Description

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.

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Taxonomy

Development assistance , Economic development , Economic policy , Fiscal policy

More publications in this series: Working Papers

More publications by: Sanjeev Gupta ; Duncan Last ; Isabell Adenauer ; Kevin Fletcher ; Gerd Schwartz ; Shamsuddin Tareq ; Richard Allen