Evening out Fiscal Fluctuations

Evening out Fiscal Fluctuations

There is an old saying that people should save their pennies for a rainy day. Dark clouds have moved across the skies since the September 11th terrorist attacks. This sort of unpredictable event is precisely why countries that depend on commodity exports have taken steps to protect themselves by creating reserve accounts that accumulate extra revenues when times are good. Javier Murcio, director of Latin American research at Credit Suisse First Boston in New York, says such stabilization funds are "supposed to isolate the country from the potential negative impact of falling commodity prices. [These] funds allow countries more stability in spending and preparing [budgets]." The

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