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on Africa |
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Issue of 2014‒07‒13
forty-four papers chosen by Christian Zimmermann Federal Reserve Bank of St. Louis |
| By: | International Monetary Fund. African Dept. |
| Keywords: | Poverty Reduction Strategy Papers;Economic growth;Agricultural sector;Manufacturing sector;Infrastructure;Transport;Electric power;Education;Health care;Gender equality;Governance;Kenya; |
| Date: | 2014–03–10 |
| URL: | http://d.repec.org/n?u=RePEc:imf:imfscr:14/74&r=afr |
| By: | Antonio David; Montfort Mlachila; Ashwin Moheeput |
| Abstract: | This paper analyzes the links between financial and trade openness and financial development in Sub-Saharan African (SSA) countries. It is based on a panel dataset using methods that tackle slope heterogeneity, cross-sectional dependence and non-stationarity, important econometric problems that are often ignored in the literature. The results do not point to a general direct robust link between trade and capital account openness and financial development in SSA, once we control for other factors such as GDP per capita and inflation. But there is some indication that trade openness is more important for financial development in countries with better institutional quality. The findings might be due to a number of factors including distortions in domestic financial markets, relatively weak institutions and/or poor financial sector supervision. Thus, African policy makers should be cautious about expectations regarding immediate gains for financial development from greater international integration. Such gains are more likely to occur through indirect channels. |
| Keywords: | Development;Sub-Saharan Africa;Trade liberalization;Capital account liberalization;Economic integration;Econometric models;Financial Development, Trade Openness, International Financial Integration, sub-Saharan Africa |
| Date: | 2014–06–09 |
| URL: | http://d.repec.org/n?u=RePEc:imf:imfwpa:14/94&r=afr |
| By: | Amanda Mandzik (West Virginia University, College of Business and Economics); Andrew T. Young (West Virginia University, College of Business and Economics) |
| Abstract: | Evidence of relationships between religious affiliation and the African AIDS pandemic is found in the medical, religion, and sociology literatures. In particular, studies have shown that predominantly Christian countries tend to have higher HIV rates than predominantly Muslim countries. These relationships have been largely unexplored by economists and we seek to identify underlying institutions using a panel of up to 43 sub-Saharan African countries for 1990-2010. Catholic antagonism towards condom use has often but proposed, but we report that the protestant (rather than the Catholic) population share drives the Christianity/HIV correlation. (Also, condom use actually correlates positively with HIV prevalence, though reverse causation likely plays a role). Male circumcision rates have a large negative effect on HIV prevalence. While male circumcision has been linked to Islam in this context, we report that the male circumcision effect is robust to controlling for the Christian population share while the correlation of HIV prevalence and the Muslim population share is not. There is no significant relationship between an index of social regulation of religion and HIV prevalence. |
| Keywords: | HIV, AIDS, religion, institutions, religious institutions, sub-Saharan Africa |
| JEL: | O10 O55 Z12 I15 |
| Date: | 2014–01 |
| URL: | http://d.repec.org/n?u=RePEc:wvu:wpaper:14-09&r=afr |
| By: | Oumar Diallo; Sampawende J.-A. Tapsoba |
| Abstract: | This paper assesses the extent to which Sub-Saharan Africa (SSA)’s business cycle is synchronized with that of the rest of the world (RoW). Findings suggest that SSA’s business cycle has not only moved in the same direction as that of the RoW, but has also gradually drifted away from the G7 in favour of the BRICs. Trade with the BRICs turns out to be the strongest driver of this shift. Much of this impact unfolds through aggregate demand impulse from trade. As fiscal policy stances in SSA and the BRICs are not synchronized, they have not caused cyclical output correlation between these two groups of countries. Also, financial openness, which is at a very early stage across most SSA countries, has acted as a neutral force. |
| Keywords: | Business cycles;Brazil;Russian Federation;India;China;Sub-Saharan Africa;Trade integration;Demand;Fiscal policy;Economic models;Business Cycle Synchronicity, Trade, Sub-Saharan Africa, and the BRICs. |
| Date: | 2014–02–14 |
| URL: | http://d.repec.org/n?u=RePEc:imf:imfwpa:14/35&r=afr |
| By: | International Monetary Fund. African Dept. |
| Keywords: | Poverty Reduction Strategy Papers;Agricultural sector;Fisheries;Employment;Education;Health care;Governance;Mozambique; |
| Date: | 2014–05–30 |
| URL: | http://d.repec.org/n?u=RePEc:imf:imfscr:14/147&r=afr |
| By: | International Monetary Fund. African Dept. |
| Keywords: | Poverty Reduction Strategy Papers;Economic growth;Mining sector;Energy sector;Budgets;Education;Health care;Gender equality;Government expenditures;Governance;International cooperation;Mali; |
| Date: | 2014–06–17 |
| URL: | http://d.repec.org/n?u=RePEc:imf:imfscr:14/166&r=afr |
| By: | Asongu, Simplice; Jellal, Mohamed |
| Abstract: | The Okada & Samreth (2012, EL) and Asongu (2012, EB; 2013, EEL) debate on ‘the effect of foreign aid on corruption’ has had an important influence in policy and academic circles. This paper provides a unifying framework by using investment and fiscal behavior transmission channels in 53 African countries for the period 1996-2010. The richness of the dataset enables us to disaggregate countries into 16 panels depicting fundamental characteristics of corruption based on wealth-effects, legal origins, openness to sea, petroleum-exporting, regional proximity and religious domination. Findings unite the two streams of the debate and broadly suggest that while the ‘government’s final consumption expenditure’ channel is consistent with the latter author, the investment and tax effort channels are in line with the former authors. Justifications for the nexuses are provided. Policy implications on how to use foreign aid constraints in managing fiscal behavior as means of reducing (increasing) corruption (corruption-control) are discussed. |
| Keywords: | Foreign Aid; Political Economy; Development; Africa |
| JEL: | B20 F35 F50 O10 O55 |
| Date: | 2014–07–09 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:57192&r=afr |
| By: | International Monetary Fund. African Dept. |
| Keywords: | Natural gas;Revenues;Fiscal policy;Transparency;Selected issues;Tanzania;Natural resources;Fiscal framework;offshore natural gas;fiscal revenues |
| Date: | 2014–05–15 |
| URL: | http://d.repec.org/n?u=RePEc:imf:imfscr:14/121&r=afr |
| By: | International Monetary Fund. African Dept. |
| Abstract: | KEY ISSUES Context. Despite recent strong non-oil growth, poverty and income inequality remain high and social and governance indicators are below averages for sub-Saharan Africa. Structural reforms under the Transformation Agenda are ongoing, but significant infrastructure gaps and weak institutional capacity still retard growth prospects. At the same time, vulnerabilities are rising in the buildup to general elections in 2015 and fiscal buffers have been reduced. Meanwhile, GDP is being rebased and structural shifts may suggest a refocus in some policy areas. Outlook and Risks. Growth is expected to remain strong, driven by agriculture, trade, and services. Inflation should continue to decline, in line with a tight monetary policy, and a lowering trend in food prices from higher rice and wheat production. Key downside risks are (i) persistently lower oil revenue from changing global dynamics and lower domestic production; (ii) less prudent fiscal policy through the ongoing political cycle; (iii) ongoing security problems in the North; (iv) uncertainty about the pace of global recovery; and (v) capital flow reversals from the expected unwinding of unconventional monetary policy (UMP) in the advanced economies or increased domestic political risk. Addressing oil theft/production losses. Transparency and governance in the oil sector should be enhanced, including by strengthening the regulatory framework through the passage of a sound Petroleum Industry Bill (PIB) featuring stringent enforcement clauses. A multicountry partner strategy could also improve oil sector oversight. Rebuilding fiscal buffers by insulating macrofinancial stability from the political cycle. The fiscal framework should continue to be improved, with an appropriately conservative 2014 budget. Monetary policy should remain supportively tight, given the potential for capital flow reversals and fiscal slippages. In the event of persistent pressures, the naira should be allowed to adjust and reserve adequacy maintained. Improving competitiveness and productivity to generate inclusive growth will require wide-ranging structural reforms. Three key areas could help promote inclusive growth—increasing the delivery of power, broadening the agricultural production base, and increasing access to finance for SMEs. Support for sectoral growth should be underpinned by improvements in competitiveness rather than by protectionist measures. |
| Keywords: | Article IV consultation reports;Economic growth;Agricultural sector;Fiscal policy;Oil sector;Spillovers;Global competitiveness;Fiscal reforms;Monetary policy;Economic indicators;Debt sustainability analysis;Staff Reports;Press releases;Nigeria; |
| Date: | 2014–04–22 |
| URL: | http://d.repec.org/n?u=RePEc:imf:imfscr:14/103&r=afr |
| By: | Tidiane Kinda |
