Aid Scaling Up: Do Wage Bill Ceilings Stand in the Way?

Author: Annalisa Fedelino,Gerd Schwartz,Marijn Verhoeven

Publisher: International Monetary Fund


Category: Economic assistance

Page: 37

View: 8928

This paper assesses whether the scaling up of aid and the resulting increase in government spending that is needed to meet the Millennium Development Goals (MDGs) would be hampered by wage bill ceilings that are often part of government programs supported by the IMF's Poverty Reduction and Growth Facility (PRGF). Based on country case studies for 2003-05, the paper suggests that, in the past, wage bill ceilings have not restricted the use of available donor funds. Yet the paper offers a number of suggestions for further enhancing the flexibility of wage bill conditionality in PRGF-supported programs to respond to higher aid flows that may result in the future.

The Macroeconomics of Medium-Term Aid Scaling-Up Scenarios

Author: Rafael Portillo,Mr. Andrew Berg,Jan Gottschalk,Luis-Felipe Zanna

Publisher: International Monetary Fund

ISBN: 1455289795

Category: Business & Economics

Page: 45

View: 4135

We develop a model to analyze the macroeconomic effects of a scaling-up of aid and assess the implications of different policy responses. The model features key structural characteristics of low-income countries, including varying degrees of public investment efficiency and a learning-by-doing (LBD) externality that captures Dutch disease effects. On the policy front, it distinguishes between spending the aid, which is controlled by the fiscal authority, and absorbing the aid - financing a higher current account deficit - which is influenced by the central bank''s reserve accumulation policies. We calibrate the model to Uganda and run several experiments. We find that a policy mix that results in full spending and absorption of aid can generate temporary demand and real exchange rate appreciation pressures, but also have a positive effect on real GDP in the medium term, through higher public capital. Full spending with partial absorption, on the other hand, may stem appreciation pressures but can also induce adverse medium-term real GDP effects, through private sector crowding out. When aid is very inefficiently invested and there are strong LBD externalities, aid can be harmful, and partial absorption policies may be justified. But in this case, a welfare improving solution is to defer spending or - even better if possible - raise its efficiency.

Macroeconomic Challenges of Scaling Up Aid to Africa

A Checklist for Practitioners

Author: Yongzheng Yang,Mr. Robert Powell,Mr. Sanjeev Gupta

Publisher: International Monetary Fund

ISBN: 1452730164

Category: Business & Economics

Page: 78

View: 5041

Over the next decade, African countries are expected to be the largest beneficiaries of increased donor aid, which is intended to improve their prospects for achieving the Millennium Development Goals. This handbook will help these countries assess the macroeconomic implications of increased aid and respond to the associated policy challenges. The handbook is directed at policymakers, practicing economists in African countries, and the staffs of international financial institutions and donor agencies who participate in preparing medium-term strategies for African countries, including in the context of poverty reduction strategy papers. It provides five main guidelines for developing scaling-up scenarios to help countries identify important policy issues involved in using higher aid flows effectively: to absorb as much aid as possible, to boost growth in the short to medium term, to promote good governance and reduce corruption, to prepare an exit strategy should aid levels decrease, and to regularly reassess the policy mix.

The Macroeconomics of Scaling Up Aid

The Gleneagles Initiative for Benin

Author: Mr. Joannes Mongardini,Issouf Samaké

Publisher: International Monetary Fund

ISBN: 1451916922

Category: Business & Economics

Page: 32

View: 2606

This paper assesses the macroeconomic implications of scaling up aid for Benin in line with the Gleneagles commitment to double aid to poor countries over the next three years to reach $85 per capita by 2010 and keep it at that level thereafter. The analysis suggests that the additional aid inflows can be accommodated under Fund-supported programs without major disruptions to macroeconomic stability, provided the inflows are highly concessional and used effectively. There are, however, significant risks that the impact on growth and poverty reduction of the additional aid inflows could fall short of expectations, given Benin''s limited absorptive and administrative capacity.

Money Isn't Everything: The Challenge of Scaling Up Aid to Achieve the Millennium Development Goals in Ethiopia (EPub)

Author: Mr. Todd D. Mattina

Publisher: International Monetary Fund

ISBN: 1452760233

Category: Business & Economics

Page: 1085

View: 3915

This paper outlines the challenge of developing an operational macroeconomic framework in Ethiopia consistent with the large envisaged scaling up of aid to achieve the Millennium Development Goals (MDGs). This paper describes an MDG scenario that addresses both microeconomic and macroeconomic constraints, such as the need to boost sustainable growth, limit Dutch disease, formulate an exit strategy from aid dependency, enhance public financial management (PFM), and expand the supply of skilled labor. The paper will argue that a carefully sequenced MDG strategy is essential so that the scaled-up aid and public spending will remain in line with Ethiopia's absorptive capacity.

