Fiscal Policy Response to Scaled-Up Aid

Author: International Monetary Fund

Sound fiscal policies are critical for handling aid volatility as well as for making effective use of scaled-up aid and other flows.

Volume/Issue: Volume 2007 Issue 020

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Topics covered in this book

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Public Finance , PP , country , PFM , governance , PFM system , budget , baseline expenditure projection , program loan , PFM reform , international community , expenditure allocation , expenditure smoothing , expenditure projection , expenditure program , Budget planning and preparation , West Africa , Sub-Saharan Africa

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Summary

Sound fiscal policies are critical for handling aid volatility as well as for making effective use of scaled-up aid and other flows. By easing resource constraints, these flows allow low-income countries (LICs) to increase spending aimed at enhancing growth and reducing poverty. Effective management of these policies, however, presents a host of macroeconomic challenges, many of them fiscal.