## _pdp04

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---

### Understanding Fiscal Space (Section 1)
- Definition:
  - "Fiscal space is the availability of budgetary room that allows a government to provide resources for a desired purpose without any prejudice to the sustainability of a government’s financial position."
  - Fiscal space must be judged relative to fiscal sustainability—the capacity to finance desired expenditure programs, service debt obligations, and ensure solvency.
- Key considerations for sustainability:
  - Debt sustainability and the nature of government expenditure structure (continuing recurrent expenditures of high priority; implicit social insurance obligations).
  - Exposure to other fiscal risks (government guarantees, public private partnerships).
  - Elasticity of government revenue.
- Ways to create fiscal space:
  - Additional revenues through tax measures or strengthened tax administration.
  - Cutting lower priority expenditures to make room for higher-priority spending.
  - Borrowing from domestic or external sources (subject to debt sustainability).
  - Seignorage (central bank money creation), noting strict limits and risks.
  - Receipt of grants from external sources.
- Intertemporal and medium-term points:
  - Distinguish one-time spending (e.g., training) versus expenditures implying ongoing operations and maintenance; many programs require sustained higher expenditure.
  - Fiscal space should be evaluated across sectors, not solely within a specific sector.
  - Precommitments (e.g., social insurance, post-retirement benefits) can create "negative" fiscal space by exhausting future resources.
  - Dedicated external resources may create counterpart future spending requirements that preempt domestic budget growth; limits on absorptive capacity and macro stability may constrain externally financed expansions.
- Core fiscal-policy objectives to assess fiscal space:
  1. Scope for increased public saving through tax reform and expenditure rationalization.
  2. Additional resources mobilizable from borrowing and grants consistent with macroeconomic stability and debt sustainability.

### Raising Revenue; Reprioritization and Efficiency (Section 1, A & B)
- Revenue mobilization targets and limits:
  - Target for low income countries: raising the tax share to at least 15 percent of GDP should be seen as a minimum objective.
  - International experience: some increases beyond 15 percent are reasonable but are technically and administratively challenging and take years.
  - High-tax industrial countries often already have tax shares above 40–45 percent of GDP, making further increases difficult.
- Earmarking:
  - Can mobilize resources for specific purposes but creates rigidities and can crowd out higher-return expenditures.
- Expenditure reprioritization and efficiency:
  - First option: reduce unproductive, recurrent expenditures (subsidies, defense/internal security spending, non-productive civil service payroll elements).
  - Examples: contain wages and salaries in non-key sectors while allowing expansion in key sectors (education, health) and reduce civil service mobility impediments.
  - Efficiency gains include improved delivery standards (minimum pupil-teacher ratios), rationalized medical care delivery, reduced corruption, improved governance.
  - Donor alignment and harmonization (reduce aid-tying, donor administrative overheads, and recipient administrative overload) can increase fiscal space.
  - Private-sector efficiency improvements (e.g., infrastructure) can raise returns to public and private spending.
  - Risk: underfunding a sector today may make rebuilding costly and reduce future fiscal space.

### Borrowing, Seignorage, and IMF stance (Section 1)
- Borrowing considerations:
  - Borrowing requires repayment—assess whether returns justify borrowing and whether spending will enhance revenues to service debt.
  - Debt sustainability assessments should consider prospective growth, exports/remittances, interest rate environment, revenue elasticities, debt composition, and terms of new debt.
- Printing money:
  - "Not desirable as a fiscal space strategy due to inflationary risks."
  - Practical scope for financing via money creation is rarely above 1 percent of GDP unless a clear and rapid supply-side impact is obtainable.
  - IMF would rarely endorse a program consciously targeting inflation above 10–12 percent (except in gradual disinflation from hyperinflationary levels).

