International Monetary Fund. Middle East and Central Asia Dept.
This Selected Issues paper discusses the need to meet Algeria’s fiscal challenges. Although Algeria enjoys substantial fiscal savings, fiscal policy is currently on an unsustainable path. Under current projections, Algeria will deplete its financial savings in the long term, leaving future generations worse off. To restore fiscal sustainability and ensure intergenerational equity, Algeria will need to undertake significant and sustained fiscal consolidation in the coming years. Successful fiscal consolidation will depend on both mobilizing more revenues and rationalizing expenditures. If done right, fiscal consolidation can restore sustainability while minimizing the impact on economic growth and enhancing equity.
This 2005 Article IV Consultation highlights that the Algerian economy continues to benefit from abundant and increasing hydrocarbon revenues. Real GDP growth is expected to continue at about 5 percent in 2005, led by increased output in the hydrocarbon sector and sustained activity in the construction and services sectors. Executive Directors have welcomed the authorities’ resolve to maintain fiscal sustainability over the medium term. They have stressed the importance of preparing comprehensive medium-term budget projections, and limiting increases in real wages to increases in productivity in the nonhydrocarbon sector.
This paper, based on the considerable practical experience of the IMF’s Fiscal Affairs Department, sets out a successful strategy for modernizing customs administration. The essence is to establish transparent and simple rules and procedures, and to foster voluntary compliance by building a system of self-assessment supported by well-designed audit policies. Having set out this strategy--and its benefits--the paper discusses in depth what is required in terms of trade policy, valuation procedures, dealing with duty reliefs and exemptions, controlling transit movements, organizational reform, use of new technologies, private sector involvement, and designing incentive systems for an effective customs administration.
Ms. Rina Bhattacharya, Tarik Yousef, and Mr. Pierre Dhonte
The working age population is expected to grow faster in the Middle East than in any other region in the world between now and 2015—rising annually by 2.7 percent, or 10 million people. This demographic explosion presents the region with a major challenge in terms of providing jobs, incomes, and housing for the growing population, but the expanding labor force can also be seen as an opportunity to generate higher per capita income growth on a sustainable basis. The paper concludes by emphasizing the importance of market-friendly institutions in turning the challenge into opportunity.
International Monetary Fund. External Relations Dept.
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One of the great ironies of intellectual history is that Adam Smith, the apostle of free trade, ended his days as a Comptroller of Customs. By the same token, it may seem strange that the International Monetary Fund (IMF), committed to the principles of free trade, should devote a good deal of its technical assistance activities to strengthening the performance of customs administrations. In each case, however, the explanation is easily found. For Smith, the position of Comptroller at Kircaldy, a post his father had also held, was an attractive sinecure (as customs posts continue to be in all too many countries). For the IMF, the support of improvement in customs administration reflects the recognition that although customs administration would wither away in an ideal world, in practice trade taxes are likely to be a significant source of revenue for many of its members, especially developing countries, for the foreseeable future; and that if trade taxes are to be levied, it is best that this be in a way that does least collateral damage to international trade flows.
Goods being carried under transit are generally not subject to the payment of duties and taxes, provided the conditions laid down by the customs administration are complied with.109 Customs transit systems are designed to facilitate the movement of goods crossing the territory of one or more states without jeopardizing revenue through diversion of such goods to the domestic market. To do this, while avoiding excessively burdensome and costly formalities, a balance has to be struck between the requirements of the customs authorities and those of the transport operators. This chapter considers how this might best be done.110
This chapter outlines the type of organizational structure that is required to deliver effectively and efficiently a customs administration program: a decentralized structure consisting of headquarters, regional, and local offices. It then discusses current trends that are emerging in organizing customs (and tax) administrations.
The purpose of this chapter137 is to outline an approach to promoting integrity—that is, reducing corruption—in customs administrations. It does not deal with the economic impact of such practices,138 but instead provides a framework for changing the incentive structure and for establishing the legal and administrative procedures that are necessary to detect, punish, and reduce such undesirable behavior.139