The Design of Fiscal Adjustment Strategies in Botswana, Lesotho, Namibia, and Swaziland

Luis-Felipe Zanna, Olivier Basdevant, Susan Yang, Genevieve Verdier, Joannes Mongardini, Borislava Mircheva and Dalmacio Benicio

No 2011/266, IMF Working Papers from International Monetary Fund

Abstract: Botswana, Lesotho, Namibia, and Swaziland face the serious challenge of adjusting not only to lower Southern Africa Customs Union (SACU) transfers because of the global economic crisis, but also to a potential further decline over the medium term. This paper assesses options for the design of the needed fiscal consolidation. The choice among these options should be driven by (i) the impact on growth and (ii) the specificities of each country. Overall, a focus on government consumption cuts appears to minimize the negative impact on growth, and would be appropriate given the relatively large size of the public sector in each country.

Keywords: WP; consumption; consumption tax; GDP; real GDP; Fiscal adjustment; fiscal multipliers; SACU transfers; SACU transfer; SACU revenue; SACU member; SACU shortfall; SACU transfer reduction; SACU imports; SACU transfers range; public consumption; revenue issue; consumption measure; government consumption adjustment; only consumption; Fiscal consolidation; Consumption taxes; Government consumption; Labor taxes; Public investment spending; Southern Africa (search for similar items in EconPapers)
Pages: 38
Date: 2011-11-01
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Citations: View citations in EconPapers (6)

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