IDEAS home Printed from https://ideas.repec.org/p/wbk/wbrwps/4970.html
   My bibliography  Save this paper

How should fiscal policy respond to the economic crisis in the low income commonwealth of independent states ? some pointers from Tajikistan

Author

Listed:
  • Brownbridge, Martin
  • Canagarajah, Sudharshan

Abstract

The paper analyses how the global economic crisis will affect the economies of the low income Commonwealth of Independent States (CIS) and discusses the fiscal measures which can be taken to help mitigate the adverse impact of the crisis. It focuses on Tajikistan, the poorest member of the CIS but also highlights similarities with the economies of Armenia, the Kyrgyz Republic and Moldova. The main channels through which the global economic crisis will affect the low income CIS economies is through a sharp reduction in remittances from migrant workers in Russia and lower export earnings. The adjustment to this external shock will involve a reduction in imports, private consumption, domestic output and government revenue. Fiscal policy, constrained by very limited macroeconomic and fiscal space, faces acute challenges. Maintaining budget targets for fiscal deficits and domestic borrowing in the face of revenue shortfalls will lead to a tightening of the fiscal stance, exacerbating recessionary pressures and making it very difficult to protect priority social expenditures from cuts. To avoid these outcomes, external support from donors, preferably in the form of quick disbursing budget support, is required. If additional external budget support can be mobilized, the priorities for fiscal policy should be to protect spending on budgeted social sector programs and, if sufficient budget resources are available, to implement a program of labor intensive repair and maintenance of public infrastructure to provide employment for returning migrant workers. Tax cuts are unlikely to be an effective use of scarce budget resources, either to stimulate the economy or protect the incomes of the poor. Up scaling existing social assistance programs may be a feasible way to protect the poor in some low income CIS countries provided they are not as poorly targeted as in Tajikistan.

Suggested Citation

  • Brownbridge, Martin & Canagarajah, Sudharshan, 2009. "How should fiscal policy respond to the economic crisis in the low income commonwealth of independent states ? some pointers from Tajikistan," Policy Research Working Paper Series 4970, The World Bank.
  • Handle: RePEc:wbk:wbrwps:4970
    as

