THE FISCAL IMPACT OF PRIVATISATION IN LATIN-AMERICA

The goal of achieving fiscal balance through privatisation is misplace d because the revenues generated are rarely large or timely enough to bring the budget deficit under control. In Mexico Argentina, Brazil, a nd Chile fiscal crisis preceded and encouraged the decision to privati se, but only in Argentina did the revenues from privatisation contribu te significantly to fiscal adjustment The article develops a model, in corporating time preferences and longer term fiscal impacts, which sho ws that major fiscal benefits can be expected only under rare circumst ances. Politicians continue to tout the fiscal benefits of privatisati on perhaps to gain support or to signal their commitment to economic r eform.