| Abstract: | Using manufacturing and services firm-level data for 30 sub-Saharan African (SSA) countries, this paper shows that taxation is not a significant driver for the location of foreign firms in SSA, while other investment climate factors, such as infrastructure, human capital, and insitutions, are. By analyzing disaggregate FDI data, the paper establishes that, while there is considerable contrast in behavior between vertical FDI (foreign firms producing for export) and horizontal FDI (foreign firms producing for local markets), taxation is not a key determinant for either type of FDI. Horizontal FDI is attracted to areas with higher trade regulations, highlighting interest in protected markets. Furthermore, horizontal FDI is affected more by financing and human capital constraints, and less by infrastructure and institutional constraints, than is vertical FDI. |
| Keywords: | Taxes;Sub-Saharan Africa;Foreign direct investment;Human capital;Infrastructure;Developing countries;foreign ownership, tax incentives, foreign capital, foreign investors, host country, mnes, external financing, foreign investments, host countries, foreign companies, investment climates, medium-sized firms, medium-sized enterprises, foreign participation, investment decisions, fixed investment, international investment, credit markets, market access, market size, multinational enterprises |
| Date: | 2014–01–27 |
| URL: | http://d.repec.org/n?u=RePEc:imf:imfwpa:14/15&r=afr |
| By: | International Monetary Fund. African Dept. |
| Abstract: | KEY ISSUES Context. The region continued to experience a strong upswing in 2013 and the immediate outlook is for further vigorous growth and moderate inflation. Sustaining this performance over the medium term, however, will require ambitious growth-enhancing reforms, high quality public investment, and consolidation of the recent improvements in the regional political and security situation. The outlook is subject to moderate downside risks. In the short term, political stability could be tested with the upcoming elections in a number of member states, particularly in a context of high demand for better governance and higher living standards. Security issues in the Sahel constitute another short-term risk. Delays in implementing reforms, at both the national and regional levels, are the principal medium-term risk. Policy recommendations: • Maintaining the current macroeconomic policy mix. The recent upswing is welcome. As growth is now better entrenched, more stimulus is not required at this juncture. With continued strong growth projected for the region, countries are encouraged to seek opportunities to strengthen fiscal sustainability while maintaining public investment efforts. The widening current account deficit and declining reserves?which remain adequate?should be monitored closely and warrant a pause in loosening monetary policy. • Increasing fiscal policy coordination. The ongoing review of the regional surveillance framework is welcome. Its ultimate goal should be to preserve fiscal and external sustainability. This will involve redesigning fiscal convergence criteria, improving regional surveillance, and strengthening the application of fiscal rules. • Accelerating financial sector reforms. Developing the financial sector while preserving its stability is essential to support sustainable economic development and improve the effectiveness of macroeconomic policies. Developing the interbank and government debt markets and strengthening substantially transparency, bank supervision, and the crisis management and resolution framework are priorities. Ongoing reforms go in the right direction but the pace of implementation needs to accelerate. • Moving toward a more dynamic and resilient union. The regional growth agenda should be reinforced by concrete and coordinated actions to improve structural competitiveness, accelerate regional integration, and strengthen economic resilience. |
| Keywords: | Staff Reports;West African Economic and Monetary Union;Economic growth;Economic conditions;Fiscal policy;Workers remittances;Monetary policy;Monetary transmission mechanism;Banking sector;Bank supervision;Economic indicators;Press releases;West Africa; |
| Date: | 2014–03–21 |
| URL: | http://d.repec.org/n?u=RePEc:imf:imfscr:14/84&r=afr |
| By: | International Monetary Fund. African Dept. |
| Abstract: | Discussions on the first review under the Extended Credit Facility (ECF) arrangement focused on program performance as well as policy commitments and reforms for 2014. The main objectives of the program remain to entrench macroeconomic stability, build fiscal and external buffers and improve prospects for inclusive growth, in the context of a new Poverty Reduction Strategy. Hence, structural reforms continue to focus on strengthening the fiscal position through enhanced revenue mobilization and progress in Public Financial Management reforms; supporting financial and private sector development; and advancing civil service reforms. |
| Keywords: | Extended Credit Facility;Fiscal policy;External borrowing;Fiscal reforms;Monetary policy;Economic indicators;Staff Reports;Letters of Intent;Press releases;Performance criteria modifications;Sierra Leone; |
| Date: | 2014–06–26 |
| URL: | http://d.repec.org/n?u=RePEc:imf:imfscr:14/171&r=afr |
| By: | International Monetary Fund. African Dept. |
| Abstract: | In recent years, the IMF has released a growing number of reports and other documents covering economic and financial developments and trends in member countries. Each report, prepared by a staff team after discussions with government officials, is published at the option of the member country. |
| Keywords: | Poverty Reduction Strategy Papers;Economic growth;Fiscal policy;Fiscal reforms;Governance;S?o Tom? and Pr?ncipe;household survey, macroeconomic framework, implementation period, reform agenda, data collection, analytical work, poverty line, reform program, fiscal impact, poverty monitoring, democratic institutions, basic social services, household surveys, vulnerable groups, poverty statistics, employment growth, social dimensions, statistical analysis, reducing poverty, rates of poverty reduction, human capital, analysis of poverty, fiscal sustainability, sustainable poverty |
| Date: | 2014–01–13 |
| URL: | http://d.repec.org/n?u=RePEc:imf:imfscr:14/10&r=afr |
| By: | Nix, Emily; Gamberoni, Elisa; Heath, Rachel |
| Keywords: | Economic Theory&Research,Labor Policies,Income,Gender and Development,Health Systems Development&Reform |
| Date: | 2014–06–01 |
| URL: | http://d.repec.org/n?u=RePEc:wbk:wbrwps:6946&r=afr |
| By: | International Monetary Fund. African Dept. |
| Abstract: | EXECUTIVE SUMMARY Context: The March 24, 2013, seizing of power by a coalition of rebels (Séléka) triggered a political and security crisis that resulted in a sharp contraction of economic activity, budgetary pressures, widespread destruction of administrative and economic infrastructures, a paralysis of the public administration, intercommunity conflicts, and a major humanitarian crisis. The new transitional government in place since the beginning of 2014 is facing significant challenges, including restoring security, reviving economic activity, and rebuilding the democratic process. As donors reengage, the economy is expected to recover slightly in 2014, subject to improvement in security conditions that would allow a resumption of agriculture activities and trade. Program issues: The authorities wish to inform the International Monetary Fund (IMF) of their decision to cancel with immediate effect the Extended Credit Facility (ECF) arrangement that was approved on June 25, 2012. They are requesting a disbursement of SDR 8.355 million (15 percent of quota, or about US$12.9 million) under the Rapid Credit Facility (RCF) to help meet their urgent balance of payments needs and support their economic program for 2014 and their reengagement with development partners. A successor RCF could follow before the end of the year, conditional upon the continued presence of urgent balance of payments needs and satisfactory performance under this RCF. Timely provision of pledged financial and technical assistance is crucial to sustain the momentum and exit from the emergency situation. Main policy recommendations: • Prepare the ground for the return of a normal budgetary process. Limit spending executed under emergency procedures, and reconnect the budget and accounting systems. • Ensure transparency and accountability in the use of public resources. Establish effective functioning of a Treasury Committee and a multi-partner Committee to monitor and manage public finances to reduce fiduciary risks. • Implement a prudent fiscal policy and restore fiscal discipline. Strengthen revenue mobilization, better prioritize spending, improve cash flow management, and gradually clear domestic arrears. • In the medium term, foster inclusive growth and create employment opportunities. Develop inclusive processes for conflict resolution, create fiscal space for social and other priority spending, and improve the business environment. |
| Keywords: | Rapid Credit Facility;Fiscal policy;Budgets;Tax collection;Revenue mobilization;Economic indicators;Extended Credit Facility;Debt sustainability analysis;Staff Reports;Letters of Intent;Press releases;Extended arrangement cancellations;Central African Republic; |
| Date: | 2014–06–16 |
| URL: | http://d.repec.org/n?u=RePEc:imf:imfscr:14/164&r=afr |
| By: | International Monetary Fund. African Dept. |
