IMF Survey : Inclusion, Governance, Fiscal Space Can Help Overcome Fragility
IMF News, July 1, 2015
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- Published: July 1, 2015
Overview
- An IMF staff report, “Building Resilience in Sub-Saharan Africa’s Fragile States,” finds that an approach focusing on inclusive politics, effective governance, and fiscal health offers a viable route to overcome fragility in sub-Saharan Africa.
- The report highlights the persistence of fragility, documents progress since the 1990s, and includes detailed analysis of seven country case studies.
- The report was released July 1, 2015, at the Center for Strategic and International Studies in Washington, D.C.
State fragility — definition and evolution
- Fragile states are defined as states in which the government is unable to deliver basic services and security to the population, facing severe and entrenched obstacles to economic and human development.
- Fragility generally combines weak and non-inclusive institutions, poor governance, low capacity, and constraints in pursuing a common national interest.
- The focus has shifted from seeing fragility mainly as a proclivity to or legacy of internal conflict to recognizing multiple dimensions of fragility where conflict is a possible outcome and feedback loops reinforce weaknesses across dimensions.
Ability to respond and fiscal space
- Fiscal space is critical in fragile states because it:
- Provides room to meet pressing development needs.
- Gives the ability to respond to adverse shocks by running expansionary fiscal policies and smoothing the impact of shocks on the population.
- Available data suggest that among countries deemed fragile in the 1990s, those that have become “resilient” have generally built stronger fiscal institutions and widened their fiscal space.
- The study highlights:
- The primary role of fiscal policy and institutions.
- Lower government spending on defense.
- Higher infrastructure spending as factors behind the buildup of resilience in selected countries.
Buildup of resilience — three key factors
- The report identifies three key factors determining success in building resilience:
- “A sufficiently inclusive political arrangement that helps sustain peace and fosters the development of a national vision going forward;”
- “A committed leadership that is both willing and capable of promoting policies that translate this vision into action and implement reforms that improve governance, transparency, and accountability;” and
- “Strong international support in the form of financial and technical assistance focused on security and on development.”
- Additional emphasis:
- International stakeholders should engage on a long-term basis, coordinate closely, and focus capacity development efforts on economic institutions.
- Policies that maintain economic stability, mobilize revenue, and make room for investment are critical.
Findings on progress and regression
- The report assesses developments in 26 sub-Saharan African countries and documents:
- Progress in 11 countries.
- Several countries remained fragile and some have regressed.
- The experience suggests no single template for building resilience; steps must be tailored to each country and are part of a long-term vision because “resilience takes a long time to achieve.”
Role of capacity building and economic institutions
- Capacity building and economic policies are highlighted as promising because:
- Broad-based institutions are deeply rooted and highly persistent.
- Basic economic and fiscal institutions can be bolstered over a relatively shorter period and help build resilience.
Case studies, period covered, and country lists
- The report covers the period 1990–2013.
- Case study countries: Central African Republic, Democratic Republic of Congo, Ethiopia, Mali, Mozambique, Rwanda, and Sierra Leone.
- The report adds that the following countries made substantial progress in building resilience: Cameroon, Ethiopia, Mozambique, Niger, Nigeria, Rwanda, and Uganda.
- The report cites Cote d’Ivoire, Malawi, and Zimbabwe as countries that had regressed.
Authorship
- “Building Resilience in Sub-Saharan Africa’s Fragile States”, by an IMF staff team led by Enrique Gelbard, with Corinne Deléchat, Ulrich Jacoby, Marco Pani, Mumtaz Hussain, Gustavo Ramirez, Rui Xu, Ejona Fuli, and Dafina Mulaj, June 2015.
IMF Survey : Inclusion, Governance, Fiscal Space Can Help Overcome Fragility — July 1, 2015.