### Inflation, Grants, PPPs, and Absorptive Capacity (Section 2)
- Inflation and growth:
  - High inflation is "not conducive to sustained rapid growth, private investment (Fischer, 1993), or distributional equity," because "the poor are most heavily taxed in an inflationary environment."
  - Country examples:
    - Tanzania: inflation has remained stable at below 5 percent.
    - Zambia: inflation was still above 20 percent at end-2003.
    - Malawi: inflation around 10 percent, with a poor harvest temporarily pushing it up to around 14 percent.
- External grants: potential, conditions, and limits:
  - Grants can provide fiscal space distinct from borrowing, but predictability and sustained flows are crucial.
  - "Greater predictability and reduced volatility is enormously important in creating fiscal space."
  - If assistance is uncertain beyond the medium term, fiscal space from grants (or concessional loans) is limited; permanent program expansion risks insufficient future assistance or inadequate growth-induced revenues.
  - Programs with high costs of downsizing (e.g., antiretroviral treatment of HIV/AIDS patients) require caution if assistance is only short-term.
  - Large aid inflows can affect the real exchange rate and the size of the traded goods sector depending on spending composition (traded vs. nontraded goods) and productivity impacts.
  - Countries may sequester aid as higher external reserves to avoid real appreciation that harms export industries.
  - IMF is concerned with policies that could threaten sustainability of a country’s external position and highlights long-term sustainability and growth tradeoffs of a significantly appreciated exchange rate.
  - Empirical evidence on Dutch Disease in low-income countries is mixed; insufficient experience exists with aid inflows that are a very substantial share of GDP.
  - Grants and loans may reduce incentives for domestic revenue mobilization and create dependency and rent-seeking; such disincentive effects must be assessed for fiscal sustainability.
  - IMF program design:
    - IMF programs often set limits on net domestic borrowing, allowing accommodation of foreign-financed infrastructural investments and social expenditures.
    - "Adjusters" can raise overall budget ceilings when unanticipated external grants finance meritorious expenditure programs.
    - IMF staff emphasize supply-side effects: higher government spending that relaxes bottlenecks or creates productive capacity can justify higher spending without adverse macroeconomic consequences, but arguments must be analytically grounded and consistent with fiscal sustainability and clear time frames for capacity increases.
    - IMF staff will "raise red flags" when higher spending threatens macroeconomic stability or medium-term sustainability, and will consider ripple effects across public-sector wages and spending pressures.
- Public-private partnerships (PPPs) and contingent risks:
  - PPPs can induce private financing of infrastructure and may yield efficiency gains that imply some fiscal space.
  - Private-sector cost of capital is typically built into future leasing costs, offsetting infrastructure savings over time.
  - Governments must ensure capacity to absorb higher future expenditures and consider contingent risks (e.g., bankruptcy of private agent).
- Absorptive capacity and implementation constraints:
  - "Absorptive capacity" includes availability of skilled manpower, managerial capacity for scaling up programs, and necessary physical infrastructure.
  - Rapid scaling up of expenditure can increase inefficiencies and reduce cost-effectiveness—an implementation constraint rather than a pure fiscal-space constraint.
- Accounting rules:
  - Changes in accounting rules do not, by themselves, create additional scope for expenditure; productivity of expenditure, debt sustainability, and solvency implications must be assessed irrespective of current/capital budget classification.
  - IMF’s Government Finance Statistics Manual 2001 is useful for analyzing impacts on net worth and overall government balance-sheet sustainability.
  - The "golden rule" still requires attention to productivity of capital spending and preventing debt from rising above specified GDP ratios.

