Over the last twenty-five years an anti-Keynesian orthodox approach has envisaged a prominent role for reductions in fiscal deficits in developing countries. Expansionary fiscal policies have been said to result in excessive expansion of aggregate demand leading to current account deficits and inflation, as well as displacing private investment, thereby inhibiting output stabilization and employment recovery. Moreover, chronic fiscal deficits are supposed to be associated with high and explosive debt/GDP ratios. The purpose of this article is to assess the theoretical adequacy of the orthodox approach in the context of developing countries. The author clarifies some common misunderstandings and finds that none of the conventional arguments against fiscal activism is wholly convincing. At the heart of the debate lies the question of assumptions, economic structure and causation mechanisms. The orthodox stories regarding the macroeconomic effects of fiscal policy very often do not go beyond the simple monetarist assumptions or seek to verify the implications against the existing experiences and empirical data from developing countries.