| Abstract: | EXECUTIVE SUMMARY This last review of Benin’s ECF arrangement confirms the improved growth performance during the program. Real GDP growth is expected to reach about 5½ percent in 2014 for the third consecutive year. This performance has closed the gap in per capita GDP growth between Benin and the Sub-Saharan African (SSA) average which was about 2 percentage points on average between 2005 and 2011. Thanks to prudent fiscal policy, macroeconomic performance remains satisfactory and progress has been achieved in structural reforms. All performance criteria were met except for the ceiling on non-concessional borrowing. The implementation of the new approach to customs reform is moving ahead well despite some delays. The government is tackling emerging issues in several areas to reduce risks to the good macroeconomic performance. Weak performance of domestic revenues requires a comprehensive tax administration reform which has been initiated. While non-performing loans (NPLs) in the banking sector have risen since 2012 and might increase further due to problems in a group of companies, they do not constitute a systemic risk. Discussions are underway among the central bank, the government, and the commercial banks on how to limit any further rise in NPLs. After some delays, the government has also initiated steps to develop a new framework for cotton management with more private sector involvement. Sound policies have created fiscal space for scaling up investment to remove growth bottlenecks, but further reforms are necessary to ensure efficiency and sustainability. To preserve the authorities’ achievements under this ECF arrangement, rising investment has to be accompanied by further progress in public financial management (PFM) and integrated into a medium-term framework anchored in debt sustainability. The authorities requested IMF support through a new ECF arrangement. The scaling up of investment will only lead to sustainable growth if conditions for private sector development are significantly improved. Government efforts are starting to show some results, but broad-based reforms will be necessary to enhance productivity. Staff recommends completion of the review and supports the authorities’ request for a waiver of the performance criterion on non-concessional borrowing. |
| Keywords: | Extended Credit Facility;Economic growth;Fiscal policy;Fiscal reforms;Banking sector;Economic indicators;Staff Reports;Press releases;Performance criteria waivers;Benin; |
| Date: | 2014–06–03 |
| URL: | http://d.repec.org/n?u=RePEc:imf:imfscr:14/150&r=afr |
| By: | International Monetary Fund. African Dept. |
| Abstract: | In recent years, the IMF has released a growing number of reports and other documents covering economic and financial developments and trends in member countries. Each report, prepared by a staff team after discussions with government officials, is published at the option of the member country. |
| Keywords: | Economic growth;Productivity;Fiscal reforms;Political economy;Financial stability;Selected issues;Namibia; |
| Date: | 2014–02–10 |
| URL: | http://d.repec.org/n?u=RePEc:imf:imfscr:14/41&r=afr |
| By: | Francis Mwesigye (National Graduate Institute for Policy Studies); Tomoya Matsumoto (National Graduate Institute for Policy Studies); Keijiro Otsuka (National Graduate Institute for Policy Studies) |
| Abstract: | While customary land tenure systems are still prevalent in most African countries, they are believed to be evolving to private land ownership. However, questions about how they are evolving and what determines this evolution remain un-answered. This study contributes to the literature by empirically analyzing the process of the evolution of land tenure systems in Uganda using community-, household-, and parcel-level data. By tracing rural-to-rural migration patterns, we found that immigrant-dominated and ethnically diverse communities have a higher incidence of private land ownership. As an implication of the evolution of land tenure system, we found that land markets are more active in immigrant communities, which enhances efficiency in land allocation through land transactions. In fact, we found a large and significant inverse relationship between farm size and productivity in communities with communal land ownership, and an insignificant relationship in communities with more privately owned land. These findings suggest that rural-to-rural migration, through weakening traditional social systems, promotes the shift from communal to individual land ownership which, in turn, boosts land transactions and efficient land use. |
| Date: | 2014–06 |
| URL: | http://d.repec.org/n?u=RePEc:ngi:dpaper:14-09&r=afr |
| By: | Pambo, Kennedy; Mugivane, Fred |
| Abstract: | Food fortification has proven to be an important strategy for addressing micronutrient deficiency that includes vitamin A, iron and zinc deficiency in most developing countries. Development efforts have thus focused on breeding for crops that have natural ability to produce through a process widely known as bio-fortification. However, efforts to promote mass fortification of foods (both bio and industrial) have yielded little success due to existence of weak information on factors affecting consumption of these nutritionally-enhanced foods. This study therefore, assessed factors affecting consumption of fortified foods using Vitamin A fortified sugar as a case study. Data collected from rural and urban areas of Kenya was analyzed through a probit model to examine consumption drivers. The results showed that point of purchase, trust for stakeholders’ involved in fortification, consumer’ awareness and knowledge of the importance of vitamin A have significant effects on consumption of fortified foods. These findings offer useful insights for the development of nutrition policies in Kenya, and Africa at large. |
| Keywords: | Micronutrient deficiency, bio-fortification, consumption drivers, probit models, Food Consumption/Nutrition/Food Safety, Food Security and Poverty, |
| Date: | 2014–06 |
| URL: | http://d.repec.org/n?u=RePEc:ags:iticab:174531&r=afr |
| By: | International Monetary Fund. African Dept. |
| Abstract: | KEY ISSUES Context: Swift corrective measures were instrumental in putting the program back on track and placing the fiscal outlook on a sounder footing in the run-up to the 2015 elections. Program: The Executive Board approved the three-year arrangement under the Extended Credit Facility (ECF) on January 27, 2012, with a total access of 39 percent of quota (SDR 30 million). The first, second and third reviews were completed on July 27, 2012, February 14, 2013, and September 6, 2013, respectively. For the fourth review, all performance criteria were observed, aided by the adoption of significant measures to bring the program back on track following fiscal slippages in early 2013. Satisfactory progress has been made on structural reforms. Policy discussions focused on reinvigorating program implementation after the difficulties in completing the third review under the ECF arrangement. Outlook and risks: The macroeconomic outlook remains difficult, and external vulnerabilities persist in the context of lower international coffee prices. Absent poor harvests, the inflation outlook in 2014 remains favorable, owing to lower projected international food and fuel prices. Wavering program ownership and expenditure pressures in the run-up to elections constitute key risks to the outlook. Staff Views: The staff recommends the completion of the fourth review under the ECF arrangement, setting of new performance and indicative criteria for September 2014, and the disbursement of SDR 5 million. The authorities have consented to the publication of this report following the completion of the review. |
| Keywords: | Extended Credit Facility;Fiscal policy;Revenue mobilization;Financial management;Debt management;Fiscal reforms;Commercial banks;Monetary policy;Economic indicators;Debt sustainability analysis;Staff Reports;Press releases;Extended arrangement reviews;Burundi; |
| Date: | 2014–03–19 |
| URL: | http://d.repec.org/n?u=RePEc:imf:imfscr:14/83&r=afr |
| By: | International Monetary Fund. African Dept. |
| Abstract: | EXECUTIVE SUMMARY The political situation was difficult throughout most of 2013 but has stabilized in the last few months. Disputes between government and opposition on preparations for legislative elections at end-September resulted in serious civil unrest but the situation is improving since the elections. The new Parliament was inaugurated on January 13, 2014, formally ending the transition period following the 2009–10 military regime. On January 20, 2014, the President nominated a new government, with key economic ministers carrying over from the previous government, albeit in different posts. The macroeconomic environment in 2013 was difficult, reflecting the fragile socio-political situation and a sharp slowdown in mining sector projects. As a result, growth is estimated to have slowed to 2.5 percent, sharply below the projected 4.5 percent. Inflation continued to fall and at end-2013 was 10.5 percent year-on-year. International reserves were maintained at a satisfactory level and the exchange rate remained broadly stable. Performance under the ECF-supported program remains satisfactory. Notwithstanding a sizeable shortfall in revenues and an increase in subsidies to the energy sector, strong adjustment measures have kept the fiscal deficit on track. All performance criteria (PCs) for end-June 2013 and the indicative targets for end-September 2013 were met with significant margins, and those for end-2013 are also expected to be met. However, the structural reform agenda incurred delays. The program for 2014 focuses on further consolidating macroeconomic stability, while increasing public investment to rebuild the country’s infrastructure. Real GDP is projected to rebound to 4.5 percent, reflecting a return to political stability and an acceleration of investment in the mining sector. Inflation is projected to further decline to 8.5 percent, while gross official reserves should remain at around 3 months of imports. Fiscal targets incorporate an increase in public investment, a strong revenue effort, and an increase in external assistance. Structural reforms aim at completing the actions delayed from 2014 and focus on public financial management, civil service reform, the mining sector, the business climate, agriculture, and the electricity sector. Risks to the program stem from a possible renewal of political instability, delays in the rebound of investment in the mining sector, and failure to reach the revenue targets. Staff supports the completion of the third review under the ECF arrangement and completing the financing assurances review. Completion of the review will result in a disbursement of an amount equivalent to SDR 18.36 million under the ECF arrangement. |
| Keywords: | Extended Credit Facility;Economic growth;Fiscal risk;Mining sector;Fiscal policy;Fiscal reforms;Electric power;Monetary policy;Economic indicators;Staff Reports;Letters of Intent;Press releases;Guinea; |
| Date: | 2014–02–27 |