### Country-specific judgments and Malawi/Tanzania/Zambia case study (Section 2)
- Country-specific assessment needs:
  - initial fiscal position;
  - revenue and expenditure structure;
  - characteristics of outstanding debt obligations;
  - economic structure;
  - prospects for external resource inflows; and
  - external conditions facing the economy.
- Taxation and revenue in the three countries:
  - Tax/GDP ratios are "high by regional standards" in Malawi and Zambia, but "remain low in Tanzania, despite recent increases."
  - VAT rates: 17.5 percent in Malawi and Zambia; 20 percent in Tanzania.
- Expenditure and non-discretionary burdens:
  - Tanzania: total spending has remained below 25 percent of GDP, and the share of non-discretionary spending has declined, leaving more short-term reprioritization flexibility.
  - Malawi and Zambia: spending levels are already quite high.
  - Non-discretionary spending proxy (wages + interest) has absorbed large and increasing resources in Malawi and Zambia:
    - Malawi: interest payments more than doubled from less than 4 percent in 1999 to more than 9 percent in 2003 (but are coming down with the new government’s commitment to fiscal stability).
    - Zambia: the wage bill increased by over 3 percent of GDP over the period 2000–2003.
- Domestic borrowing and monetization:
  - Limited scope to borrow domestically in Malawi and Zambia due to rising domestic debt shares and low degree of monetization.
  - Broad money/GDP: about 21 percent in Zambia; "well below 20 percent" in both Malawi and Tanzania.
- External indebtedness and borrowing prospects:
  - Malawi and Zambia: stock of external debt relative to GDP remains high (as of end-2004 these countries had yet to reach the HIPC Completion Point).
  - Tanzania: graduated from HIPC Initiative at end-2002; external debt ratios steadily declining.
  - NPV of external debt/exports:
    - Tanzania: less than 120 percent at end-2003.
    - Zambia: more 220 percent at end-2003.
- Grants dependence and volatility:
  - All three countries rely heavily on grants, which have been volatile.
  - Standard deviation of grants over 1990–2003:
    - Zambia: 3.2
    - Malawi: 2.5
    - Tanzania: less than 1.2
  - Lower grant volatility in Tanzania reflects strong donor response to successful macroeconomic stabilization and reform, and an increasing share of budget support grants within overall grants.
- Public expenditure management and absorptive capacity:
  - Fund and World Bank assessment (originally 2001–2002, updated later with a 16th indicator on procurement) based on 15 indicators covering budget formulation, execution, and reporting:
    - Initial fulfillment: Tanzania 8 of 15 indicators; Malawi 4; Zambia 3.
    - Recent update: limited progress in Zambia and Malawi (though efforts strengthened recently); Tanzania has further strengthened its position.
- Macroeconomic absorption of demand pressures:
  - Channel 1 — private-sector credit growth:
    - Tanzania: credit to private sector has been steadily growing.
    - Zambia: credit to private sector has declined.
    - Malawi: credit to private sector has remained stable—reflecting sizeable real interest rates driven by government borrowing needs.
  - Channel 2 — current account deficits and external vulnerability:
    - Tanzania: has been reducing its current account deficit as a share of GDP.
    - Malawi and Zambia: current account deficits have shown larger and more volatile behavior.
  - Risk of Dutch disease with large aid flows can be offset if spending enhances supply response (e.g., removing transportation bottlenecks, building productive infrastructure, increasing market access).

### Conclusion and author attribution (Section 3)
- Key conclusion:
  - The potential role and size of Dutch disease effects, if any, can only be assessed on a country-specific basis.
  - The analysis provides an illustration of challenges countries face in attempting to expand spending levels on priority sectors.
- Author attribution:
  - This box was prepared by Annalisa Fedelino of the IMF’s Fiscal Affairs Department.

*Source: Understanding Fiscal Space, Peter S. Heller, March 2005 (IMF Policy Discussion Paper PDP/05/4); box prepared by Annalisa Fedelino (IMF Fiscal Affairs Department).*

### Section 1

### Understanding Fiscal Space

### Introduction
- Context: Donors and NGOs seek to know whether “fiscal space” can be provided in the context of IMF-supported programs to support initiatives such as the Millennium Development Goals (MDGs).
- Paper objective: Define “fiscal space” and its linkage to fiscal sustainability; describe alternative ways to create fiscal space; note how the IMF can support appropriate efforts; discuss relationship to absorptive capacity.
- Key point: Issues in creating fiscal space are not novel but are longstanding fiscal policy trade-offs.

### Definition and link to fiscal sustainability
- Definition: Fiscal space is the availability of budgetary room that allows a government to provide resources for a desired purpose without any prejudice to the sustainability of a government’s financial position.
- Explicit link: Fiscal space must be judged relative to fiscal sustainability—the capacity to finance desired expenditure programs, service debt obligations, and ensure solvency.
- Considerations for sustainability:
  - Debt sustainability and the nature of government expenditure structure (continuing recurrent expenditures of high priority; implicit social insurance obligations).
  - Exposure to other fiscal risks (government guarantees, public private partnerships).
  - Elasticity of government revenue.

### Ways fiscal space can be created
- Additional revenues through tax measures or strengthened tax administration.
- Cutting lower priority expenditures to make room for higher-priority spending.
- Borrowing from domestic or external sources (subject to debt sustainability).
- Seignorage (central bank money creation), noting strict limits and risks.
- Receipt of grants from external sources.

### Intertemporal and medium-term considerations
- Short-term creation of fiscal space must be assessed for medium-term implications:
  - One-time spending (e.g., training) versus expenditures that imply ongoing operations and maintenance.
  - Many advocated programs (health, education, infrastructure) require sustained higher expenditure over time.
- Necessity of a medium-term expenditure framework with a comprehensive perspective on priorities:
  - Fiscal space should be evaluated across sectors, not solely within a specific sector.
  - Precommitments (e.g., social insurance, post-retirement benefits) can exhaust future budgetary resources and create “negative” fiscal space.
- External inflows:
  - Dedicated external resources may create counterpart future spending requirements that preempt domestic budget growth.
  - Limits on absorptive capacity and macroeconomic stability may constrain the magnitude of externally financed sectoral expansions.

