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on Africa |
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Issue of 2007‒01‒06
one paper chosen by Suzanne McCoskey Foreign Service Institute, US Department of State |
| By: | Xavier Debrun; Theo Thomas; Taline Koranchelian; Isabell Adenauer; Peter S. Heller; Menachem Katz |
| Abstract: | Debt relief and the scaling up of aid to low-income countries should allow for greater fiscal space for expenditure programs to create long-term growth and lower poverty rates. But designing a suitable medium-term fiscal framework that fosters a sustainable delivery of better public services and infrastructure while maintaining a credible commitment to fiscal prudence confronts many challenges. This paper discusses what low-income countries can do to shape fiscal policy frameworks that are ambitious in trying to absorb additional aid while still ensuring longer-term sustainability for government expenditure programs and finances. It suggests what approaches can be used to manage the greater fiscal policy risks associated with a scaled-up aid environment, including coordination with monetary policy. The paper also discusses what institutional changes are needed if donors and countries are to facilitate the implementation of a higher level of aid-financed spending programs. |
| Keywords: | Aid , fiscal policy , low-income countries , macroeconomic policy , public financial management , Economic assistance , Fiscal policy , Low income developing countries , Economic policy , Public finance , |
| Date: | 2006–12–08 |
| URL: | http://d.repec.org/n?u=RePEc:imf:imfwpa:06/270&r=afr |