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Mr. Rolando Ossowski, Mr. Steven A Barnett, Mr. James Daniel, and Mr. Jeffrey M. Davis

uncertainty and volatility. In the absence of liquidity constraints, however, NRFs provide no direct mechanism to stabilize expenditure. Since resources are fungible, governments could bypass the operation of NRFs by financing spending in other ways. Expenditure smoothing therefore requires additional fiscal policy decisions besides the operation of the fund. Moreover, price or revenue rules, which signal the need to accumulate or withdraw assets from the fund, may be difficult to establish. NRFs designed to save for future generations face some of the same problems

Ms. Elva Bova, Nathalie Carcenac, and Ms. Martine Guerguil

EMDEs and in advanced economies ( Figure 4 ). In both groups of countries, and particularly among members of currency unions, these two rules are usually combined. In EMDEs as well as in advanced economies, revenue rules are rather rare. In contrast with the practice among advanced economies, most rules in EMDEs only cover the central government, often reflecting data availability limitations ( Figure 5 ). Figure 4. Types of Fiscal Rules, 2012 (Number of countries with fiscal rules) Source: IMF Fiscal Rules Database (2012). Figure 5. Coverage of

International Monetary Fund. African Dept.

strategic plans by every ministry (v) Introducing performance management systems 17. In view of the high volatility and uncertainty of the SACU revenue, a fiscal framework to better manage this uncertainty is worth exploring . The authorities are exploring the option of implementing a revenue rule that would only incorporate into the budget their estimated steady state level of SACU revenue (17 percent of GDP, the historical average) with any additional SACU revenue saved in a stabilization fund (to be used when the revenue is lower than the average). In the

International Monetary Fund. African Dept.

be affected by valuation effects and extra-budgetary public borrowing), while also having a close link to debt dynamics. If other options (e.g. an expenditure rule, a revenue rule, a structural balance rule, or a public-sector balance rule) could play this role, the CEMAC’s convergence framework relies on a fiscal balance rule. Shortcomings of previous fiscal balance rule 5. The previous fiscal balance criterion had significant weaknesses, both in terms of design and implementation : It set a nil-floor on the basic fiscal balance (i.e. the overall budget