Fiscal Management of Scaled-Up Aid

This paper discusses the role of fiscal policy and fiscal institutions in managing scaled-up aid. In an environment of volatile scaled-up aid, fiscal policy formulation should be anchored in medium-term frameworks, incorporating a longer-term view of potential resource availability and spending plan...

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Bibliographic Details
Published in:Policy File 2007
Main Authors: Gupta, Sanjeev, Schwartz, Gerd, Tareq, Shamsuddin, Allen, Richard, Adenauer, Isabell, Fletcher, Kevin, Last, Duncan
Format: Report
Language:English
Subjects:
Banking/Finance
Economic policy
Foreign aid
International Monetary Fund
International/Economic development
Online Access:Request full text
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Summary:This paper discusses the role of fiscal policy and fiscal institutions in managing scaled-up aid. In an environment of volatile scaled-up aid, fiscal policy formulation should be anchored in medium-term frameworks, incorporating a longer-term view of potential resource availability and spending plans. There is merit in smoothing expenditures over time so that all programs are adequately funded. The paper argues that wage-bill ceilings should be used in Fund-supported programs only in exceptional cases. The paper also discusses basic reforms for strengthening public financial management systems for effective utilization of scaled-up aid flows.