Front Matter

Front Matter

Author(s):
Jan Martijn, Gabriel Di Bella, Shamsuddin Tareq, Benedict Clements, and Abebe Aemro Selassie
Published Date:
July 2006
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    © 2006 International Monetary Fund

    Production: IMF Multimedia Services Division

    Typesetting: Choon Lee

    Figures: Theodore F. Peters, Jr.

    Cataloging-in-Publication Data

    Designing monetary and fiscal policy in low-income countries / Aemro Selassie … [et al.] — Washington, D.C. : International Monetary Fund, 2006.

    p. cm. — (Occasional paper ; 250)

    Includes bibliographical references.

    ISBN 1-58906-496-8

    1. Monetary policy — Developing countries. 2. Fiscal policy — Developing countries. 3. Poverty Reduction and Growth Facility (International Monetary Fund) 4. Inflation — Developing countries. I. Abebe Aemro Selassie. II. Series : Occasional paper (International Monetary Fund) ; no. 250

    HG1496.D37 2006

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    Contents

    The following conventions are used in this publication:

    • In tables, a blank cell indicates “not applicable,” ellipsis points (…) indicate “not available,” and 0 or 0.0 indicates “zero” or “negligible.” Minor discrepancies between sums of constituent figures and totals are due to rounding.

    • An en dash (–) between years or months (for example, 2005–06 or January–June) indicates the years or months covered, including the beginning and ending years or months; a slash or virgule (/) between years or months (for example, 2005/06) indicates a fiscal or financial year, as does the abbreviation FY (for example, FY2006).

    • “Billion” means a thousand million; “trillion” means a thousand billion.

    • “Basis points” refer to hundredths of 1 percentage point (for example, 25 basis points are equivalent to ¼ of 1 percentage point).

    As used in this publication, the term “country” does not in all cases refer to a territorial entity that is a state as understood by international law and practice. As used here, the term also covers some territorial entities that are not states but for which statistical data are maintained on a separate and independent basis.

    Preface

    In 1999, the IMF established the Poverty Reduction and Growth Facility (PRGF) to make the objectives of poverty reduction and growth more central to lending operations in its poorest member countries. Against this backdrop, in this study, the IMF staff takes a close look at the IMF’s monetary and fiscal policy advice, as well as program design in the context of PRGF-supported programs. In view of the marked improvement in macroeconomic outcomes in many low-income countries in recent years, the analysis focuses, in particular, on those countries that have established a certain level of macroeconomic stability—the so-called mature stabilizers.

    Designing Monetary and Fiscal Policy in Low-Income Countries was prepared by a team comprising staff members from the Policy Development and Review (PDR) and Fiscal Affairs (FAD) departments. In PDR, the team included Abebe Aemro Selassie, Jan Kees Martijn, Gabriel Di Bella, and Zaijin Zhan. In FAD, the team consisted of Michael Keen, Benedict Clements, Shamsuddin M. Tareq, Kevin Fletcher, Mario Mansour, Todd Mattina, and Alejandro Simone. Qiang Cui of FAD and Luzmaria Monasi of PDR provided valuable research assistance. Overall supervision was exercised by Mark Plant and Peter S. Heller.

    This paper was originally prepared as background for the IMF Executive Board discussion of the 2005 review of PRGF program design. The views expressed are those of the authors, however, and do not necessarily reflect the views of national authorities, the IMF, or IMF Executive Directors.

    Abbreviations

    CPI

    Consumer price index

    CIT

    Corporate income tax

    DSA

    Debt sustainability assessment

    EU

    European Union

    FAD

    Fiscal Affairs department

    FDI

    Foreign direct investment

    HIPC

    Heavily Indebted Poor Countries

    IEO

    Independent Evaluation Office

    IFS

    International Financial Statistics

    MDG

    Millennium Development Goal

    NDA

    Net domestic assets

    NFA

    Net foreign assets

    NIR

    Net international reserves

    NPV

    Net present value

    PDR

    Policy Development and Review Department

    PRGF

    Poverty Reduction and Growth Facility

    PRSP

    Poverty Reduction Strategy Paper

    PSCG

    Private sector credit growth

    PEM

    Public expenditure management

    RMSE

    Root mean squared error

    VAT

    Value-added tax

    WEO

    World Economic Outlook

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