Departmental Papers / Policy Papers

A Growth-Friendly Path for Building Fiscal Buffers in the Caucuses and Central Asia

Author/Editor:

Edward R Gemayel ; Lorraine Ocampos ; Matteo Ghilardi ; James Aylward

Publication Date:

April 10, 2018

Electronic Access:

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Summary:

Since 2014, large and persistent external shocks have hit the CCA region, particularly a slump in global commodity prices and slower growth in its key economic partners. Fiscal accommodation, along with currency adjustment, has helped the CCA mitigate the impact of the external shocks. However, amid weakening revenues, increased public spending has widened budget deficits, weakened external balances, and increased public debts. Fiscal policy and strengthening fiscal frameworks must play a central role in helping build buffers and ensuring debt sustainability while supporting growth. This requires (1) tightening fiscal policies to reduce deficits to help restore external balance and fiscal sustainability, (2) strengthening tax systems and tax collection and tilting expenditure toward a more productive and growth-enhancing composition, and (3) implementing public financial management reforms and strengthening fiscal institutions, including through fiscal rules.

Series:

Departmental Paper No. 18/06

Subject:

Afghanistan, Islamic Republic of Algeria Armenia Azerbaijan Bahrain Djibouti Economic growth Economic reforms Economic stabilization Egypt Fiscal analysis Fiscal management Fiscal policy Georgia Growth acceleration Iran, Islamic Republic of Iraq Jordan Kazakhstan Kuwait Kyrgyz Republic Lebanon Libyan Arab Jamahiriya Mauritania Middle East Middle East and Central Asia Morocco Oman Pakistan Production growth Public financial management Qatar Regional economics Saudi Arabia Somalia Sudan Syrian Arab Republic Tajikistan Tunisia Turkmenistan United Arab Emirates Uzbekistan Yemen, Republic of