- Jan Martijn, Gabriel Di Bella, Shamsuddin Tareq, Benedict Clements, and Abebe Aemro Selassie
- Published Date:
- July 2006
© 2006 International Monetary Fund
Production: IMF Multimedia Services Division
Typesetting: Choon Lee
Figures: Theodore F. Peters, Jr.
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.
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
(US$25.00 to full-time faculty members and students at universities and colleges)
Please send orders to:
International Monetary Fund, Publication Services
700 19th Street, N.W., Washington, D.C. 20431, U.S.A.
Tel.: (202) 623-7430 Telefax: (202) 623-7201
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.
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.
Consumer price indexCIT
Corporate income taxDSA
Debt sustainability assessmentEU
Fiscal Affairs departmentFDI
Foreign direct investmentHIPC
Heavily Indebted Poor CountriesIEO
Independent Evaluation OfficeIFS
International Financial StatisticsMDG
Millennium Development GoalNDA
Net domestic assetsNFA
Net foreign assetsNIR
Net international reservesNPV
Net present valuePDR
Policy Development and Review DepartmentPRGF
Poverty Reduction and Growth FacilityPRSP
Poverty Reduction Strategy PaperPSCG
Private sector credit growthPEM
Public expenditure managementRMSE
Root mean squared errorVAT
World Economic Outlook