| URL: | http://d.repec.org/n?u=RePEc:imf:imfscr:14/63&r=afr |
| By: | International Monetary Fund. African Dept. |
| Abstract: | KEY ISSUES Context: Angola has returned to a path of solid economic growth, with single-digit inflation, a strong international reserves position, and a stable exchange rate. The authorities have made progress in strengthening some areas of fiscal and monetary policies. However, recurrent domestic arrears and the reconciliation of oil revenue remain as challenges for public financial management. Outlook and risks: Growth is projected to have slowed to 4 percent in 2013, but is expected to increase to 5 percent in 2014 as oil production recovers. The non-oil sector continues to grow strongly, as investments in roads and power bolster growth in construction and manufacturing. The 2013 budget took important steps toward the integration of quasi-fiscal operations, but some slippage has been introduced in the 2014 budget. The weakening of the overall fiscal balance initiated in 2013 is expected to continue in 2014, heightening vulnerability to external shocks. In this context, efforts to reconcile oil revenue data and to ensure a timely and complete transfer of that revenue to the Treasury should continue, together with institutional reforms to address recurrent domestic arrears and persistent weaknesses in public financial management. Angola should take advantage of continued high oil prices to put in place reforms that will lead to higher growth in 2015. Focus: Discussions focused on policy options for further strengthening macroeconomic outcomes and key issues related to Angola’s capacity to repay the Fund, including the need for: prudent fiscal policies to support further strengthening of buffers; more timely and predictable oil revenue transfers to the Treasury; public financial management reforms to address the recurrence of domestic arrears; and the implementation of the foreign exchange law for the oil sector. |
| Keywords: | Post-program monitoring;Fiscal policy;Government expenditures;Infrastructure;Public investment;Oil sector;Foreign exchange;Monetary policy;Banking sector;Bank supervision;Economic indicators;Staff Reports;Press releases;Angola; |
| Date: | 2014–03–19 |
| URL: | http://d.repec.org/n?u=RePEc:imf:imfscr:14/81&r=afr |
| By: | Andrew Okello |
| Abstract: | Modern tax administrations seek to optimize tax collections while minimizing administration costs and taxpayer compliance costs. Experience shows that voluntary compliance is best achieved through a system of self-assessment. Many tax administrations have introduced self-assessment principles in the income tax law but the legal authority is not being consistently applied. They continue to rely heavily on “desk†auditing a majority of tax returns, while risk management practices remain largely underdeveloped and/or underutilized. There is also plenty of opportunity in many countries to enhance the design and delivery of client-focused taxpayer service programs, and better engage with the private sector and other stakeholders. |
| Keywords: | Income taxes;Tax assessments;Tax collection;Tax legislation;Tax policy;Tax administration;Cross country analysis;income tax, tax compliance, self-assessment, risk management, Sub-Saharan Africa |
| Date: | 2014–03–11 |
| URL: | http://d.repec.org/n?u=RePEc:imf:imfwpa:14/41&r=afr |
| By: | International Monetary Fund. African Dept. |
| Abstract: | EXECUTIVE SUMMARY Economic activity continued to grow at a brisk pace in 2013. Growth projections have been revised slightly downwards to 6.8 percent in 2013 and 2014, based on lower gold and cotton prices that are leading to somewhat lower output, and the impact of the high base of agricultural production in 2012 on growth in 2013. Inflation has continued to decline, reaching 2 percent, with notable reductions in the prices of food and staple goods. The current account is likely to deteriorate more than previously anticipated due to declining terms of trade, and higher volume imports of fuel and capital goods. Program performance remains strong. Revenue performance remains on target, but is no longer overshooting targets as in recent years, while spending execution is below target. Almost all program targets were met, including on net domestic financing and the fiscal balance. All structural benchmarks slated for completion in June and September were met. The authorities are requesting a successor 3-year ECF arrangement to meet projected balance of payments needs. Based on ad referendum agreements, the requested successor ECF-supported program aims to address long-term structural issues, while preserving stability in a potentially more challenging macroeconomic environment going forward. Structural reforms are articulated around four key themes: managing the use of natural resources revenues; improving the quality and pace of investment spending; supporting efforts to transform high growth into more inclusive growth; and, in the energy sector, improving supply while ensuring financial sustainability. The medium-term macroeconomic framework aims to contain the deficit at around 3 percent of GDP while providing space for higher social and investment spending. The program framework targets current spending adjustment, primarily through expiration of exceptional spending needed to address exogenous shocks, which will be complemented by modestly-growing domestic revenues and financing. There would be modest residual fiscal and balance of payments needs over the three-year program period; proposed access of 45 percent of quota would fill about one third of the identified needs. |
| Keywords: | Extended Credit Facility;Economic growth;Natural resources;Fiscal policy;Fiscal reforms;Commercial banks;Economic indicators;Extended arrangement requests;Staff Reports;Press releases;Burkina Faso; |
| Date: | 2014–02–10 |
| URL: | http://d.repec.org/n?u=RePEc:imf:imfscr:14/43&r=afr |
| By: | International Monetary Fund. African Dept. |
| Abstract: | KEY ISSUES Context and outlook. Mozambique’s macroeconomic outlook remains favorable and the PSI-supported program is broadly on track. All assessment criteria were met and most indicative targets, but there was some slippage on structural reforms. Economic growth is robust and inflation remains moderate. In spite of risks stemming from the uncertain global economy, growth is expected to be sustained in the medium term by the natural resource boom and infrastructure investment. A recent government guarantee for large-scale borrowing by a public enterprise has raised transparency and prioritization issues that point to the need to strengthen investment and macroeconomic planning. New risks associated with the political/security environment have emerged. Short-term policy framework. The main short-term challenge is to maintain the growth momentum and to contain the fiscal expansion envisaged in 2014, reflecting both election year pressures and the spending of one-off revenue windfalls and of external borrowing. Key fiscal priorities include improving VAT administration, using windfall revenue to build buffers and invest, strengthen investment implementation capacity, and ensure transparency and adherence to due process for investment selection and borrowing. Monetary policy will need to be vigilant and monitor inflation developments closely. Medium-term challenges. Structural reforms along a broad policy spectrum should be implemented vigorously to foster sustained and more inclusive growth. With foreign aid likely to decline over the medium term, increased nonconcessional borrowing can provide additional resources for improving physical infrastructure and human capital. Further strengthening debt management and investment planning and implementation are essential to ensure the efficiency of investment and borrowing. Completion of the new mining and hydrocarbon legislation, the related fiscal regimes, and implementation regulations would facilitate the economic development of Mozambique’s natural resources. |
| Keywords: | Policy Support Instrument;Fiscal policy;Public investment;External borrowing;Debt management;Tax administration;Fiscal reforms;Monetary policy;Economic indicators;Staff Reports;Press releases;Mozambique;external debt, public debt, current account, debt service payments, private credit, debt reduction, debt sustainability, external debt service, domestic financing, external financing, public debt management, budget law, external payments arrears, reserve assets, balance of payments, debt management strategy, central bank, nonconcessional debt, borrowing on debt sustainability, international debt, current account deficits, debt portfolio, current account balance, debt relief, domestic savings, debt sustainability analysis, private creditors, multilateral creditors, short term debt, foreign aid, domestic borrowing, debt report, external debt stock, bilateral creditors, external public debt, external loan, debt service obligations, external liability, domestic currency, government debt |
| Date: | 2014–01–28 |
| URL: | http://d.repec.org/n?u=RePEc:imf:imfscr:14/20&r=afr |
| By: | International Monetary Fund. African Dept. |
