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International Monetary Fund. African Dept.
This Selected Issues paper revisits Rwanda’s options to create fiscal space to meet long-term development challenges. It examines strategies and options for a credible and comprehensive domestic revenue mobilization. The paper analyzes the driving factors of past reform successes and use an original dataset to highlight the benefits of implementing comprehensive tax reforms over selective reforms. The paper concludes that selective measures tend to yield protracted loss of revenue while measures implemented comprehensively lead to increases in revenue in the medium term. This stresses the need for an integrated approach to fiscal policy reform coordination to maximize long-term revenue benefits. For Rwanda, a comprehensive strategy for increasing tax revenues by adjusting rates, broadening the domestic tax base, improving tax compliance, and curbing tax evasion is the way forward. The strategy should shift higher tax burden from low-income households to higher income wealth cohorts with the view to advancing distributional fairness against growing inequality.

Abstract

This volume, edited by Michel A. Dessart and Roland E. Ubogu, records the presentations made and discussions held during the Inaugural Seminar of the Joint Africa Institute (JAI). The JAI was established in Abidjan, Côte d'Ivoire, by the African Development Bank, the IMF, and the World Bank to meet the pressing training needs of the African continent. The participants discussed four main topics: the changing role of the state, governance, and new capacity requirements; the challenge of achieving macroeconomic stability in Africa; the requirement for capacity building in Africa; and the role of international financial institutions in capacity building in Africa. The seminar was held in November 1999, but the topics and recommendations of the seminar remain current and of particular importance today. The seminar was held in English and French, and both language versions are contained in this volume. 240 pp. 2001