A Rule-Based Medium-Term Fiscal Policy Framework for Tanzania
AbstractA zero net domestic financing (NDF) target has served Tanzania well in recent years, contributing to prudent expenditure policy, improved fiscal sustainability, and macroeconomic stability. Moving to a more flexible fiscal policy, however, may serve Tanzania better. The "diamond rule" proposed in this paper incorporates a permanent hard ceiling on debt and annual benchmark limits on NDF, expenditure growth, and nonconcessional external financing. This rule would provide flexibility for countercyclical policy and help define the fiscal space for infrastructure spending that is consistent with longrun fiscal sustainability. An illustrative simulation shows that Tanzania has considerable fiscal space for development spending.
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Bibliographic InfoPaper provided by International Monetary Fund in its series IMF Working Papers with number 09/244.
Date of creation: 01 Nov 2009
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This paper has been announced in the following NEP Reports:
- NEP-AFR-2009-11-27 (Africa)
- NEP-ALL-2009-11-27 (All new papers)
- NEP-CMP-2009-11-27 (Computational Economics)
- NEP-MAC-2009-11-27 (Macroeconomics)
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
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