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Fiscal Policy in Sub-Saharan Africa in Response to the Impact of the Global Crisis

Author

Listed:
  • Mr. Norbert Funke
  • Mr. Martin Schindler
  • Victor Duarte Lledo
  • Irene Yackovlev
  • Alejandro Hajdenberg
  • Mr. Rolando Ossowski
  • Mr. Antonio Spilimbergo
  • Mr. Shamsuddin Tareq
  • Mr. Andrew Berg

Abstract

The global financial crisis poses significant challenges to fiscal policies in Sub-Saharan African countries. Growth will weaken considerably as export prices and volumes, remittances, tourism, and capital flows decline. The fiscal effects of the crisis are likely to be large and to operate mainly via revenue losses, with commodity-related revenues particularly hard hit. Countries will need to weigh their options for fiscal policy responses. Countries with output gaps and sustainable debt and financing options have scope to implement expansionary policies, by letting automatic stabilizers work, accommodating declines in commodity-related revenues, and in some cases implementing discretionary fiscal stimulus. The focus of fiscal stimulus should be on the expenditure side, particularly infrastructure and social spending given pressing needs, as reducing tax rates may be inequitable and the scope for doing so is limited given low revenue ratios. Other countries will have to adjust, in a way that will not affect critical spending. Additional donor support would reduce the need for adjustment. In all cases, countries should give priority to expanding social safety nets as needed to cushion the impact of the crisis on the poor.

Suggested Citation

  • Mr. Norbert Funke & Mr. Martin Schindler & Victor Duarte Lledo & Irene Yackovlev & Alejandro Hajdenberg & Mr. Rolando Ossowski & Mr. Antonio Spilimbergo & Mr. Shamsuddin Tareq & Mr. Andrew Berg, 2009. "Fiscal Policy in Sub-Saharan Africa in Response to the Impact of the Global Crisis," IMF Staff Position Notes 2009/010, International Monetary Fund.
  • Handle: RePEc:imf:imfspn:2009/010
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    Citations

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    Cited by:

    1. Andrea Filippo Presbitero, 2009. "The 2008-2009 Financial Crisis and the HIPCs: Another Debt Crisis?," Mo.Fi.R. Working Papers 29, Money and Finance Research group (Mo.Fi.R.) - Univ. Politecnica Marche - Dept. Economic and Social Sciences.
    2. Pedro Conceição & Sebastian Levine, "undated". "The African Moment: On the Brink of a Development Breakthrough," UNDP Africa Policy Notes 2011-001, United Nations Development Programme, Regional Bureau for Africa.
    3. Blanca Moreno-Dodson, 2013. "Is Fiscal Policy the Answer? A Developing Country Perspective," World Bank Publications - Books, The World Bank Group, number 13086, November.
    4. Sèna Kimm Gnangnon, 2012. "The Effect of Development Aid Unpredictability and Migrants' Remittances on Fiscal Consolidation in Developing Countries," Working Papers halshs-00677108, HAL.
    5. Sèna Kimm Gnangnon, 2012. "The Effect of Development Aid Unpredictability and Migrants' Remittances on Fiscal Consolidation in Developing Countries," CERDI Working papers halshs-00677108, HAL.
    6. Ley, Eduardo & Misch, Florian, 2013. "Real-time macro monitoring and fiscal policy," Policy Research Working Paper Series 6303, The World Bank.
    7. Andrea Filippo Presbitero & Alberto Zazzaro, 2010. "The Global Crisis in Low- and Middle-Income Countries: How the IMF Responded," Mo.Fi.R. Working Papers 35, Money and Finance Research group (Mo.Fi.R.) - Univ. Politecnica Marche - Dept. Economic and Social Sciences.
    8. Brückner, Markus, 2012. "An instrumental variables approach to estimating tax revenue elasticities: Evidence from Sub-Saharan Africa," Journal of Development Economics, Elsevier, vol. 98(2), pages 220-227.
    9. Ms. Lisa L Kolovich & Suhaib Kebhaj & Ms. Janet Gale Stotsky, 2016. "Sub-Saharan Africa: A Survey of Gender Budgeting Efforts," IMF Working Papers 2016/152, International Monetary Fund.
    10. Sena Kimm GNANGNON, 2012. "The Effect of Development Aid Unpredictability and Migrants’ Remittances on Fiscal Consolidation in Developing Countries," Working Papers 201210, CERDI.

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