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Does conditionality in IMF-supported programs promote revenue reform?

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  • Ernesto Crivelli
  • Sanjeev Gupta

Abstract

This paper studies whether revenue conditionality in Fund-supported programs had any impact on the revenue performance of 126 low- and middle-income countries during 1993-2013. The results indicate that such conditionality had a positive impact on tax revenue, with strongest improvement felt on taxes on goods and services, including the VAT. Revenue conditionality matters more for low-income countries, particularly those where revenue ratios are below the group average. Moreover, revenue conditionality appears to be more effective when targeted to a specific tax. These results hold after controlling for potential endogeneity, sample selection bias, and when revenues are adjusted for economic cycle.

Suggested Citation

  • Ernesto Crivelli & Sanjeev Gupta, 2014. "Does conditionality in IMF-supported programs promote revenue reform?," IMF Working Papers 14/206, International Monetary Fund.
    • Handle: RePEc:imf:imfwpa:14/206
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    Cited by:

    1. Guimarães, Bernardo de Vasconcellos & Ladeira, Carlos Eduardo de Almeida, 2015. "The determinants of IMF fiscal conditionalities: economics or politics?," Textos para discussão 391, FGV/EESP - Escola de Economia de São Paulo, Getulio Vargas Foundation (Brazil).
    2. Djedje Hermann YOHOU & Michaël GOUJON, 2017. "Reassessing Tax Effort in Developing Countries: a Proposal of a Vulnerability-Adjusted Tax Effort Index (VATEI)," Working Papers P186, FERDI.
    3. Stubbs, Thomas & Kentikelenis, Alexander & Stuckler, David & McKee, Martin & King, Lawrence, 2017. "The impact of IMF conditionality on government health expenditure: A cross-national analysis of 16 West African nations," Social Science & Medicine, Elsevier, vol. 174(C), pages 220-227.
    4. Abrams M.E. Tagem, 2017. "The economics and politics of foreign aid and domestic revenue," WIDER Working Paper Series 180, World Institute for Development Economic Research (UNU-WIDER).
    5. Roel Dom, 2017. "Semi-Autonomous Revenue Authorities in Sub-Saharan Africa: Silver Bullet or White Elephant," Discussion Papers 2017-01, University of Nottingham, CREDIT.
    6. repec:taf:jdevst:v:53:y:2017:i:7:p:1057-1074 is not listed on IDEAS
    7. Irina Andone & Beatrice D. Scheubel, 2017. "Memorable Encounters? Own and Neighbours' Experience with IMF Conditionality and IMF Stigma," CESifo Working Paper Series 6399, CESifo Group Munich.
    8. Ernesto Crivelli & Sanjeev Gupta, 2017. "Does Conditionality Mitigate the Potential Negative Effect of Aid on Revenues?," Journal of Development Studies, Taylor & Francis Journals, vol. 53(7), pages 1057-1074, July.

    More about this item

    Keywords

    Conditionality; Revenue administration; Low-income developing countries; Fund-supported adjustment programs; Tax collection; Tax reforms; Tax revenues; Tax revenue; structural conditionality; revenue; tax; taxes; revenues; goods; Models with Panel Data; International Monetary Arrangements and Institutions; General;

    JEL classification:

    • C33 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Models with Panel Data; Spatio-temporal Models
    • E62 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Fiscal Policy
    • F33 - International Economics - - International Finance - - - International Monetary Arrangements and Institutions
    • H2 - Public Economics - - Taxation, Subsidies, and Revenue

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