Making Fiscal Space Happen
AbstractDebt 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.
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Bibliographic InfoPaper provided by International Monetary Fund in its series IMF Working Papers with number 06/270.
Date of creation: 01 Dec 2006
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Other versions of this item:
- Peter S. Heller & Menachem Katz & Xavier Debrun & Theo Thomas & Taline Koranchelian & Isabell Adenauer, 2006. "Making Fiscal Space Happen!," World Economics, World Economics, Economic & Financial Publishing, 1 Ivory Square, Plantation Wharf, London, United Kingdom, SW11 3UE, vol. 7(3), pages 89-132, July.
- NEP-AFR-2007-01-06 (Africa)
- NEP-ALL-2007-01-06 (All new papers)
- NEP-MAC-2007-01-06 (Macroeconomics)
- NEP-PBE-2007-01-06 (Public Economics)
- NEP-PPM-2007-01-06 (Project, Program & Portfolio Management)
- NEP-PUB-2007-01-06 (Public Finance)
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