### Issues that arise in creating fiscal space
- Two core objectives for fiscal policy to determine available fiscal space:
  1. Scope for increased public saving through tax reform and expenditure rationalization.
  2. Additional resources mobilizable from borrowing and grants consistent with macroeconomic stability and debt sustainability.

### A. Raising revenue
- Target for low income countries: raising the tax share to at least 15 percent of GDP should be seen as a minimum objective.
- International experience: some increases beyond 15 percent are reasonable but are technically and administratively challenging and take years.
- High-tax industrial countries often already have tax shares above 40–45 percent of GDP, making further increases difficult.
- Earmarking revenues:
  - Can mobilize resources for specific purposes.
  - Creates rigidities and can crowd out higher-return expenditures, potentially reducing net fiscal space.

### B. Reprioritization and efficiency of expenditure
- First option: reduce unproductive, recurrent expenditures (subsidies, defense/internal security spending, non-productive civil service payroll elements).
- Reconciliation example: contain wages and salaries in non-key sectors while allowing expansion in key sectors (education, health) and reducing rigidities (civil service mobility impediments).
- Efficiency gains:
  - Improve delivery (minimum pupil-teacher ratios, rationalize medical care delivery).
  - Reduce corruption and improve governance.
  - Donor alignment and harmonization (reduce aid-tying, donor administrative overheads, and recipient administrative overload) can increase fiscal space.
- Private-sector efficiency improvements (e.g., infrastructure) can raise returns to public and private spending.
- Intertemporal risk: underfunding a sector today may make rebuilding costly and reduce future fiscal space.

### Borrowing and seignorage
- Borrowing (domestic or external):
  - Requires repayment—assess whether returns justify borrowing and whether spending will enhance revenues to service debt.
  - Debt sustainability assessments should consider prospective growth, exports/remittances, interest rate environment, revenue elasticities, debt composition, and terms of new debt.
- Printing money:
  - Not desirable as a fiscal space strategy due to inflationary risks.
  - Practical scope for financing via money creation is rarely above 1 percent of GDP unless a clear and rapid supply-side impact is obtainable.
  - IMF would rarely endorse a program consciously targeting inflation above 10–12 percent (except in gradual disinflation from hyperinflationary levels).

*Source: Understanding Fiscal Space, Peter S. Heller, March 2005 (IMF Policy Discussion Paper PDP/05/4).*

### Section 2

### _pdp04 - Section 2

### Inflation and growth
- High inflation is "not conducive to sustained rapid growth, private investment (Fischer, 1993), or distributional equity," because "the poor are most heavily taxed in an inflationary environment."
- Country-specific inflation observations:
  - Tanzania: inflation has remained stable at below 5 percent.
  - Zambia: inflation was still above 20 percent at end-2003.
  - Malawi: inflation around 10 percent, with a poor harvest temporarily pushing it up to around 14 percent.

### External grants: potential, conditions, and limits
- Grants can provide fiscal space distinct from borrowing, but predictability and sustained flows are crucial:
  - A commitment to provide a given flow of resources over a number of years implies greater fiscal space than the same amounts delivered with year-to-year uncertainty.
  - "Greater predictability and reduced volatility is enormously important in creating fiscal space."
- When assistance is not assured beyond the medium term, fiscal space from grants (or concessional loans) is limited:
  - Expanding programs on a permanent basis risks insufficient future assistance or inadequate growth-induced domestic revenues.
  - Programs with high costs of downsizing (e.g., antiretroviral treatment of HIV/AIDS patients) require caution if assistance is only short-term.
- Policy tradeoffs and IMF role:
  - Large aid inflows can affect the real exchange rate and the size of the traded goods sector depending on spending composition (traded vs. nontraded goods) and productivity impacts.
  - Countries may sequester aid as higher external reserves to avoid real appreciation that harms export industries.
  - The IMF, by mandate, is concerned with policies that could threaten sustainability of a country’s external position and would highlight long-term sustainability and growth tradeoffs of a significantly appreciated exchange rate.
- Empirical evidence on Dutch Disease in low-income countries is mixed; insufficient experience exists with aid inflows that are a very substantial share of GDP.
- Grants and loans may reduce incentives for domestic revenue mobilization and create dependency and rent-seeking; such disincentive effects must be assessed when judging fiscal sustainability.
- IMF-supported programs and grant absorption:
  - IMF programs often set limits on net domestic borrowing, allowing accommodation of foreign-financed infrastructural investments and social expenditures.
  - "Adjusters" can be used to raise overall budget ceilings when unanticipated external grants finance meritorious expenditure programs.
  - IMF staff emphasize supply-side effects: higher government spending that relaxes bottlenecks or creates productive capacity can justify higher spending without adverse macroeconomic consequences, but arguments must be analytically grounded and consistent with fiscal sustainability and clear time frames for capacity increases.
  - IMF staff will "raise red flags" when higher spending threatens macroeconomic stability or medium-term sustainability, and will consider ripple effects across public-sector wages and spending pressures.