| Abstract: | KEY ISSUES Background, outlook, and risks. Economic growth is projected to remain strong at 7 percent next year and in the medium term. Inflation is at 6 percent, gradually converging to the authorities’ 5 percent medium term objective. The external current account deficit remains among the largest in the region, at 14 percent of GDP this year. Fiscal revenue shortfalls and overruns in domestically-financed spending led the deficit to rise to 6.8 percent of GDP in 2012/13. Revenue shortfalls in 2013/14 compared to the budget approved by parliament have prompted the authorities to undertake expenditure cuts during the fiscal year in an effort to meet their 5 percent of GDP target. Based on the debt sustainability analysis, Tanzania remains at low risk of debt distress. A major upside risk for the long term, not yet incorporated in the baseline projections, relates to sizable finds of offshore natural gas that, if confirmed as commercially viable, could bring in large revenues during the next decade. Program implementation. All performance criteria under the program were met, except a sizable breach of the performance criterion on net domestic financing at end-June 2013. The structural benchmark on submission to parliament of the VAT reform for November 2013 was missed. The authorities have taken corrective measures. Macroeconomic and structural policies. Preparations for the draft 2014/15 budget are under way. A VAT reform aimed at improving efficiency and reducing exemptions is ready for submission to parliament prior to the beginning of the new fiscal year. A priority in the next few years is to establish the institutional and policy framework to ensure that, if natural gas revenues materialize, they will bring benefits to all Tanzanians. Staff recommends completion of the third (and final) review under the SCF arrangement and approval of the authorities’ requests for a waiver for nonobservance of a performance criterion and for completion of the financing assurances review. |
| Keywords: | Article IV consultation reports;Economic growth;Natural gas;Fiscal policy;Fiscal reforms;Monetary policy;Exchange rate assessments;Economic indicators;Standby Credit Facility;Debt sustainability analysis;Staff Reports;Press releases;Performance criteria waivers;Tanzania; |
| Date: | 2014–05–15 |
| URL: | http://d.repec.org/n?u=RePEc:imf:imfscr:14/120&r=afr |
| By: | Amavilah, Voxi Heinrich |
| Abstract: | This comment is not a typical outcome of a typical research activity, and it not written like one. For example, although I have a list of references, I do not provide a formal literature review. The list is simply an acknowledge of the work that might have influenced my thoughts on the topic at hand. It is also not a review or any other evaluation of Lewis’s work, of which there are many by more eminent and famous friends, colleagues, and students of his. Lewis’s impact on Development Economics is well-known and appreciated. Less known and openly appreciated is his economic theory of growth and technological change, but I am not going to stress that either. My maintained claim is that the Newly-Industrialized Asian economies (NIAEs) have read carefully and followed closely and well Lewis’s theory in devising their growth and change strategies and policies, with local adjustments, of course. Many African countries on the other hand appear to have followed Lewis halfheartedly and in a helter-skelter way. Consequently, the difference in the performance of the two regions is no longer a matter of contention. The objective of this comment is to restate what I believe are Lewis’s key lessons to developing countries, and to show that although Lewis led all developing countries to water, proverbially speaking, some African countries have so far chosen not to drink. I find that there is a deliberateness in the order of the development process as conceptualized in Lewis’s theory of economic growth and technological change. First, for a country to grow it has to acknowledge that scarcity is real and to learn to be efficient, to economize. Second, efficiency requires good economic institutions to sustain it. Third, institutions need to not only have knowledge, defined as technological knowledge plus social knowledge, but more importantly such knowledge must grow, spread, and be used. The fourth “proximate cause” of growth in this order of preference is physical capital. Following capital, in the fifth and sixth places, respectively, are population (labor) and other natural resources (land), and government. Lewis is new classical (not to be confused with neo-classical) in that his theory of growth and change takes population and natural resources as given for any developing country, and counts government as a throwback to classical economics to suggest that economies perform best when government’s role is well defined and constrained. By implication good government is a function of good institutions, learning and knowledge growth. I conclude from this evidence that some African countries have refused to acknowledge scarcity, paid lip-service to knowledge accumulation, growth, and diffusion, over-stressed their need for physical capital and the abundance of their natural resources, neglected their populations, and failed to assign government its proper role. The result, until recently, has been slow growth. |
| Keywords: | Economic growth and technological change, Lewis and the Africans, Lewis and growth and change of African countries, lessons for growth and change, deep causes of growth and change of developing countries |
| JEL: | O11 O33 O47 O55 P52 |
| Date: | 2014–07–05 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:57126&r=afr |
| By: | Will Clark; Birgir Arnason |
| Abstract: | Rwanda is a unique case among its Sub-Saharan African peers in that it has already undergone a large scaling-up of public investment. The Rwandan government has made clear its desire to lower its reliance on foreign aid while still maintaining high public investment levels. We use the model of public investment, growth, and debt sustainability in Buffie et al. (2012) to evaluate the macroeconomic consequences of a possible scaling-down of investment in Rwanda. Using the model, we can gauge the consequences of different financing mechanisms and investment efficiency levels on the economy. We find that with some commercial borrowing and a modest tax adjustment, the authorities may be able to retain their high investment spending while still reducing their reliance on foreign aid. |
| Keywords: | Public investment;Rwanda;Development assistance;Economic growth;Debt sustainability;Economic models;Public Investment, Growth, Debt Sustainability, Low Income Countries |
| Date: | 2014–03–31 |
| URL: | http://d.repec.org/n?u=RePEc:imf:imfwpa:14/51&r=afr |
| By: | International Monetary Fund. African Dept. |
| Abstract: | KEY ISSUES Context. GDP growth is on track to reach 4 percent in 2013 and is projected to increase to 4.6 percent in 2014. Inflation has been declining, following a good harvest, and should stay below 1 percent in 2013 and below 2 percent in 2014. The cabinet was reshuffled in early September. This change was broadly viewed as a move to accelerate reforms ahead of local elections scheduled for the spring of 2014. Program implementation. While all quantitative program targets for mid-2013 were met, structural reform implementation slowed significantly during the summer and most structural benchmarks were not met by their respective deadlines. A number of critical reforms not covered by benchmarks also experienced limited progress. Fiscal outlook. The 2013 deficit target of 5.4 percent of GDP is projected to be met. The deficit would further decrease to 4.9 percent of GDP in 2014. This will require strengthening the revenue base, as recurrent revenue shortfalls have complicated fiscal management and required inefficient expenditure cuts in the past few years. The revenue mobilization efforts will hinge on tax administration reforms, as the tax system needs to stabilize after the introduction of the new tax code. Substantial current expenditure streamlining is also expected in 2014. It will contribute to the reduction of the deficit while allowing for higher public investment and the development of the social safety net. Reforming the State. The reform of agencies will improve transparency of public spending, expenditure control, fiscal management, and the efficiency of public spending. Beyond the restructuring of existing agencies, better supervision of remaining agencies and better application of rules governing the creation of new ones will be critical. Other efforts to increase the efficiency of public expenditure, such as generalizing cost-benefit analysis for the selection of projects and better control over the wage bill, should continue. Energy sector. Slow reforms in this sector represent a major obstacle to economic growth and carry substantial fiscal risks. Insufficient progress has been recorded in the implementation of the authorities’ strategy to introduce more cost-effective production technologies and improve the efficiency of SENELEC. It is critical to adopt a realistic timeline for the implementation of the investment plan and to focus efforts on a few large projects that are most critical. Better communication with all stakeholders on the situation of the sector, the reform strategy and its implementation is also needed. Staff recommends completion of the sixth PSI review. |
| Keywords: | Policy Support Instrument;Fiscal policy;Budget deficits;Fiscal reforms;Financial management;Energy sector;Economic indicators;Staff Reports;Press releases;Performance criteria modifications;Senegal;fiscal balance, public expenditure, tax revenue, fiscal deficit, capital expenditure, fiscal management, public debt, revenue collection, public spending, tax administration, budget law, primary fiscal balance, tax policy, government expenditure, tax reform, tax system, taxation, fiscal space, public expenditures, debt service, budget allocations, fiscal risks, tax base, fiscal cost, government revenue, fiscal outlook, public finance, fiscal sustainability, fiscal consolidation, government spending, expenditure cuts, capital expenditures, expenditure restraint, expenditure ratios, fiscal consolidation efforts, budget management, efficiency of government expenditure, government expenditures, fiscal accounts, social expenditure, budget management system, fiscal transparency, public finances, fiscal support, state budget |
| Date: | 2014–01–08 |
| URL: | http://d.repec.org/n?u=RePEc:imf:imfscr:14/4&r=afr |
| By: | International Monetary Fund. African Dept. |