    Download full text from publisher

    File URL: http://www-wds.worldbank.org/external/default/WDSContentServer/WDSP/IB/2009/06/18/000158349_20090618170130/Rendered/PDF/WPS4970.pdf
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Perotti, Roberto, 2007. "Fiscal policy in developing countries : a framework and some questions," Policy Research Working Paper Series 4365, The World Bank.
    2. Mr. Peter S. Heller, 2005. "Understanding Fiscal Space," IMF Policy Discussion Papers 2005/004, International Monetary Fund.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Johan Swinnen & Kristine Van Herck, 2012. "Food Security: Challenges and Opportunities for Eastern Europe and Central Asia," Asian Journal of Agriculture and Development, Southeast Asian Regional Center for Graduate Study and Research in Agriculture (SEARCA), vol. 9(1), pages 37-52, June.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Kose, M. Ayhan & Kurlat, Sergio & Ohnsorge, Franziska & Sugawara, Naotaka, 2022. "A cross-country database of fiscal space," Journal of International Money and Finance, Elsevier, vol. 128(C).
    2. Céline Carrère & Jaime de Melo, 2015. "Fiscal Spending and Economic Growth: Some Stylized Facts," World Scientific Book Chapters, in: Developing Countries in the World Economy, chapter 7, pages 167-196, World Scientific Publishing Co. Pte. Ltd..
    3. Luca Metelli & Kevin Pallara, 2020. "Fiscal space and the size of the fiscal multiplier," Temi di discussione (Economic working papers) 1293, Bank of Italy, Economic Research and International Relations Area.
    4. World Bank, 2009. "Liberia - 2008 Public Expenditure Management and Financial Accountability Review," World Bank Publications - Reports 3082, The World Bank Group.
    5. Reinhard Mechler & Stefan Hochrainer & Asbjørn Aaheim & Håkon Salen & Anita Wreford, 2010. "Modelling economic impacts and adaptation to extreme events: Insights from European case studies," Mitigation and Adaptation Strategies for Global Change, Springer, vol. 15(7), pages 737-762, October.
    6. Sudheesh Ramapurath Chemmencheri, 2016. "Social Protection as a Human Right in South Asia," Indian Journal of Human Development, , vol. 10(2), pages 236-252, August.
    7. Cummins, Matthew, 2019. "Fiscal Space for Children and Human Capital in Eastern and Southern Africa: Options and Strategic Entry Points to Address Investment Gaps in 16 Countries," MPRA Paper 96410, University Library of Munich, Germany.
    8. Kessy, Flora Lucas & Ngowi, Daniel, 2013. "Creating Fiscal Space for Social Sectors Development in Tanzania," African Journal of Economic Review, African Journal of Economic Review, vol. 1(1), January.
    9. Strand, Jon, 2009. ""Revenue management"effects related to financial flows generated by climate policy," Policy Research Working Paper Series 5053, The World Bank.
    10. -, 2009. "Macroeconomic policies in times of crisis: options and perspectives," Documentos de Proyectos 3665, Naciones Unidas Comisión Económica para América Latina y el Caribe (CEPAL).
    11. Alexis CRUZ-RODRÍGUEZ, 2014. "Assessing fiscal sustainability in some selected countries," Theoretical and Applied Economics, Asociatia Generala a Economistilor din Romania / Editura Economica, vol. 0(6(595)), pages 7-22, June.
    12. Danny Cassimon & Bjorn Van Campenhout, 2007. "Aid Effectiveness, Debt Relief and Public Finance Response: Evidence from a Panel of HIPC Countries," Review of World Economics (Weltwirtschaftliches Archiv), Springer;Institut für Weltwirtschaft (Kiel Institute for the World Economy), vol. 143(4), pages 742-763, December.
    13. Peter S. Heller & Menachem Katz & Xavier Debrun & Theo Thomas & Taline Koranchelian & Isabell Adenauer, 2006. "Making Fiscal Space Happen!: Managing Fiscal Policy in a World of Scaled-Up Aid," WIDER Working Paper Series RP2006-125, World Institute for Development Economic Research (UNU-WIDER).
    14. Jordan Schwartz & Luis Andres & Georgeta Dragoiu, 2009. "Crisis in Latin America," Journal of Infrastructure Development, India Development Foundation, vol. 1(2), pages 111-131, December.
    15. Daniela Fantozzi & Alessio Muscarnera, 2021. "A News-based Policy Index for Italy: Expectations and Fiscal Policy," CEIS Research Paper 509, Tor Vergata University, CEIS, revised 11 Mar 2021.
    16. Johansson, Pernilla, 2010. "Debt Relief, Investment and Growth," World Development, Elsevier, vol. 38(9), pages 1204-1216, September.
    17. Sèna Kimm Gnangnon & Jean-François Brun, 2020. "Tax reform and fiscal space in developing countries," Eurasian Economic Review, Springer;Eurasia Business and Economics Society, vol. 10(2), pages 237-265, June.
    18. Estache, Antonio & Iimi, Atsushi, 2011. "(Un)bundling infrastructure procurement: Evidence from water supply and sewage projects," Utilities Policy, Elsevier, vol. 19(2), pages 104-114, June.
    19. Mrs. Teresa Ter-Minassian & Richard Hughes & Alejandro Hajdenberg, 2008. "Creating Sustainable Fiscal Space for Infrastructure: The Case of Tanzania," IMF Working Papers 2008/256, International Monetary Fund.
    20. Frank Ellis & Dyton Maliro, 2013. "Fertiliser Subsidies and Social Cash Transfers as Complementary or Competing Instruments for Reducing Vulnerability to Hunger: The Case of Malawi," Development Policy Review, Overseas Development Institute, vol. 31(5), pages 575-596, September.

    More about this item

    Keywords

    Debt Markets; Currencies and Exchange Rates; Access to Finance; Banks&Banking Reform;
    All these keywords.

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:wbk:wbrwps:4970. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Roula I. Yazigi (email available below). General contact details of provider: https://edirc.repec.org/data/dvewbus.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.