### Public-private partnerships (PPPs) and contingent risks
- PPPs can induce private financing of infrastructure and may yield efficiency gains that imply some fiscal space.
- However, private-sector cost of capital is typically built into future leasing costs, offsetting infrastructure savings over time.
- Governments must ensure capacity to absorb higher future expenditures and consider contingent risks (e.g., bankruptcy of private agent).

### Absorptive capacity and implementation constraints
- "Absorptive capacity" is multifaceted: availability of skilled manpower, managerial capacity for scaling up programs, and necessary physical infrastructure.
- Rapid scaling up of expenditure can increase inefficiencies and reduce cost-effectiveness — an implementation constraint rather than a pure fiscal-space constraint.

### Accounting rules cannot create real fiscal space
- Changes in accounting rules do not, by themselves, create additional scope for expenditure on social services or infrastructure.
- Productivity of expenditure, debt sustainability, and solvency implications must be assessed irrespective of current/capital budget classification.
- The IMF’s Government Finance Statistics Manual 2001 is useful for analyzing impacts on net worth and overall government balance-sheet sustainability.
- Example: the "golden rule" (focus on current balance and finance capital from savings/borrowing) still requires attention to productivity of capital spending and preventing debt from rising above specified GDP ratios.

### Country-specific judgments and IMF engagement
- Judgments on fiscal space are inherently country specific, requiring detailed assessment of:
  - initial fiscal position;
  - revenue and expenditure structure;
  - characteristics of outstanding debt obligations;
  - economic structure;
  - prospects for external resource inflows; and
  - external conditions facing the economy.
- Donors and governments can and should request IMF detailed and transparent assessments of fiscal and debt sustainability.
- When donors commit to substantial grant increases (e.g., scaling up health sector), countries should:
  - focus on sector-specific dynamics (e.g., building a cadre of trained health personnel and recurrent costs);
  - ask IMF staff to assess fiscal implications, macroeconomic management challenges, and policy tradeoffs (including real exchange rate consequences);
  - clarify with donors the likely medium- to long-term availability of assistance and structure expenditures in light of uncertainty.
- No simple mechanistic formulas substitute for detailed country-specific macroeconomic and fiscal policy assessment.