| Abstract: | Executive Summary The first NPRS was drafted in 2002 and the authorities promised to reduce the percentage of the Saotomean population living in poverty (53.8 percent) by half in 2010 and by two-thirds in 2015, and to decrease the percentage of the population living in extreme poverty from 15.1 percent to 4.9 percent. In December 2005 a Priority Action Program (PAP 2006-2008) was submitted to the partners at the Brussels Round Table with a view to forming a partnership for good governance and poverty reduction that would make it possible to respond to the need to achieve the Millennium Development Goals. This exercise in negotiating with technical and financial partners was continued at the sectoral round tables held in São Tomé in December 2006 and a Coordination Meeting held in Santo António in the Autonomous Region of PrÃncipe in October 2007. Despite these initiatives, implementation of the National Poverty Reduction Strategy (NPRS-I) fell short of expectations, as evidenced by the progress reports and impact assessments for the policies and programs implemented. In light of this situation and the challenges faced in pursuing poverty reduction actions, São Tomé and PrÃncipe took the initiative to draft an updated National Poverty Reduction Strategy (NPRS-II) for the purpose of refocusing poverty reduction interventions for the period 2012- 2016. To that end, the present National Poverty Reduction Strategy Paper (NPRS-II) is informed by the participatory spirit and process that guided the preparation of the NPRS-I and is linked and coordinated with previous policy and planning instruments to create a new strategic framework, which incorporates a number of changes that have occurred at the national and international spheres, as well as new policy guidelines and concerns expressed by both the cooperation partners and the beneficiaries. This strategy is the result of a long process, which seeks to reconcile São Tomé’s aspirations with the opinions of the different national, regional, and district public institutions, as well as nongovernmental organizations, technical and financial partners, the private sector, and organized civil society. |
| Keywords: | Poverty Reduction Strategy Papers;Governance;Transparency;Economic growth;Agricultural sector;Transport;Infrastructure;Human capital;Education;Health care;HIV and AIDS;Millennium Development Goals;S?o Tom? and Pr?ncipe;basic social services, reducing poverty, incidence of poverty, local authorities, citizen participation, social security, gini, relative poverty, welfare indicators, gini index, labor market, vulnerable groups, quality of life, equal opportunity, environmental sustainability, income distribution, industrial sector, inequality index, social inequalities, cost-of-basic-needs method, pro-poor, basic needs method, human development index, human development report, social safety net, purchasing power, distribution of income, poverty indicators, social safety nets, democratic institutions, demographic factors, levels of inequality, low-income families, equality of opportunity, household consumption survey |
| Date: | 2014–01–13 |
| URL: | http://d.repec.org/n?u=RePEc:imf:imfscr:14/9&r=afr |
| By: | Francesco Grigoli |
| Abstract: | The measurement of the efficiency of public education expenditure using parametric and non-parametric methods has proven challenging. This paper seeks to overcome the difficulties of earlier studies by using a hybrid approach to measure the efficiency of secondary education spending in emerging and developing economies. The approach accounts for the impact of the level of development on education outcomes by constructing different efficiency frontiers for lower- and higher-income economies. We find evidence of large potential gains in enrollment rates by improving efficiency. These are largest in lower-income economies, especially in Africa. Reallocating expenditure to reduce student-to-teacher ratios (where these are high) and improving the quality of institutions (as measured by the "governance effectiveness" indicator in the World Bank's Governance Indicators database) could help improve the efficiency of education spending. Easing the access to education facilities and reducing income inequality (as measured by the Gini coefficient) could also help improve efficiency. |
| Keywords: | Government expenditures;Education;Africa;Emerging markets;Developing countries;Cross country analysis;education spending, educational outcomes, public education, public expenditure, education sector, school enrollment, education facilities, education outcomes, educational output, completion rates, access to education, educational efficiency, expenditure efficiency, schooling, education systems, efficiency of government expenditure, student educational outcomes, education indicators, public spending, school enrollments, health expenditure, returns to education, education services |
| Date: | 2014–01–30 |
| URL: | http://d.repec.org/n?u=RePEc:imf:imfwpa:14/19&r=afr |
| By: | International Monetary Fund. African Dept. |
| Abstract: | KEY ISSUES Context. Economic growth and macroeconomic stability improved in 2013. A robust rise in tourism earnings supported growth, as well as a reduction in the current account deficit as a share of GDP. The exchange rate has strengthened slightly, at the same time as the central bank accumulated more international reserves than expected. Inflation has decelerated and the government is on track to achieve its 5 percent of GDP primary surplus target. Focus. Discussions centered on the 2013 fiscal performance, the 2014 budget framework, monetary policy challenges (particularly responses to excess liquidity), and reforms in public enterprises, utility tariffs, and public financial management to reduce fiscal risks, strengthen the business environment, and improve the quality of public service provision. Program performance. All performance criteria for end-June 2013, the program’s last test date, were met. All the third quarter indicative targets were also met. The measures in the structural benchmarks were all completed, although there were short delays compared to initial plans for technical reasons. Staff recommends completion of the eighth review under the Extended Arrangement. Policies in the period ahead. The authorities remain resolute in their objective of reducing public debt below 50 percent of GDP by 2018, which leaves little scope to relax fiscal policy. Policies in 2014 aim to continue debt reduction while responding to some social pressures. Monetary policy will continue to stabilize inflation at low levels and aim for international reserves accumulation. Structural reforms aim to extend improvements in financial discipline to the broader public sector, including through utility price adjustments that reduce implicit subsidies and through better oversight of parastatals. The authorities indicated their intention to request a successor arrangement with the IMF to consolidate and extend the progress made during this EFF. Risks. The largest risks to the economic outlook and program performance are external, including most notably a downturn in Europe or global financial turbulence, which could lead declines in tourism receipts, drops in FDI and/or bank retrenchment. Homegrown risks to the program center on additional losses of key public enterprises that could jeopardize the government’s debt reduction objectives. |
| Keywords: | Extended arrangement reviews;Economic growth;Tourism;Fiscal policy;Debt restructuring;Fiscal reforms;Monetary policy;Reserves accumulation;Economic indicators;Staff Reports;Press releases;Seychelles;central bank, public debt, external debt, debt reduction, balance of payments, current account, current account deficit, external borrowing, debt service payments, external debt service, foreign debt, reserve accumulation, public external debt, debt forgiveness, public finance, debt strategy, payment arrears, debt burden, domestic financing, domestic debt, treasury bills, public finances, domestic currency, debt crisis, external payments arrears, public and publicly guaranteed, commercial debt, commercial borrowing, debt outstanding, current account balance, current account deficits, debt exchange, general resources account, debt dynamics, debt sustainability, domestic borrowing |
| Date: | 2014–01–31 |
| URL: | http://d.repec.org/n?u=RePEc:imf:imfscr:14/25&r=afr |
| By: | Andrew Berg; Rafael A Portillo; Luis-Felipe Zanna |
| Abstract: | We study the role of the exchange rate regime, reserve accumulation, and sterilization policies in the macroeconomics of aid surges. Absent sterilization, a peg allows for almost full aid absorption — an increase in the current account deficit net of aid—delivering the same effects as those of a flexible regime but with a necessary increase in inflation. Regardless of the regime, policies that limit absorption—and result in large accumulation of reserves—are welfare reducing: they help reduce the real appreciation (and inflation under the peg), but at the expense of reducing private consumption and investment, and therefore medium-term growth. |
| Keywords: | Exchange rate regimes;Aid flows;Africa;Foreign exchange;Reserves accumulation;Central banks;Monetary policy;Fiscal policy;Economic models;Reserve Accumulation Policies, Sterilization Policies, Transfer Problem., fixed exchange rate, fixed exchange rate regime, flexible exchange rate, flexible exchange rate regime, real exchange rate, exchange rate appreciation, exchange rates, real exchange rate appreciation, fixed exchange rate regimes, nominal exchange rate, flexible exchange rates, flexible exchange rate regimes, exchange sales, exchange rate commitment, foreign exchange sales, exchange rate policies, currency substitution, exchange rate peg, exchange reserves, fixed exchange rates, foreign exchange reserves, exchange rate policy, exchange rate target |
| Date: | 2014–01–30 |
| URL: | http://d.repec.org/n?u=RePEc:imf:imfwpa:14/18&r=afr |
| By: | Alimi, R. Santos |
| Abstract: | The paper examines the long run and short run relationships between inflation and financial sector development in Nigeria over the period between 1970 and 2012. Three variables, namely; broad definition of money as ratio of GDP, quasi money as share of GDP and credit to private sector as share of GDP, were used to proxy financial sector development. Our findings suggest that inflation presented deleterious effects on financial development over the study period. The main implication of the results is that poor macroeconomic performance has deleterious effects to financial development - a variable that is important for affecting economic growth and income inequality. More so, we observed a negative effect of the measures of financial development on growth, suggesting that impact of inflation on the economic growth passes through financial sector. Therefore, low and stable prices, is a necessary first step to achieving a deeper and more active financial sector that will enhance growth as predicted by Schumpeter. |
