Cover IMF Working Papers
A Rule-Based Medium-Term Fiscal Policy Framework for Tanzania
Author: Mr. Daehaeng Kim and Mika Saito
Series:
IMF Working Papers
Volume/Issue:
Volume 2009: Issue 244
Language:
English
Publication Date:
01 Nov 2009
DOI:
https://doi.org/10.5089/9781451873917.001
ISBN:
9781451873917
ISSN:
1018-5941
Pages:
29
Keywords:
WP; debt ceiling; real GDP; expenditure policy; annual budget; debt sustainability; present value
Legal-disclaimer:
IMF Working Papers describe research in progress by the author(s) and are published to elicit comments and to encourage debate. The views expressed in IMF Working Papers are those of the author(s) and do not necessarily represent the views of the IMF, its Executive Board, or IMF management.
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A zero net domestic financing (NDF) target has served Tanzania well in recent years, contributing to prudent expenditure policy, improved fiscal sustainability, and macroeconomic stability. Moving to a more flexible fiscal policy, however, may serve Tanzania better. The "diamond rule" proposed in this paper incorporates a permanent hard ceiling on debt and annual benchmark limits on NDF, expenditure growth, and nonconcessional external financing. This rule would provide flexibility for countercyclical policy and help define the fiscal space for infrastructure spending that is consistent with longrun fiscal sustainability. An illustrative simulation shows that Tanzania has considerable fiscal space for development spending.
Cover IMF Working Papers
IMF Working Papers
ISSN:
1018-5941
Publisher:
International Monetary Fund