This chapter reviews the distributional impact of agricultural sector reforms in Africa. African governments have intervened in the agricultural sector for decades, but generous pricing policies and operational inefficiencies have often necessitated large budgetary transfers to parastatals. Over the past 20 years many African countries attempted to liberalize their agricultural sector, with mixed success. This chapter describes the forms of government intervention in agricultural markets, the liberalizing reforms undertaken in the past 20 years, the channels by which these reforms affected stakeholders, and the outcomes of the reforms on poor households.100
The Poverty Reduction and Growth Facility (PRGF) is used by the IMF to provide support for countries’ implementation of their poverty reduction and growth strategies. A key requirement in the design of PRGF programs is understanding the effects of reform program measures on vulnerable groups—particularly the poor—and how to devise measures to mitigate any negative effects. Poverty and social impact analysis (PSIA) is a critical instrument for pursuing this goal. The IMF has therefore established a small group of staff economists to facilitate the integration of PSIA into PRGF-supported programs. In this book, the group’s members review analytical techniques used in PSIA as well as several important topics to which PSIA can make valuable contributions. These reviews should prove useful and interesting to readers interested in PSIA in general and the IMF’s PSIA efforts in particular.
It is common for governments in developing countries to manipulate prices of goods and services using a range of policy instruments and institutional arrangements. The motivations behind these price manipulations reflect varying objectives, such as the need to raise revenue, the desire to redistribute income toward the poor or toward politically important groups, the desire to provide protection to domestic producers, or the desire to influence the levels of supply or demand in other related markets where prices cannot easily be influenced.17 For example, the major source of revenue in most developing countries is commodity taxation such as domestic sales and excise taxes and taxes on international trade (Burgess and Stern, 1993; and Keen and Simone, 2004); food prices are often kept artificially low for consumers in order to increase the real incomes of poor households (Pinstrup- Andersen, 1988; and Gupta and others, 2000); and public sector prices (e.g., of electricity, gas, petroleum, coal, other fuels, fertilizers) are also often controlled by governments, reflecting either the perceived strategic importance of these inputs for development or the need to provide these sectors with an independent source of revenue and thus greater financial autonomy (Julius and Alicbusan, 1986).
Trade liberalization and devaluation (TLD) policies have always been present in many IMF-supported programs. Tariffs, quotas, and other trade restrictions reduce the level of trade and tend to foster the development of import substitute industries that often fail to attain the degree of efficiency and flexibility shown by firms continuously exposed to international competition.66 Programs tend to promote the removal of trade restrictions in order to improve resource allocation and growth outcomes in the medium term. Devaluation policies in IMF programs tend to play a shorter-term adjustment role instead. The objective is in most cases to restore external viability by switching expenditures from the nontradables sector to the tradables sector.
The poverty and social implications of macroeconomic and structural reform policies are increasingly being recognized in IMF-supported programs and IMF policy advice. In 1999, the IMF replaced the Enhanced Structural Adjustment Facility, its assistance program for supporting low-income countries, with the Poverty Reduction and Growth Facility (PRGF), which explicitly gives poverty alleviation more prominence in its operations. In addition to its focus on promoting macroeconomic stability and growth, the PRGF program focuses on the relationship between macroeconomic policies and their poverty implications.
The Poverty Reduction and Growth Facility (PRGF) is the instrument used by the IMF to provide support for countries in the implementation of their poverty reduction and growth strategies, as identified in their Poverty Reduction Strategy Papers (PRSPs). The core objective of the PRSP approach is to arrive at policies that are more clearly focused on growth and poverty reduction, in which the poverty reduction and macroeconomic elements of the program are fully integrated, and that embody a greater degree of national ownership, thereby leading to more consistent policy implementation. Key requirements in the design of the PRGF programs that support this approach are an understanding of the effect of program measures on vulnerable groups—particularly the poor—and designing measures to mitigate any negative effects. Poverty and Social Impact Analysis (PSIA) is, in turn, a critical instrument for pursuing this goal. In this regard, IMF staff is expected to draw on PSIAs carried out by other institutions (such as the World Bank) and donors in addressing distributive concerns in PRGF-supported programs. To this end, the IMF established a small in-house capability on PSIA to facilitate the integration of PSIA into PRGF-supported programs. The group has only four full-time positions, so its activities are designed to leverage expertise and available resources both inside and outside the IMF. In limited cases, the group also conducts PSIAs in areas that are central to the work of the IMF and where no other analysis is available. The goals of the PSIA group are to assist mission teams to
This Technical Assistance Report surveys the resources of the subnational jurisdictions and proposes a tax reform strategy for Mali. In Mali, the system of local taxes generates insufficient revenue and relies on obsolete taxes, which are particularly difficult to collect. It proposes that the rental value be replaced by a value per hectare indexed on various factors such as access to property or public services; geographic location; and average and georeferenced consumption of electricity, water, cell phone minutes. A real property tax system will also require the elimination of key exemptions under the current real property tax.
This paper presents a diagnostic assessment of the tax policy of Mali. The diagnostic assessment looks at the country’s main taxes and levies; it is supplemented by a second report on the mining and petroleum sector. Tax revenues represented 15.37 percent of GDP in 2013, up slightly from the 2012 level (14.87 percent). The revenue structure has scarcely changed since the last general assessment mission conducted in 2011, and the analysis performed then remains relevant now. Mali’s corporate income tax and tax on industrial and commercial profits (IS-BIC) are in compliance with the West African Economic and Monetary Union harmonization directives. The IS-BIC rate is 30 percent.
International Monetary Fund. African Dept. and International Monetary Fund. Fiscal Affairs Dept.
This Technical Assistance Report focuses on continued modernization of the Malian tax system and administration. The crisis that has afflicted Mali since 2012 has had an adverse economic impact, reflected in a 25 percent decline in government resources and negative growth of -1.2 percent. Despite the difficult context, the combination of reduced investment expenditure, improved tax collection, reduced subsidies, and increased taxes on petroleum products served to contain the budget deficit at 1.3 percent of GDP. In regard to increasing own resources, the government is committed to increasing tax receipts to reduce dependence on foreign aid.
This paper examines the economic implications of fiscal policy coordination in the West African Economic and Monetary Union (WAEMU) in the light of the January 1994 devaluation of the CFA franc. Diverging tax, tariff, and budgetary politics are identified and it is argued that the resulting fiscal externalities have prevented the zone from reaping the full benefits of a monetary union. The paper shows that the devaluation makes it more desirable than ever to have a closer policy coordination to prevent such detrimental fiscal externalities. Recent efforts in this field are reviewed and evaluated. Finally, the paper offers some recommendations with respect to the optimal design of tax and tariff rate structures, and the choice of budgetary convergence criteria.