE CONTROLS PRIMARY DEALERS PRIVATE DEBT PROBABILITY OF DEFAULT PUBLIC DEBT PUBLIC ENTERPRISES PUBLIC SAVINGS REDEMPTION REFINANCING REPO RESERVE REQUIREMENT RESERVE REQUIREMENTS REVENUE SHARING RISK AVERSION RISK MANAGEMENT RISK PREMIUM SAVINGS SECURITIES SOLVENCY SOVEREIGN DEBT SOVEREIGN RISK TAX REFORMS TAX REVENUE TAXPAYERS THEORETICAL MODELS WAGES WEALTH YIELD CURVE |
| spellingShingle |
ACCOUNTING ASSET PRICES ASSET RETURNS BALANCE SHEETS BANK RUN BANKING CRISES BANKING SECTOR BOND PRICES BONDS BORROWING CAPITAL EXPENDITURES CAPITAL FLOWS CAPITAL MARKETS CENTRAL BANK CREDIT RISK CURRENCY DEALERS DEBT DEBT BURDEN DEBT INSTRUMENTS DEBT LEVEL DEBT MANAGEMENT DEBT REFINANCING DEBT SERVICE DEBT SUSTAINABILITY DEBTORS DEFICITS DEPOSITS DIRECT INVESTMENT DOMESTIC DEBT DOMESTIC PUBLIC DEBT DRAFTS ECONOMIC REFORM ENTITLEMENTS EQUILIBRIUM EXCESS LIQUIDITY EXCHANGE RATE EXCHANGE RATES EXPENDITURE EXPORTS EXTERNAL DEBT EXTERNAL FINANCING FACE VALUE FINANCIAL CRISES FINANCIAL INTERMEDIARIES FINANCIAL POLICIES FINANCIAL TRANSACTIONS FISCAL CONDITIONS FISCAL POLICY FISCAL REFORM FORECASTS FOREIGN BANKS FUTURE VALUE GDP GOVERNMENT BONDS GOVERNMENT EXPENDITURES GOVERNMENT SECURITIES GROWTH RATE HEDGING ILLIQUIDITY INCOME INDEBTEDNESS INDEXATION INFLATION INFLATION RATE INTEREST PAYMENTS INTEREST RATE INTEREST RATE RISK INTEREST RATES INTEREST/ INTERNATIONAL RESERVES LEGAL FRAMEWORK LIABILITY LIQUIDITY LIQUIDITY RISK LOCAL CURRENCY MANDATES MARKET POWER MARKET RISK MARKET VALUE MATURITY MONETARY AUTHORITIES MONETARY POLICY MUTUAL FUND NATIONAL INCOME NET WORTH OIL OPEN MARKET OPERATIONS PRESENT VALUE PRESENT VALUE OF DEBT PRICE CHANGES PRICE CONTROLS PRIMARY DEALERS PRIVATE DEBT PROBABILITY OF DEFAULT PUBLIC DEBT PUBLIC ENTERPRISES PUBLIC SAVINGS REDEMPTION REFINANCING REPO RESERVE REQUIREMENT RESERVE REQUIREMENTS REVENUE SHARING RISK AVERSION RISK MANAGEMENT RISK PREMIUM SAVINGS SECURITIES SOLVENCY SOVEREIGN DEBT SOVEREIGN RISK TAX REFORMS TAX REVENUE TAXPAYERS THEORETICAL MODELS WAGES WEALTH YIELD CURVE Herrera, Santiago Policy Mix, Public Debt Management and Fiscal Rules : Lessons from the 2002 Brazilian Crisis |
| geographic_facet |
Latin America & Caribbean Brazil |
| relation |
Policy Research Working Paper; No. 3512 |
| description |
Despite significant progress in economic reform throughout the 1990s, and an exemplary development of the policymaking framework in the second part of the decade, Brazil suffered a major public debt and currency crisis in 2002. Though the political origin of the uncertainty cannot be ignored, the author identifies other sources of uncertainty emanating from the policymaking framework: fiscal policy was not responsive to the shocks, public debt instruments were used with several objectives (to stabilize the currency and to lengthen maturity) and there was inadequate supervision of agents holding public debt. Most of the flaws have been fixed following the crisis: a) The primary fiscal balance has been increased, sending the signal that it is a flexible instrument that will be used to ensure commitment of the sovereign to honor its obligations. b) The central bank formally transferred to the Treasury the remaining debt-issuance functions, facilitating a more adequate balancing of different risks involved in debt management. c) Mutual funds' public debt holdings are better regulated, ensuring that end-investors have the proper information to assess the risk of the institutions in which they invest. |
| format |
Publications & Research :: Policy Research Working Paper |
| author |
Herrera, Santiago |
| author_facet |
Herrera, Santiago |
| author_sort |
Herrera, Santiago |
| title |
Policy Mix, Public Debt Management and Fiscal Rules : Lessons from the 2002 Brazilian Crisis |
| title_short |
Policy Mix, Public Debt Management and Fiscal Rules : Lessons from the 2002 Brazilian Crisis |
| title_full |
Policy Mix, Public Debt Management and Fiscal Rules : Lessons from the 2002 Brazilian Crisis |
| title_fullStr |
Policy Mix, Public Debt Management and Fiscal Rules : Lessons from the 2002 Brazilian Crisis |
| title_full_unstemmed |
Policy Mix, Public Debt Management and Fiscal Rules : Lessons from the 2002 Brazilian Crisis |
| title_sort |
policy mix, public debt management and fiscal rules : lessons from the 2002 brazilian crisis |
| publisher |
World Bank, Washington, DC |
| publishDate |
2012 |
| url |
http://documents.worldbank.org/curated/en/2005/02/5635025/policy-mix-public-debt-management-fiscal-rules-lessons-2002-brazilian-crisis http://hdl.handle.net/10986/8910 |
| _version_ |
1764407104494370816 |