### Case studies: Malawi, Tanzania, and Zambia — room for additional spending
- Taxation and revenue:
  - Tax/GDP ratios are "high by regional standards" in Malawi and Zambia, but "remain low in Tanzania, despite recent increases."
  - VAT rates: 17.5 percent in Malawi and Zambia; 20 percent in Tanzania.
- Expenditure and non-discretionary burdens:
  - Tanzania: total spending has remained below 25 percent of GDP, and the share of non-discretionary spending has declined, leaving more short-term reprioritization flexibility.
  - Malawi and Zambia: spending levels are already quite high.
  - Non-discretionary spending proxy (wages + interest) has absorbed large and increasing resources in Malawi and Zambia:
    - Malawi: interest payments more than doubled from less than 4 percent in 1999 to more than 9 percent in 2003 (but are coming down with the new government’s commitment to fiscal stability).
    - Zambia: the wage bill increased by over 3 percent of GDP over the period 2000–2003.
- Domestic borrowing and monetization:
  - Limited scope to borrow domestically in Malawi and Zambia due to rising domestic debt shares and low degree of monetization.
  - Broad money/GDP: about 21 percent in Zambia; "well below 20 percent" in both Malawi and Tanzania.
- External indebtedness and borrowing prospects:
  - Malawi and Zambia: stock of external debt relative to GDP remains high (as of end-2004 these countries had yet to reach the HIPC Completion Point).
  - Tanzania: graduated from HIPC Initiative at end-2002; external debt ratios steadily declining.
  - NPV of external debt/exports:
    - Tanzania: less than 120 percent at end-2003.
    - Zambia: more 220 percent at end-2003.
- Grants dependence and volatility:
  - All three countries rely heavily on grants, which have been volatile.
  - Standard deviation of grants over 1990–2003:
    - Zambia: 3.2
    - Malawi: 2.5
    - Tanzania: less than 1.2
  - Lower grant volatility in Tanzania reflects strong donor response to successful macroeconomic stabilization and reform, and an increasing share of budget support grants within overall grants.
- Public expenditure management and absorptive capacity:
  - Fund and World Bank assessment (originally 2001–2002, updated later with a 16th indicator on procurement) based on 15 indicators covering budget formulation, execution, and reporting:
    - Initial fulfillment: Tanzania 8 of 15 indicators; Malawi 4; Zambia 3.
    - Recent update: limited progress in Zambia and Malawi (though efforts strengthened recently); Tanzania has further strengthened its position.
- Macroeconomic absorption of demand pressures:
  - Two channels considered:
    1. Private-sector credit growth: risk that sterilization of liquidity from government spending may raise interest rates and crowd out private-sector borrowing:
       - Tanzania: credit to private sector has been steadily growing.
       - Zambia: credit to private sector has declined.
       - Malawi: credit to private sector has remained stable—reflecting sizeable real interest rates driven by government borrowing needs.
    2. Current account deficits and external vulnerability:
       - Tanzania: has been reducing its current account deficit as a share of GDP.
       - Malawi and Zambia: current account deficits have shown larger and more volatile behavior.
  - Risk of Dutch disease with large aid flows (real appreciation harming exports) can be offset if spending enhances supply response (e.g., removing transportation bottlenecks, building productive infrastructure, increasing market access).

*Source: _pdp04 - Section 2*

### Section 3

### _pdp04 - Section 3

### Key conclusion
- Again, the potential role and size of Dutch disease effects, if any, can only be assessed on a country-specific basis.
- Conclusion. The analysis in this box—while cursory—may provide a useful illustration of some of the challenges these—and other—countries face in attempting to expand their spending levels on priority sectors.

### Author attribution
- *This box was prepared by Annalisa Fedelino of the IMF’s Fiscal Affairs Department.*

### References
- Baldacci, Emanuelle and Kevin Fletcher, 2003,“A Framework for Fiscal Debt Sustainability Analysis in Low-Income Countries,” in Helping Countries Develop: The Role of Fiscal Policy, ed. by Sanjeev Gupta, Benedict Clements, and Gabriela Inchauste (Washington: International Monetary Fund), pp. 130–161.
- Calderón, César and Luis Servén, 2004, “The Effects of Infrastructure Development on Growth and Income Distribution,” World Bank Policy Research Paper No. 3400 (September).
- Chalk, Nigel, and Richard Hemming, 2000, “Assessing Fiscal Sustainability in Theory and Practice,” IMF Working Paper 00/81 (Washington: International Monetary Fund).
- Fischer, Stanley, 1993, “The Macroeconomic Factors in Growth,” Journal of Monetary Economics,” Vol. 32 (December), pp. 485–512.
- Heller, Peter S., 2003, Who Will Pay? Coping with Aging Societies, Climate Change, and other Long-Term Fiscal Challenges (Washington: International Monetary Fund).
- ____________, 2004, “Are Governments Overextended, ”World Economics, vol. 5, no. 4 (October-December).
- IMF, 2004a, Debt Sustainability in Low-Income Countries—Proposal for an Operational Framework and Policy Implications (February). Available via the Internet: http://www.imf.org/external/np/pdr/sustain/2004/091004.htm
- _____2004b Operational Implications for Debt Sustainability in Low-Income Countries—Implications for Fund Program Design (September). Available via the Internet: http://www.imf.org/external/np/pdr/sustain/2004/091304.htm
- Khan, Mohsin S., and Abdelhak S. Senhadji, 2000, “Threshold Effects in the Relationship Between Inflation and Growth,” IMF Staff Papers, Vol. 48, No. 1, pp. 1–21.
- Leipziger, Danny, Marianne Fay, Quentin Wodon and Tito Yepes, 2003, “Achieving the Millennium Development Goals: The Role of Infrastructure,” World Bank Policy Research Working Paper 3163 (November).

*This box was prepared by Annalisa Fedelino of the IMF’s Fiscal Affairs Department.*

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