| Keywords: | Financial Sector development, inflation, Nigeria |
| JEL: | C51 D49 G10 |
| Date: | 2014–01 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:57180&r=afr |
| By: | Kjellgren, Annika; Jones-Pauly, Christina; El-Tayeb Alyn, Hadyiat; Tadesse, Endashaw; Vermehren, Andrea |
| Abstract: | The Sudanese population has suffered from years of conflict, and deep-seated security issues have severely hampered Sudan’s long-term economic stability and social development. As a consequence, Sudan is struggling to meet its MDGs. Since the secessionof South Sudan, Sudan has lost a considerable part of its oil production and fiscal revenues. At the same time, the Government recognizes social safety nets as important instruments for reducing poverty. This report provides an analysis of the state of social safety nets in Sudan which shows that Sudan’s existing safety net programs are limited in coverage, lack coordination, as well as monitoring and evaluation. The report suggests (i) reallocation of savings from the fuel subsidy reform to targeted pro-poor safety net programs; (ii) strengthening of the existing safety net through monitoring the outcomes, strong controls and social accountability, and a culture of evaluation, and (iii) development of a coherent National Social Protection Policy. |
| Keywords: | Safety Nets and Transfers,Rural Poverty Reduction,Population Policies,Health Monitoring&Evaluation,Access to Finance |
| Date: | 2014–05–01 |
| URL: | http://d.repec.org/n?u=RePEc:wbk:hdnspu:89230&r=afr |
| By: | Vandeginste, Stef |
| Abstract: | Dans le débat concernant l’éventuelle candidature à un mandat présidentiel supplémentaire des présidents en exercice au Burundi, en République démocratique du Congo et au Rwanda, on observe une tendance de la part d’acteurs politiques et diplomatiques à appeler au respect de la Constitution. Appliquée au cas du Burundi, l’analyse juridique présentée dans ce papier montre que d’importants défis peuvent se poser en ce qui concerne la mise en application de la norme constitutionnelle consacrant le principe de la limitation du nombre de mandats que peut exercer un président de la République. Cette norme n’aura, en toute probabilité, aucun effet au moment de l’évaluation de la recevabilité de l’éventuelle candidature de Pierre Nkurunziza aux élections présidentielles de 2015 par la Commission électorale nationale indépendance (CENI). La seule procédure qui, avant les élections, permettrait de jeter de la lumière sur l’éligibilité de Pierre Nkurunziza au scrutin présidentiel serait celle d’une demande d’interprétation de la Constitution adressée à la Cour constitutionnelle par Pierre Nkurunziza lui-même ou par d’autres requérants issus de son parti politique, le CNDD-FDD (Conseil national pour la défense de la démocratie – Forces de défense de la démocratie). Dans ces circonstances, un renvoi à la Constitution, aussi louable soit-il, ne remplace pas le choix essentiellement politique à faire. In the ongoing debate around presidential term limits and how they apply to the cases of Burundi, the Democratic Republic of the Congo and Rwanda, national and international political and diplomatic actors have increasingly referred to the need to respect the Constitution. Applied to the case of Burundi, this legal analyses shows that important challenges arise when it comes to implementing the constitutional norm regarding presidential term limits. In all likelihood, this norm will have no effect whatsoever no the decision to be taken by the Independent National Electoral Commission (CENI) regarding the admissibility of a candidacy of Pierre Nkurunziza for the 2015 presidential elections. The only procedure through which, before the elections, some light can be shed on Pierre Nkurunziza’s eligibility for a third presidential mandate is through an interpretation of the Constitution by the Constitutional Court. This can only be done at the request of Pierre Nkurunziza himself or through a petition which is supported by at least some of the members of parliament who belong to his political party CNDD-FDD (Conseil national pour la defense de la démocratie – Forces de defense de la démocratie). In these circumstances, merely referring to the Constitution, however laudable in principle, clearly does not replace the essentially political choice to be made. |
| Keywords: | Burundi; constitution |
| Date: | 2014–06 |
| URL: | http://d.repec.org/n?u=RePEc:iob:wpaper:201404&r=afr |
| By: | Alimi, R. Santos |
| Abstract: | This study aimed at empirically exploring the triangle of relationships – finance-inflation-growth – with the broader data sets (1970 - 2012) to see whether a direct effect of inflation on growth can be identified as well as an indirect effect through financial sector development. It also seeks to explore the relative strength of the variables in affecting economic growth using the variance decompositions (VDCs) and the impulse-response functions (IRFs) based on the structural vector autoregression (VAR) framework. We found that both Engel - Granger and Johansen cointegration test suggest that the variables are cointegrated. Based on the existence of cointegration relationship among the variables, we therefore estimate the long-run relationships using the Stock-Watson’s dynamic ordinary least squares (DOLS) model. The results of DOLS model give an indication that inflation effect on growth is independent of financial development while the financial development effect on growth is dependent of inflation. Furthermore, we also found no evidence of short run causality between RGDP and INF; and there is existence of short run interaction between RGDP and FD that is a bi-directional causality between the variables. Variance decompositions (VDCs) results revealed the variations in the economic growth in Nigeria respond more to shocks in trade openness and next government spending, however, the variations in the economic growth rely more on its own innovations. The policy implication of this finding is for policy makers to develop strategy that will holistic reforms in the financial system and enhance stock market development along side with banking financial institutions. Finally, since financial development effect on growth is dependent of inflation, policy that will ensure price stability will promote output further. |
| Keywords: | Inflation, Financial Development, Output Growth, VECM |
| JEL: | D53 E31 G29 |
| Date: | 2014–01 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:57182&r=afr |
| By: | Kodongo, Odongo; Mokoaleli-Mokoteli, Thabang; Maina, Leonard |
| Abstract: | This paper investigates the relationship between leverage and the financial performance of listed firm in Kenya. We use annual data for the period 2002 – 2011. Using various panel procedures, our study finds reasonably strong evidence that leverage significantly, and negatively, affects the profitability of listed firms in Kenya. However, leverage has no effect on Tobin’s Q, our proxy for firm value. Our results are robust to alternative panel specifications and hold for both small-size and large-size firms. Second, because the performance of firms depends on other things than just their capital structure, we control for the effects of those other variables by including them in our models. In this respect, our findings suggest that asset tangibility, sales growth and firm size are important determinants of profitability. Surprisingly, asset tangibility consistently has a negative relationship with profitability. For small firms, our results indicate that sales growth and firm size are important factors driving firm value (Tobin’s Q). Yet, the same variables do not appear to drive the value of large firms. |
| Keywords: | Capital structure, leverage, firm value, profitability, Kenya |
| JEL: | G30 G32 |
| Date: | 2014–04 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:57116&r=afr |
| By: | International Monetary Fund. Fiscal Affairs Dept. |
| Abstract: | PREFACE In response to a request from the Minister of Economy and Finance, an IMF Fiscal Affairs Department mission visited Bamako from January 7 to 21, 2014 in order to: (1) describe the expenditure chain by diagramming the circulation of information and the responsibilities of the officials involved; (2) make recommendations to streamline procedures for the various categories of expenditure (payroll, value-added tax (VAT) refunds, investments and imprest accounts); and (3) propose a roadmap for implementing the key recommendations. The mission comprised Mr. Benoit Taiclet, head of mission, and Mr. Christophe Maurin and Ms. Marie-Laure Berbach, both IMF Fiscal Affairs Department panel experts. The mission was received by Her Excellency Mrs. Bouaré Fily Sissoko, Minister of Economy and Finance, His Excellency Mr. Madani Touré, Minister Delegate responsible for the Budget, and Mr. Sidiki Traoré, Advisor to the Minister responsible for Finance, and Mr. Ousmane Coulibaly, Technical Advisor to the Minister Delegate responsible for the Budget. It held meetings with a number of officials and their colleagues: Mr. Boubacar Ben Bouillé, National Treasury and Public Accounting Director; Mr. Robert Diarra, General Director of the Budget; Mr. Alhassane Ag Hamed Moussa, National Financial Control Director; Mr. Sidi Almoctar Oumar, General Director of Public Contracting and Public Service Delegations; Mr. Kloussama Goita, President of the Accounts Section of the Supreme Court (SCCS); Mr. Amadou Ousmane Touré, Auditor General; Mr. Amadou Gadiaga, Controller General. The mission also met with representatives of civil society and the Chamber of Commerce of Bamako, and had the opportunity to discuss its conclusions and recommendations with representatives of the various development partners. The members of the mission would like to express their sincere thanks to the Office of the Minister for the organization of the work, the availability of the directors and their colleagues, and the quality and openness of the discussions. The mission would also like to thank Mr. Anton Op de Becke, IMF Resident Representative, Mr. Bakary Traore, resident economist, and Mrs. Racheeda Boukezia, IMF resident advisor at the National Treasury and Public Accounting Directorate, for their availability and assistance in the organization of the mission. |
