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Securing Fiscal Discipline and Credibility in WAEMU: WAEMU
Author:
Ljubica Dordevic https://isni.org/isni/0000000404811396 International Monetary Fund

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Olivia Y Ibrahim
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Series:
Selected Issues Papers
Volume/Issue:
Volume 2024: Issue 012
Language:
English
Publication Date:
17 May 2024
DOI:
https://doi.org/10.5089/9798400275395.018
ISBN:
9798400275395
ISSN:
2958-7875
Pages:
16
Keywords:
monetary union; fiscal policy; fiscal consolidation; fiscal rules; debt; stock flow adjustment; stock-flow adjustment; credibility in WAEMU; deficit ceiling; deficit target; deficit rule; Debt sustainability; Fiscal space; Global
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IMF Selected Issues Papers are prepared by IMF staff as background documentation for periodic consultations with member countries. It is based on the information available at the time it was completed.
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Fiscal consolidation and the reintroduction of the WAEMU fiscal framework is crucial for maintaining debt sustainability, external viability, and financial stability. The 3 and 70 percent of GDP deficit and debt ceilings envisaged by the expired rule remain appropriate, while addressing the stock-flow adjustments will help rebuild fiscal buffers. Convergence to a fiscal deficit of 3 percent of GDP should be ensured by 2025— barring exceptional circumstances—with focus on domestic revenue mobilization, while controlling expenditure. To secure fiscal discipline and credibility, it is essential to revamp the fiscal rule with a credible debt correction mechanism and exogenous escape clauses.
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Cover Selected Issues Papers
Selected Issues Papers
Publisher:
International Monetary Fund