Budget deficit:
Budget deficits are often very hard to reduce for political and structural reasons. Conversely, increasing seignorage revenues is much easier as it implies printing new money, an executive action rather than a legislative action as in the case of traditional taxes. Of course, seignorage is as much of a tax as regular taxes but it is politically more hidden (at least at low levels of inflation) as the effect of higher money growth leads to higher inflation only slowly over time.
For what concerns the possibility of (non-inflationary) bond financing rather than (inflationary) monetary financing of the deficits, there are several obstacles to such a policy option in many developing countries.
1) Bond markets are not very well developed (and in some cases altogether absent) in many countries.
2) Citizens are concerned about buying nominal long-term bonds issued by the domestic government because an unexpected increase in inflation by the government would lead to a fall in the real value of these bonds (that is equal to a wealth tax on the public holdings of such bonds).
3) Bonds indexed to inflation and/or short-term bonds that pay returns close to current market rates are still subject to default risk if the government decide to renege on its obligations.
4) The ability to borrow abroad and/or issue bonds denominated in foreign currency in international capital markets may also be limited by the default risk of the country.
5) Even when some bond borrowing may be available either domestically or abroad, governments may not be willing to issue such bonds. In fact, bond financing is more expensive than monetary financing (seignorage) since governments do not pay interest on their monetary liabilities while they have to pay interest (high ones if inflation is high) on their borrowing.
6) Borrowing by issuing debt means that the stock of debt goes up every year by the amount of the flow debt financing: Bt+1 = Bt + ΔBt . This growth of debt may be very costly and could lead to debt trap in the long-run. In fact, if the public debt grows a lot (relative to GDP), at some point private agents might become unwilling to buy new debt (or even roll-over old debt that comes to maturity) as high debt increases the probability that the government might at some point default on its debt obligations. So, if such a panic occurs and the private sector refuses to buy new debt and/or renew the old one, a government with a structural budget deficit will eventually be forced to start printing money and thus create inflation.
Therefore, in face of a structural deficit, trying to reduce inflation today by issuing bonds rather than printing money will just lead to higher debt in the future that will eventually force the government to monetize the deficit (when the debt constraint is hit) and thus will cause inflation in the future. Again, inflation becomes a fiscal phenomenon and there is no escape from it if the underlying deficit problem is not solved: attempts to reduce current inflation by issuing bonds only implies that future inflation will be higher when the ability to issue debt is exhausted and the government is forced to switch to a monetary financing of the deficit.
Therefore, while the near proximate cause of high inflation is always monetary as inflation is associated with high rates of growth of money, the true structural cause of persistent high inflation is likely to be fiscal deficit that is not eliminated with cuts in spending and/or increases in (non-seignorage) taxes.