| Keywords: | Government expenditures;Budgets;Government accounting;Public investment;Value added tax;Technical Assistance;Mali; |
| Date: | 2014–05–30 |
| URL: | http://d.repec.org/n?u=RePEc:imf:imfscr:14/122&r=afr |
| By: | International Monetary Fund. Fiscal Affairs Dept. |
| Abstract: | EXECUTIVE SUMMARY The Government of Botswana has committed to introduce a Medium-Term Expenditure Framework (MTEF) by 2016. The MTEF will provide a more explicit linkage between National Development Plan (NDP) priorities and budget allocations by adopting a medium-term budgeting horizon. The design characteristics of the MTEF need to be chosen carefully to meet specific fiscal consolidation objectives of the government. The proposed model is aimed at maintaining expenditure discipline to meet the government’s objective of reducing spending to 30 percent of GDP from the current 36 percent of GDP and running budget surpluses in order to rebuild government reserves that had fallen significantly in recent years. An MTEF model based on a binding nominal expenditure ceiling covering 100 percent of government expenditure is appropriate. The key features would include: • Three-year aggregate expenditure ceilings - fixed for the budget year(BY) and the first out-year (BY+1), but which may be adjusted in the second out-year, in recognition of the volatility facing Botswana’s economy; and • Binding ministerial allocations for the budget year (BY); indicative allocations for first out-year (BY+1) and second out-year (BY+2)—constrained by the aggregate expenditure ceiling—to allow reallocation of spending from low- to high-priority areas. To support the commitment to the resource allocations approved under the MTEF, a number of prioritization, control, and accountability arrangements need to be put in place. These arrangements form a key part of the MTEF and are required to: (i) increase the legitimacy of expenditure allocations; (ii) ensure that once the allocations are decided upon, they can be executed effectively; and (iii) demonstrate that the government is meeting its previously stated commitments, and if not, state reasons for any deviations. Some of these elements are in place, but they will require strengthening and refinement. These include: (i) the need to undertake more frequent forecasting rounds that cover the full range of macroeconomic, revenue and expenditure areas; (ii) building a margin for contingencies in the outer years; and (iii) a greater degree of political involvement in the prioritization between different spending areas in order to give the allocation legitimacy. Successful MTEFs require credible macro-fiscal forecasts, which inform the setting of aggregate expenditure ceilings. Botswana is strengthening its macro-fiscal forecasting capability. The government now has a coherent medium-term framework that can provide aggregate revenue, expenditure, and fiscal balance projections. Further improvements would include: (i) broadening the coverage of the framework; (ii) incorporating balance sheet dynamics; and (iii) systemized assessment of past forecast errors to improve the credibility of the forecasts. |
| Keywords: | Government expenditures;Budgets;Budgeting;Technical Assistance;Botswana; |
| Date: | 2014–06–10 |
| URL: | http://d.repec.org/n?u=RePEc:imf:imfscr:14/162&r=afr |
| By: | International Monetary Fund. Fiscal Affairs Dept. |
| Abstract: | PREFACE At the request of the Malian Ministry of Finance, a technical assistance mission visited Bamako during August 12–21, 2013. The purpose of the mission was to identify issues and options that need to be considered when adopting an automatic petroleum product pricing mechanism. The mission was led by Mr. Mark De Broeck and also comprised Mr. Kangni Roland Kpdodar (both from the IMF’s Fiscal Affairs Department). The mission met with Mr. Mamadou Traoré, Minister of Economy and Humanitarian Action, Mr. Abdel Karim Konaté, Minister of Finances, Mr. Makan Tounkara, Minister of Energy and Water, Mr. Ibrahima Dansako, Deputy Director General of ONAP, Mr. Moumouni Dembélé, Director General Customs, and Mr. Mahamadou Lamine Samaké, Deputy Director General, Taxation Directorate-General, Ministry of Finance The mission also met with the stakeholders in fuel pricing issues represented in the fuel price monitoring commission, including representative from consumer advocacy groups, domestic and international oil companies, transport associations, and mining companies. The mission’s findings were discussed with World Bank staff. The mission is grateful to all its interlocutors for the cooperation and fruitful discussions. The mission would like to express its sincere appreciation for the excellent cooperation, support and logistical assistance from ONAP staff, in particular from it received from Ministry of Economy and Finance officials, in particular from Mr. Modibo Diall, Chief of the Statistics and Administration Department, the mission’s main counterpart. The mission is also very grateful to the staff of the IMF Resident Representative’s Office. Mr. Op de Beke, the Resident Representative, Mr. Bakary Traoré, the Office’s economist, provided first-rate assistance with organizing the mission at short notice and very valuable advice on the mission’s work. Mrs. Nafissatou Koné, the Office’s administrative assistant, provided excellent support. |
| Keywords: | Oil pricing policy;Tax revenues;Fiscal management;Technical Assistance;Mali; |
| Date: | 2014–02–04 |
| URL: | http://d.repec.org/n?u=RePEc:imf:imfscr:14/31&r=afr |
| By: | Auffret, Philippe |
| Abstract: | Madagascar is one of the poorest countries in the world and a very high proportion of the population experiences frequent shocks, whether from natural disasters, economic shocks or internal crises of governance. As a consequence, about half the country’s population is undernourished. Children between the ages of 6 and 14 face the risks of low human capital development, child labor and marginalization. On the other hand, the Government of Madagascar’s commitment to social protection as a national policy was never fully effective. Interventions in social protection have been developed on an ad-hoc basis, often on the initiative of donors. In order to inform the government’s policy development, the report proposes a social protection strategy that increases the protection of the population while decreasing its vulnerability, taking into account the existing programs and the differences in exposure to risks between population groups recommendations that emerge from the research. |
| Keywords: | Health Monitoring&Evaluation,Safety Nets and Transfers,Population Policies,Rural Poverty Reduction,Regional Economic Development |
| Date: | 2014–05–01 |
| URL: | http://d.repec.org/n?u=RePEc:wbk:hdnspu:89231&r=afr |
| By: | Onour, Ibrahim |
| Abstract: | The primary aim of this paper to evaluate the cost of deposit insurance premium and assess moral hazard effect in the banking sector in Sudan. The analysis of moral hazard in this paper is based on two types of risks, credit default risk, measured as the ratio of non-performing loans to the total size of loans for each bank, and operational risk measured as technical inefficiency. The findings of the research indicate there is a positive association between insurance coverage premium and increase in each of these two risks, implying evidence of moral hazard effect. A policy implication of this result is that the moral hazard behavior in the banking sector can be mitigated by changing the current policy of flat rate deposit insurance premium to risk based insurance premium policy. |
| Keywords: | Deposit; Insurance; Moral hazard; Risk. |
| JEL: | G12 G2 |
| Date: | 2013 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:57082&r=afr |
| By: | Salifou Issoufou; Edward F. Buffie; Mouhamadou Bamba Diop; Kalidou Thiaw |
| Abstract: | Senegal's fiscal deficit and public debt have been on the rise in recent years owing partly to an ailing and inefficient oil-based energy sector. In this paper we use a two-sector, open-economy, dynamic general equilibrium model to investigate the effects of varying fiscal policy instruments one at a time and of policy packages that increase public investment in energy and infrastructure in scenarios with varying degrees of debt finance and with different types of supporting fiscal adjustment. Lowering the fiscal deficit by raising taxes and cutting government expenditure has adverse effects on growth, real wages and the supply of public services. Senegal does not need, however, to undertake such difficult fiscal adjustment. A public investment program that coordinates new investment in low-cost hydroelectric, coal or gas-fired power with a phased contraction of the oil-based sector raises the total supply of energy by 70 percent, increases real wages and real GDP, stimulates private investment, and significantly reduces the fiscal deficit in the medium long term. More aggressive investment programs borrow against future fiscal gains to combine new energy investments with either delayed or frontloaded investments in non-energy infrastructure. These programs lead to much higher real wages and real GDP while keeping public debt sustainable and the fiscal deficit low in the medium and long term. |
| Keywords: | Energy sector;Senegal;Public investment;Fiscal policy;Budget deficits;Public debt;Economic models;Energy Reform, Public Investment, Growth, Debt Sustainability, Fiscal Policy, Infrastructure. |
| Date: | 2014–03–12 |
| URL: | http://d.repec.org/n?u=RePEc:imf:imfwpa:14/44&r=afr |