{
  "title": "West African Economic and Monetary Union: Selected Issues",
  "publication": "IMF Staff Country Reports, March 7, 2023",
  "sourceUrl": "https://www.imf.org/en/publications/cr/issues/2023/03/07/west-african-economic-and-monetary-union-selected-issues-530695",
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  "summary": "This Selected Issues paper explores revamping the West African Economic and Monetary Union’s fiscal framework. The new set of fiscal rules should be improved via various supporting arrangements.",
  "sections": [
    {
      "heading": "Fiscal framework reform and supporting arrangements",
      "content": "- The paper recommends revamping the West African Economic and Monetary Union’s fiscal framework.\n- Proposed supporting arrangements include:\n  - an escape clause,\n  - broader mechanisms for assessment, accountability, enforcement, and discipline,\n  - possibly additional operational frameworks based on intermediate and complementary targets.\n- The fiscal strategy should crucially encompass efforts towards increasing domestic revenues."
    },
    {
      "heading": "Debt dynamics and drivers",
      "content": "- The countries’ debt dynamics are affected not only by the fiscal deficit but also by stock flow adjustments (SFA).\n- The level of debt in any given year is a function of:\n  - the previous year’s debt,\n  - fiscal deficit,\n  - a nominal growth effect,\n  - an exchange rate effect,\n  - a guarantees effect,\n  - and a residual.\n- Bringing stock flow adjustments (SFA) under control is essential to ensure debt stabilization over the medium term."
    },
    {
      "heading": "Simulations, scenarios, and policy implications",
      "content": "- Simulations show that:\n  - The only option to stabilize debt and recover buffers is to stick to the 3 percent fiscal deficit target while addressing the SFA.\n  - The only scenario consistent with both debt stability and the recovery of some fiscal buffers to cope with future shocks is the baseline scenario, with a deficit target of 3 percent of gross domestic product and elimination of the SFA.\n- Policy implication: combine strict adherence to the 3 percent deficit target with measures to eliminate or control SFAs, and pursue domestic revenue mobilization."
    },
    {
      "heading": "Subjects and keywords (as listed)",
      "content": "- Subject: External debt, Fiscal policy, Fiscal rules, Government debt management, Inflation, International organization, Monetary policy, Prices, Public debt, Public financial management (PFM)\n- Keywords: auction market debt, deficit target, Fiscal rules, Global, Government debt management, Inflation, inflation contagion, inflation DYNAMICS, market borrowing costs, WAEMU inflation\n\nIMF Staff Country Reports — West African Economic and Monetary Union: Selected Issues (March 7, 2023).\n\n---\n\n Content in this bundle\n\n- 1. Debt Dynamics\n  - 1. Debt Dynamics (Markdown version){rel=\"alternate\" type=\"text/markdown\"}\n  - 1. Debt Dynamics (PDF){rel=\"external\" type=\"application/pdf\"}"
    }
  ],
  "bullets": [
    "[Markdown version](/en/publications/cr/issues/2023/03/07/west-african-economic-and-monetary-union-selected-issues-530695/index.md)",
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    "Published: March 7, 2023",
    "Series: IMF Staff Country Reports",
    "DOI: https://doi.org/10.5089/9798400235986.002",
    "The paper recommends revamping the West African Economic and Monetary Union’s fiscal framework.",
    "Proposed supporting arrangements include:",
    "The fiscal strategy should crucially encompass efforts towards increasing domestic revenues.",
    "The countries’ debt dynamics are affected not only by the fiscal deficit but also by stock flow adjustments (SFA).",
    "The level of debt in any given year is a function of:",
    "Bringing stock flow adjustments (SFA) under control is essential to ensure debt stabilization over the medium term.",
    "Simulations show that:",
    "Policy implication: combine strict adherence to the 3 percent deficit target with measures to eliminate or control SFAs, and pursue domestic revenue mobilization.",
    "Subject: External debt, Fiscal policy, Fiscal rules, Government debt management, Inflation, International organization, Monetary policy, Prices, Public debt, Public financial management (PFM)",
    "Keywords: auction market debt, deficit target, Fiscal rules, Global, Government debt management, Inflation, inflation contagion, inflation DYNAMICS, market borrowing costs, WAEMU inflation",
    "**1. Debt Dynamics**"
  ],
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