A Rule-Based Medium-Term Fiscal Policy Framework for Tanzania

Author/Editor:

Daehaeng Kim ; Mika Saito

Publication Date:

November 1, 2009

Electronic Access:

Free Full Text (PDF file size is 989 KB).Use the free Adobe Acrobat Reader to view this PDF file

Disclaimer: This Working Paper should not be reported as representing the views of the IMF.The views expressed in this Working Paper are those of the author(s) and do not necessarily represent those of the IMF or IMF policy. Working Papers describe research in progress by the author(s) and are published to elicit comments and to further debate

Summary:

A zero net domestic financing (NDF) target has served Tanzania well in recent years, contributing to prudent expenditure policy, improved fiscal sustainability, and macroeconomic stability. Moving to a more flexible fiscal policy, however, may serve Tanzania better. The "diamond rule" proposed in this paper incorporates a permanent hard ceiling on debt and annual benchmark limits on NDF, expenditure growth, and nonconcessional external financing. This rule would provide flexibility for countercyclical policy and help define the fiscal space for infrastructure spending that is consistent with longrun fiscal sustainability. An illustrative simulation shows that Tanzania has considerable fiscal space for development spending.

Series:

Working Paper No. 09/244

Subject:

English

Publication Date:

November 1, 2009

ISBN/ISSN:

9781451873917/1018-5941

Stock No:

WPIEA2009244

Price:

$18.00 (Academic Rate:$18.00)

Format:

Paper

Pages:

29

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