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The Design of Fiscal Adjustment Strategies in Botswana, Lesotho, Namibia, and Swaziland


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  • Luis-Felipe Zanna
  • Olivier Basdevant
  • Susan Yang
  • Geneviève Verdier
  • Joannes Mongardini
  • Borislava Mircheva
  • Dalmacio Benicio


Botswana, Lesotho, Namibia, and Swaziland face the serious challenge of adjusting not only to lower Southern Africa Customs Union (SACU) transfers because of the global economic crisis, but also to a potential further decline over the medium term. This paper assesses options for the design of the needed fiscal consolidation. The choice among these options should be driven by (i) the impact on growth and (ii) the specificities of each country. Overall, a focus on government consumption cuts appears to minimize the negative impact on growth, and would be appropriate given the relatively large size of the public sector in each country.

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Bibliographic Info

Paper provided by International Monetary Fund in its series IMF Working Papers with number 11/266.

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Length: 38
Date of creation: 01 Nov 2011
Date of revision:
Handle: RePEc:imf:imfwpa:11/266

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Postal: International Monetary Fund, Washington, DC USA
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Keywords: Customs duties; Economic models; Fiscal consolidation; Government expenditures; Revenues; Southern Africa; consumption tax; government spending; fiscal consolidations; consumption tax rate; fiscal adjustment; tax rates; fiscal adjustments; fiscal multipliers; government purchases; budget constraint; fiscal policy; investment spending; fiscal variables; fiscal rules; government budget constraint; private consumption; government budget; labor income; tax administration; consumption goods; spending cuts; consumption taxes; disposable income; tax increase; government revenue; capital account; public expenditures; public finances; tax increases; aggregate demand; fiscal sustainability; public spending; fiscal instrument; national budget; consumption price index; consumption declines; consumption over time; taxes on labor; substitution effect; fiscal risk; fiscal balances; fiscal stance; budgetary consolidation; fiscal strategies; tax compliance; fiscal reporting; fiscal responsibility; fiscal risks; tax collection; consumption tax rates; consumption price; tax changes; general equilibrium; fiscal multiplier; fiscal transparency; fiscal policy instrument; public debt; consumption basket; revenue collection; fiscal objectives; national fiscal rules; budget constraints; high spending; fiscal responsibility laws; budget imbalances; tax policy; fiscal balance; fiscal stabilizations; medium-term expenditure frameworks; marginal utility of consumption; tax evasion; public finance; fiscal shocks; fiscal response; fiscal pressure;

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  1. Alexander Plekhanov & Manmohan S. Kumar & Daniel Leigh, 2007. "Fiscal Adjustments," IMF Working Papers 07/178, International Monetary Fund.
  2. Ethan Ilzetzki & Enrique G. Mendoza & Carlos A. Végh, 2010. "How Big (Small?) are Fiscal Multipliers?," CEP Discussion Papers dp1016, Centre for Economic Performance, LSE.
  3. Arestoff, Florence & Hurlin, Christophe, 2010. "Are Public Investment Efficient in Creating Capital Stock in Developing Countries?," Economics Papers from University Paris Dauphine 123456789/5253, Paris Dauphine University.
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Cited by:
  1. Juha Tervala & Giovanni Ganelli, 2012. "Tariff-Tax Reforms in Large Economies," IMF Working Papers 12/139, International Monetary Fund.
  2. Olivier Basdevant, 2012. "Fiscal Policies and Rules in the Face of Revenue Volatility within Southern Africa Customs Union Countries (SACU)," IMF Working Papers 12/93, International Monetary Fund.


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