This Selected Issues paper estimates the macroeconomic impact of these discoveries and discusses potential fiscal frameworks for managing related revenues. Pre-production investment (2019–2021) will lead to an increase in the current account deficit; however, this will be followed by a boost to exports as hydrocarbon production comes online (2022 onward). Discoveries are important but will not lead to a major transformation of the economy, with hydrocarbons expected to make up not more than 5 percent of GDP. Fiscal revenues would average about 1.5 percent of GDP over a 25-year period and about 3 percent of GDP when production peaks. Given the relatively small gains in revenue, IMF staff recommends a fiscal framework that allows for an initial drawdown of government resources to finance large up-front investment needs, followed by an appropriate target level of the non-resource primary balance which is to serve as a medium-term fiscal anchor. Issues related to managing the volatility of resource revenues are also discussed.
REVENUE MOBILIZATION AND INEQUALITY IN SENEGAL
B. Impact of Revenue and Expenditure Measures on Inequality
C. Concluding Remarks
1. Comparison of Tax Instruments Non-Productive Government Expenditure
2. Main Experiment: Non-Productive Government Expenditure
3. Comparison of ExpenditureSchemes: Compared to No Reform, Alpha = 0.05
4. Comparison of ExpenditureSchemes: Compared to Non-Productive Expenditure Alpha = 0.05
5. Comparison of ExpenditureSchemes: Compared to No Reform, Alpha = 0
This report analyzes the Comprehensive Poverty Reduction and Growth Strategy (CPRGS), the poverty reduction strategy paper of Vietnam. It evaluates the CPRGS in the international context and the national situation, economic growth in individual sectors, and social achievements in poverty reduction. It analyzes the policy implementation, macroeconomic stability, administration reforms, modern governance, and challenges and measures in poverty reduction and growth. It provides details of strategy implementation and the monitoring and evaluating system.
This report assesses fiscal transparency practices in the United Kingdom in relation to the requirements of the IMF’s new Fiscal Transparency Code (FTC). Across all pillars evaluated in the code, the United Kingdom scores very highly when compared with other countries that have undergone an assessment. Of the 48 principles in the FTC, the United Kingdom meets 9 principles at the basic level, 10 principles at the good level, and 23 principles at the advanced level. Fiscal transparency practices are strongest in the area of fiscal reporting and resource revenue management. In four principles, the United Kingdom’s transparency practices do not currently meet basic practice.
Mr. Ping Zhang, Mr. Eivind Tandberg, and Mr. Ehtisham Ahmad
Central governments or the international community at large are concerned about subnational service delivery. The design of targeted expenditure programs features frequently in central efforts to redistribute infrastructure and social spending or assure minimum standards. These programs are typically financed by the center, often with external assistance, but are implemented at the subnational level, which may not have incentives to spend the resources as intended by the center or donors. We discuss mechanisms for improving the effectiveness of targeted public expenditure programs, modeling the interaction between different levels of government as a dynamic game. An incentive structure could be designed that compelled local governments to truthfully reveal their ability to implement national programs in a cost-effective manner and to exert the effort required to maximize the expected benefits. The models have direct policy relevance in the Heavily Indebted Poor Countries (HIPCs), where donor-financed resources are used for poverty-reduction at the local level, or in large countries such as China, where there is an effort to redirect social and infrastructure spending to particular regions.
Adrian Peralta, Ms. Marina Mendes Tavares, Xuan S. Tam, and Xin Tang
We quantitatively investigate the macroeconomic and distributional impacts of fiscal consolidations in low-income countries (LICs) through value added tax (VAT), personal income tax (PIT), and corporate income tax (CIT). We extend the standard heterogeneous agents incomplete markets model by including multiple sectors and rural-urban distinction to capture salient features of LICs. We find that overall, VAT has the least efficiency costs but is highly regressive, while PIT impacts the economy in the opposite way with CIT staying in between. Cash transfers targeting rural households mitigate the negative distributional impacts of VAT most effectively, while public investment leads to little redistribution.
This paper reviews Ex-Post Assessment of Performance Under IMF-Supported Programs for Guinea-Bissau. More than two-thirds of the population of approximately 1.3 million is living below the poverty line in Guinea-Bissau. The paper describes developments under IMF-supported programs since 1993, when Guinea-Bissau embarked on a second round of stabilization and reform efforts. It summarizes the lessons learned and the challenges for the near future. Possible future role of IMF in Guinea-Bissau is also discussed.
This paper analyzes the interlinkages between climate shocks, domestic conflicts, and policy resilience in Africa. It builds on a Correlated Random Effect model to asess these interrelationships on a broad sample of 51 African countries over the 1990-2018 period. We find suggestive evidence that climate shocks, as captured through weather shocks, increase the likelihood of domestic conflicts, by as high as up to 38 percent. However, the effect holds only for intercommunal conflicts, not for government-involved conflicts. The effect is maginified in countries with more unequal income distribution and a stronger share of young male demographics. The results are robust to a wide set of sensitivity checks, including using various indicators of weather shocks and domestic conflicts, and alternative estimation techniques. The findings shed light on key policy resilience factors, including steadily improving domestic revenue mobilization, strengthening social protection and access to basic health care services, scaling up public investment in the agriculture sector, and stepping up anti-desertification efforts.