IMF Working Papers

The Design of Fiscal Adjustment Strategies in Botswana, Lesotho, Namibia, and Swaziland

ByLuis-Felipe Zanna, Olivier Basdevant, Susan S. Yang, Joannes Mongardini, Dalmacio Benicio

November 1, 2011

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Luis-Felipe Zanna, Olivier Basdevant, Susan S. Yang, Joannes Mongardini, and Dalmacio Benicio. "The Design of Fiscal Adjustment Strategies in Botswana, Lesotho, Namibia, and Swaziland", IMF Working Papers 2011, 266 (2011), accessed 12/9/2025, https://doi.org/10.5089/9781463924652.001

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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

Botswana, Lesotho, Namibia, and Swaziland face the serious challenge of adjusting not only to lower Southern Africa Customs Union (SACU) transfers because of the global economic crisis, but also to a potential further decline over the medium term. This paper assesses options for the design of the needed fiscal consolidation. The choice among these options should be driven by (i) the impact on growth and (ii) the specificities of each country. Overall, a focus on government consumption cuts appears to minimize the negative impact on growth, and would be appropriate given the relatively large size of the public sector in each country.

Subject: Consumption taxes, Expenditure, Fiscal consolidation, Fiscal policy, Government consumption, Labor taxes, National accounts, Public investment spending, Taxes

Keywords: consumption, consumption measure, consumption tax, Consumption taxes, Fiscal adjustment, Fiscal consolidation, fiscal multipliers, GDP, Government consumption, government consumption adjustment, Labor taxes, only consumption, public consumption, Public investment spending, real GDP, revenue issue, SACU imports, SACU member, SACU revenue, SACU shortfall, SACU transfer, SACU transfer reduction, SACU transfers, SACU transfers range, Southern Africa, WP

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