Fiscal Forecast Errors in East Africa: Nature, Drivers, and Policy Implications
IMF Working Papers, March 27, 2026
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- Fiscal Forecast Errors in East Africa: Nature, Drivers, and Policy Implications
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Bibliographic details
- Authors: Youssouf Kiendrebeogo, Barima K Gyesaw
- Published: March 27, 2026
- Series: IMF Working Papers
- DOI: https://doi.org/10.5089/9781484308332.001
Overview
- Study period: 2000 to 2024.
- Geographic focus: selected East African countries.
- Slippage proxy: budget forecast errors as captured in WEO projections by IMF Staff.
- Authors: Youssouf Kiendrebeogo, Barima K Gyesaw.
- Publication date: March 27, 2026.
- Publication: IMF Working Papers, Working Paper No. 2026/055.
- Pages: 34.
- DOI: https://doi.org/10.5089/9781484308332.001
- ISBN: 9781484308332
- ISSN: 1018-5941
- Stock No: WPIEA2026055
Key findings
- Budget forecasts tend to be systematically optimistic, with actual budget balances typically falling short of projected balances.
- Primary sources of slippage:
- Spending overruns (primary driver).
- Revenue shortfalls (secondary driver).
- Composition of unexpected revenue shortfalls:
- Largely arise from indirect taxes (VAT and customs).
- Composition of spending slippages:
- Predominantly influenced by public investment, goods and services, and social protection expenditures.
- Contexts with stronger optimism bias:
- When the budget is in deficit.
- During economic booms.
- Among commodity-exporting countries.
- In the absence of an IMF program.
- In the absence of fiscal rules.
- When fiscal institutions are weak.
Analytical robustness
- Results are robust to:
- Excluding potential outliers.
- Expanding the sample to other SSA countries.
- Controlling for country specific effects.
- Controlling for potential endogeneity bias.
Policy implications (as implied by findings)
- Fiscal rules and stronger fiscal institutions are associated with reduced optimism bias in budget forecasts.
- Engagement with an IMF program is associated with less pronounced optimism bias.
- Addressing vulnerabilities in indirect tax revenue forecasting (VAT and customs) and managing public investment, goods and services, and social protection spending can reduce budget forecast slippages.
- Monitoring and mitigation efforts are particularly important during economic booms, for commodity-exporting countries, and when budgets are in deficit.
Source: Fiscal Forecast Errors in East Africa: Nature, Drivers, and Policy Implications, Youssouf Kiendrebeogo and Barima K Gyesaw, IMF Working Papers 2026, 055 (2026), March 27, 2026.
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