Fiscal Rules: Coping with Revenue Volatility in Lesotho and Swaziland
Departmental Papers, September 12, 2017
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- Fiscal Rules: Coping with Revenue Volatility in Lesotho and Swaziland
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Bibliographic details
- Authors: Jiro Honda, Manabu Nose, Cesar Sosa Padilla, Jose L. Torres, Murna Morgan, Fernando G Im, Natasha Koliadina
- Published: September 12, 2017
- Series: Departmental Papers
- DOI: https://doi.org/10.5089/9781484309575.087
Summary and context
- Over the past decade, Lesotho and Swaziland have faced significant volatility in their fiscal revenues owing to highly unstable Southern African Customs Union (SACU) receipts.
- The paper uses model analysis to explore the advantages of implementing fiscal rules to deal with such volatility.
- It emphasizes that developing strong institutions and improving public financial management (PFM) are necessary steps to ease transitions to a rules-based fiscal policy framework.
Key findings from the analysis
- The use of a structural balance target could:
- smooth the growth impact from revenue shocks, and
- help preserve sufficient international reserves during bad times.
- From a long-term perspective, the analysis suggests possible welfare gains from introducing fiscal rules.
Policy recommendations and implementation considerations
- Adopt a structural balance fiscal rule to stabilize the economy against SACU revenue volatility.
- Strengthen institutions and improve public financial management as prerequisites for successful transition to a rules-based framework.
- Draw on experiences in other countries to inform design and implementation of fiscal rules and supporting institutions.
Subjects and keywords (as provided)
- Subjects: Central banks, Expenditure, Fiscal policy, Fiscal rules, International reserves, Public financial management (PFM)
- Keywords: Africa, DP, DPPP, feedback coefficient, Fiscal rules, Global, government, impulse responses to SACU revenue shock, International reserves, revenue fall, SACU, SACU receipts, SACU revenue, SACU revenue feedback coefficient, SACU revenues in excess, SACU transfer, stabilization fund, structural surplus, unstable SACU receipt, volatile SACU receipt
Publication and metadata (exact)
- Authors: Jiro Honda, Manabu Nose, Cesar Sosa Padilla, Jose L. Torres, Murna Morgan, Fernando G Im, Natasha Koliadina
- Publication date: September 12, 2017
- Series: Departmental Paper No. 2017/005
- Issue: 005
- Volume: 2017
- Pages: 53
- DOI: https://doi.org/10.5089/9781484309575.087
- Stock No: FRAVREA
- ISBN: 9781484309575
- ISSN: 2616-5333
Departmental Paper No. 2017/005 (September 12, 2017), DOI: https://doi.org/10.5089/9781484309575.087
Content in this bundle
- 45073 Afrdp Fiscal Rules