Are cash budgets a cure for excess fiscal deficits (and at what cost)?

Dambisa Moyo and David Stasavage

No 1999-11, CSAE Working Paper Series from Centre for the Study of African Economies, University of Oxford

Abstract: This paper investigates the effect of recent reforms of budgetary institutions in Uganda and Zambia. We argue that cash budgeting has brought clear benefits in terms of improved expenditure control with regard to line ministries. However, contrary to what is often suggested, adoption of a cash budget has not provided a means for top politicians in either country to “tie their hands” with respect to intervention in fiscal policy decisions. In Uganda improved fiscal policy outcomes have, in fact, been achieved as a result of (and not in spite of) discretionary interventions by top politicians. In Zambia, a strict rule imposing a balanced budget on a monthly basis both ineffective as a commitment device and costly in terms of increased volatility of expenditures.

Date: 1999
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