Enhancing Development Assistance to Africa: Lessons from Scaling-Up Scenarios

Author: Matthew Gaertner,Ms. Laure Redifer,Pedro Conceição,Rafael Portillo,Luis-Felipe Zanna,Jan Gottschalk,Mr. Andrew Berg,Ayodele F. Odusola,Mr. Brett E. House,Mr. José Saúl Lizondo

Publisher: International Monetary Fund

ISBN: 1463998147

Category: Political Science

Page: 72

View: 3158

The pace of progress toward achievement of the Millenium Development Goals (MDG) in many sub-Saharan African countries remains too slow to reach targets by 2015, despite significant progress in the late 1990s. The MDG Africa Steering Group, convened in September 2007 by the UN Secretary-General, designated 10 countries for pilot studies to investigate how existing national development plans would be impacted by scaled up development aid to Africa. This joint publication of the IMF and the United Nations Development Programme reports conclusions drawn from these pilot studies and summarizes country-specific results for Benin, the Central African Republic, Ghana, Liberia, Niger, Rwanda, Tanzania, Togo, Sierra Leone, and Zambia.

Pity the Finance Minister: Issues in Managing a Substantial Scaling-Up of Aid Flows

Author: Peter S. Heller

Publisher: International Monetary Fund


Category: Economic assistance

Page: 36

View: 5078

Substantially scaling up of aid flows will require development partners to address many issues, including the impact of higher aid flows on: the competitiveness of aid recipients; the management of fiscal and monetary policy; the delivery of public services; behavioral incentives; and the rate of growth of the economy. Other issues will include the appropriate sequencing of aid-financed investments; balancing alternative expenditure priorities; the implications for fiscal and budget sustainability; and exit strategies from donor funding. Donors will need to ensure greater long-term predictability and reduced short-term volatility of aid. The international financial institutions can play a critical role in helping countries address these scaling-up issues.

Getting to Scale

How to Bring Development Solutions to Millions of Poor People

Author: Laurence Chandy,Akio Hosono,Homi J. Kharas,Johannes F. Linn

Publisher: Brookings Institution Press

ISBN: 0815724195

Category: Business & Economics

Page: 383

View: 2652

The global development community is teeming with different ideas and interventions to improve the lives of the world's poorest people. Whether these succeed in having a transformative impact depends not just on their individual brilliance but on whether they can be brought to a scale where they reach millions of poor people. Getting to Scale explores what it takes to expand the reach of development solutions beyond an individual village or pilot program so they serve poor people everywhere. Each chapter documents one or more contemporary case studies, which together provide a body of evidence on how scale can be pursued. The book suggests that the challenge of scaling up can be divided into two solutions: financing interventions at scale, and managing delivery to large numbers of beneficiaries. Neither governments, donors, charities, nor corporations are usually capable of overcoming these twin challenges alone, indicating that partnerships are key to success. Scaling up is mission critical if extreme poverty is to be vanquished in our lifetime. Getting to Scale provides an invaluable resource for development practitioners, analysts, and students on a topic that remains largely unexplored and poorly understood. Contributors: Tessa Bold (Goethe University, Frankfurt), Wolfgang Fengler (World Bank, Nairobi), David Gartner (Arizona State University), Shunichiro Honda (JICA Research Institute), Michael Joseph (Vodafone), Hiroshi Kato (JICA), Mwangi Kimenyi (Brookings), Michael Kubzansky (Monitor Inclusive Markets), Germano Mwabu (University of Nairobi), Jane Nelson (Harvard Kennedy School), Alice Ng'ang'a (Strathmore University, Nairobi), Justin Sandefur (Center for Global Development), Pauline Vaughan (consultant), Chris West (Shell Foundation)

The Development Dimension Aid for Trade Making it Effective

Making it Effective

Author: OECD

Publisher: OECD Publishing

ISBN: 9264028609


Page: 96

View: 7850

This book sets out how much aid OECD countries are already providing towards trade-related activities in developing countries, reviews the effectiveness of existing programmes, and makes recommendations for improvements.

