Cover Departmental Papers
Fiscal Rules: Coping with Revenue Volatility in Lesotho and Swaziland
Author:
Mr. Jiro Honda
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Manabu Nose
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Cesar Sosa Padillahttps://isni.org/isni/0000000404811396, International Monetary Fund

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Mr. Jose L. Torreshttps://isni.org/isni/0000000404811396, International Monetary Fund

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Ms. Murna Morgan
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Mr. Fernando G Imhttps://isni.org/isni/0000000404811396, International Monetary Fund

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Ms. Natalia A Koliadina
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Series:
Departmental Papers
Volume/Issue:
Volume 2017: Issue 005
Language:
English
Publication Date:
12 Sep 2017
DOI:
https://doi.org/10.5089/9781484309575.087
ISBN:
9781484309575
ISSN:
2616-5333
Pages:
53
Keywords:
DPPP; DP; SACU revenue; SACU; government; feedback coefficient; SACU transfer; SACU receipts; structural surplus; stabilization fund; revenue fall; unstable SACU receipt; SACU revenues in excess; SACU revenue feedback coefficient; volatile SACU receipt; impulse responses to SACU revenue shock; Fiscal rules; International reserves; Africa; Global
Legal-disclaimer:
The Departmental Paper Series presents research by IMF staff on issues of broad regional or cross-country interest. The views expressed in this paper 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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Over the past decade, Lesotho and Swaziland have faced significant volatility in their fiscal revenues, owing to highly unstable Southern African Customs Union (SACU) receipts. Based on model analysis, this paper explores the advantages of implementing fiscal rules to deal with such volatility. It finds that the use of a structural balance target could smooth the growth impact from revenue shocks while helping preserve sufficient international reserves during bad times. From a long-term perspective, it suggests possible welfare gains from introducing fiscal rules. Last, it concludes that, based on experiences in other countries, developing strong institutions and improving public financial management are necessary steps to ease the transitions to a rules-based fiscal policy framework.
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Cover Departmental Papers
Departmental Papers
ISSN:
2616-5333
Publisher:
International Monetary Fund
Volume 2017: Issue 005