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

Author/Editor: Luis-Felipe Zanna ; Olivier Basdevant ; Susan Yang ; Geneviève Verdier ; Joannes Mongardini ; Borislava Mircheva ; Dalmacio Benicio
Publication Date: November 01, 2011
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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.
Series: Working Paper No. 11/266
Subject(s): Customs duties | Economic models | Fiscal consolidation | Government expenditures | Revenues | Southern Africa

Author's Keyword(s): Fiscal adjustment | fiscal multipliers | SACU transfers
Publication Date: November 01, 2011
ISBN/ISSN: 9781463924652/1018-5941 Format: Paper
Stock No: WPIEA2011266 Pages: 38
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