Imf Research Bulletin, March 2011

Author: International Monetary Fund

Publisher: International Monetary Fund

ISBN: 1616352248

Category: Business & Economics

Page: 32

View: 7785

The Q & A in this issue features seven questions on the role of precautionary savings in open economies (by Damiano Sandri); the research summaries are the Macroeconomics of Aid (by Andrew Berg, Rafael Portillo, and Luis-Felipe Zanna) and the Building Blocks to Measure Inflation (by Mick Silver). the issue also lists the contents of the March 2011 issue of the IMF Economic Review, Volume 59 Number 1; visiting scholars at the IMF during January?March 2011; and recent IMF Working Papers and Staff Discussion Notes.

The Macroeconomics of Scaling Up Aid

Lessons from Recent Experience

Author: N.A

Publisher: IMF

ISBN: 9781589065918

Category: Business & Economics

Page: 105

View: 4829

This study analyzes key issues associated with large increases in aid, including absorptive capacity, Dutch disease, and inflation. The authors develop a framework that emphasizes the different roles of monetary and fiscal policy and apply it to the recent experience of five countries: Ethiopia, Ghana, Mozambique, Tanzania, and Uganda. These countries have often found it difficult to coordinate monetary and fiscal policy in the face of conflicting objectives, notably to spend the aid money on domestic goods and to avoid excessive exchange rate appreciation.

Burkina Faso

Request for a Three-year Arrangement Under the Extended Credit Facility - Staff Report : Staff Supplement : Press Release on the Executive Board Discussion : and Statement by the Executive Director for Burkina Faso

Author: N.A

Publisher: International Monetary Fund


Category: Balance of payments

Page: N.A

View: 6179

Fiscal Management of Scaled-Up Aid

Author: Mr. Kevin Fletcher,Mr. Sanjeev Gupta,Mr. Duncan Last,Mr. Gerd Schwartz,Mr. Shamsuddin Tareq,Richard Allen,Isabell Adenauer

Publisher: International Monetary Fund

ISBN: 1452783640

Category: Business & Economics

Page: 67

View: 9589

The international community has committed to scaling up aid and improving aid delivery to low-income countries to help them meet the Millennium Development Goals. Other "emerging" donors, public and private, are increasing their assistance, and debt-relief initiatives are creating space for new borrowing. Remittances to low-income countries have been on a precipitous rise, and many countries are benefiting from high commodity prices. Fiscal Management of Scaled-Up Aid explores approaches to the sound fiscal management that will be required to ensure effective and sustainable use of these flows. With a medium-term perspective and efficient use of resources in mind, this paper addresses questions that shape fiscal policy response to scaled-up aid. Drawing on IMF Fiscal Affairs Department technical assistance to member countries, it outlines factors that should be taken into account in preparing an action plan for public financial management reform and proposes specific measures that will assist countries in strengthening fiscal institutions.

The Macroeconomic Impact of Scaled-Up Aid

The Case of Niger

Author: Mr. Emilio Sacerdoti,Gonzalo Salinas,Abdikarim Farah

Publisher: International Monetary Fund

ISBN: 1451916191

Category: Business & Economics

Page: 33

View: 6427

We develop a simple macroeconomic model that assesses the effects of higher foreign aid on output growth and other macroeconomic variables, including the real exchange rate. The model is easily tractable and requires estimation of only a few basic parameters. It takes into account the impact of aid on physical and human capital accumulation, while recognizing that the impact of the latter is more protracted. Application of the model to Niger-one of the poorest countries in the world-suggests that if foreign aid as a share of GDP were to be permanently increased from the equivalent of 10 percent of GDP in 2007 to 15 percent in 2008, annual economic growth would accelerate by more than 1 percentage point, without generating significant risks for macroeconomic stability. As a result, by 2020 Niger''s income per capita would be 12.5 percent higher than it would be without increased foreign aid. Moreover, the higher growth would help Niger to cut the incidence of poverty by 25 percent by 2015, although the country will still be unable to reach the Millennium Development Goal of poverty reduction (MDG 1).

The Value Chain of Foreign Aid

Development, Poverty Reduction, and Regional Conditions

Author: Christian Schabbel

Publisher: Springer Science & Business Media

ISBN: 9783790819328

Category: Business & Economics

Page: 320

View: 4683

This book assesses the prospects of official development assistance (ODA) for poverty reduction. It analyzes the entire value chain of ODA, including provision, allocation and utilization. Within each of these components, coverage examines scope and limits of aid. The horizontal interactions between donors and recipients as well as the vertical connections to local and region-specific conditions represent the heart of this book's approach.

