Australian Loan Council: Arrangements and Experience with Bailouts

Abstract

In most countries, public borrowing by subnational governments is subjected to somerestrictions imposed by the national governments. In a recent study of 53 selectedcountries, researchers at the International Monetary Fund found that all but six countriesimposed such restrictions. 1 Public borrowing by subnational governments was altogetherprohibited in 16 countries, while 19 countries did not allow subnational governments toborrow overseas. The controls in the remaining countries vary in detail and have beenclassified by the authors of the IMF study into the broad categories of administrativecontrols, rule-based controls and cooperative controls.