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International Monetary Fund. External Relations Dept.

This paper reviews the influence of the tropical climate on economic development. The paper highlights that the effect of climate is clearly not the only ruling constraint on economic development. It is claimed that climatic factors severely hamper development through their impact on both human beings and their agriculture. Human economic activity is directly and adversely affected through the widespread extent and impact of diseases; and tropical agriculture suffers in the quality of its soils, its rainfall, and its multiplicity of pests and diseases.

International Monetary Fund. Independent Evaluation Office

Abstract

Fiscal policy is central to macroeconomic management and is, therefore, the subject of considerable attention in the course of Article IV surveillance and in the design of IMF-supported programs. In fact, it is often the centerpiece of program design, with quantified targets included as key elements of conditionality. Fiscal adjustment is also among the most controversial elements in IMF-supported programs. Critics complain that the scale of the adjustment is often unduly harsh and likely to impart a contractionary impulse at a time when economic activity is depressed in any case, thereby leading to unnecessary loss of output and employment, with adverse effects on the poor.1 Apart from aggregate output and employment effects, fiscal adjustment is also controversial because of its potential distributional effects. Policies for reducing or constraining spending to meet fiscal targets are often criticized on the grounds that they squeeze socially beneficial spending such as health and education or withdraw subsidies on items of essential consumption, thus placing a disproportionate burden of the adjustment on those least able to bear it. Efforts to mobilize higher tax revenue are also sometimes criticized because many of the tax measures which can be introduced in practice in the short term, such as an increase in the rate of general sales taxes or VAT, are viewed as regressive.

International Monetary Fund. Independent Evaluation Office

Abstract

Acommon criticism of fiscal adjustment in an IMF-supported program is that it is derived from a “one-size-fits-all” approach, which places too much emphasis on fiscal adjustment (i.e., a reduction in the fiscal deficit defined in terms of either the overall deficit or the primary deficit) without taking account of the specific circumstances of the country. In this chapter, we examine the available evidence on fiscal targets in IMF-supported programs and the extent to which they vary across countries. First, we outline some of the considerations that should ideally be taken into account in setting fiscal targets. Next, we use cross-country analysis to examine a large number of past IMF-supported programs and assess patterns and statistical regularities in the way fiscal targets actually are set.