Aid, growth and real exchange rate dynamics

Author: N.A

Publisher: World Bank Publications



Page: N.A

View: 1756

Devarajan, Go, Page, Robinson, and Thierfelder argued that if aid is about the future and recipients are able to plan consumption and investment decisions optimally over time, then the potential problem of an aid-induced appreciation of the real exchange rate (Dutch disease) does not occur. In their paper, "Aid, Growth and Real Exchange Rate Dynamics," this key result is derived without requiring extreme assumptions or additional productivity story. The economic framework is a standard neoclassical growth model, based on the familiar Salter-Swan characterization of an open economy, with full dynamic savings and investment decisions. It does require that the model is fully dynamic in both savings and investment decisions. An important assumption is that aid should be predictable for intertemporal smoothing to take place. If aid volatility forces recipients to be constrained and myopic, Dutch disease problems become an issue.

Policy Matters

Economic and Social Policies to Sustain Equitable Development

Author: Jose Antonio Ocampo,Sarbuland Khan

Publisher: Zed Books

ISBN: 9781842778364

Category: Business & Economics

Page: 347

View: 4160

In 2000, UN member states pledged to halve world poverty by 2015, among other Millennium Development Goals (MDG's). But progress has been elusive since. The chapters in this volume address disparate problems in achieving the UN Development Agenda, from the complex effects of trade and financial liberalisation to the realities of development aid, itself a central pillar of the MDGs. The unifying theme is one of economic and social integration, and an emphasis on long-term strategic investments in education, health and infrastructure.

Foreign Aid Allocation, Governance, and Economic Growth

Author: Kamiljon T. Akramov

Publisher: University of Pennsylvania Press

ISBN: 0812207734

Category: Business & Economics

Page: 168

View: 8952

How important is foreign aid in fostering economic growth in developing countries? Does it help recipient countries, hurt them, or have little effect either way? Foreign Aid Allocation, Governance, and Economic Growth investigates this issue by looking at foreign aid by sector rather than treating it as an aggregate amount. Aid can be allocated to a recipient's production sectors (such as agriculture, manufacturing, or mining), economic infrastructure (such as transport, storage, or communications networks or power generation facilities), or social sectors (such as education or healthcare). This book differentiates among various channels through which each of these three categories of foreign aid affects economic growth. The findings suggest that economic aid, including aid to production sectors and economic infrastructure, contributes to economic growth by increasing domestic investment. Aid to social sectors, however, does not appear to have a significant impact on human capital (measured by school enrollment) and economic growth. This study also assesses the degree to which the quality of democratic governance in a recipient country influences foreign aid's effectiveness and finds that democracy is no guarantee of aid effectiveness. In fact, economic aid to less democratic countries can lead to better economic growth, at least initially, provided the aid recipients secure property rights and allow capital accumulation. Although further research into the question is necessary, Foreign Aid Allocation, Governance, and Economic Growth suggests that aid targeted to increasing domestic investment might be an effective means of fostering economic growth in less developed countries.

The Poorest and Hungry

Assessments, Analyses, and Actions : an IFPRI 2020 Book

Author: Joachim Von Braun,Ruth Elaine Hill,Rajul Pandya-Lorch

Publisher: Intl Food Policy Res Inst

ISBN: 0896296601

Category: Social Science

Page: 584

View: 6074

Have the lives of the world's poorest, neediest people improved over the past few decades? What policies have lifted some people out of the worst forms of poverty, and what conditions keep others mired within it? The Poorest and Hungry: Assessment, Analyses, and Actions answers such questions, bringing together studies of both what causes and what reduces severe poverty from a diverse group of development specialists. The book focuses on the poorest and hungry in society and identifies areas for action. Stable economic growth; targeted social programs and insurance that invest in and protect nutrition, health, and education; and political and social inclusion of previously marginalized groups emerge as the essential requirements for poverty reduction, and this book's contributors identify strategies for promoting all three. The Poorest and Hungry is an important resource for policymakers, development specialists, and others concerned with helping the world's poorest people.

Post-Stabilization Economics in Sub-Saharan Africa

Lessons from Mozambique

Author: Shanaka J. Peiris,Mr. Jean A. P. Clément

Publisher: International Monetary Fund

ISBN: 145194537X

Category: Business & Economics

Page: 407

View: 1515

Mozambique is an economic success story in sub-Saharan Africa (SSA). Its remarkable achievements offer valuable lessons to other low-income countries in a post-stabilization economic phase, including how they can efficiently manage a scaling up of foreign aid aimed at poverty reduction. Of special interest to other sub-Saharan countries are the book's discussions of Mozambique's progress toward consolidating macroeconomic and financial stability, and the challenges it faces in ensuring long-term sustainability, creating a virtuous cycle of natural resource use, and implementing second-generation structural reforms to sustain its growth. This book also provides a summary of the most recent research on issues related to post-stabilization economics in SSA.