Resource Dependence and Fiscal Effort in Sub-Saharan Africa

Resource Dependence and Fiscal Effort in Sub-Saharan Africa PDF

Author: Mr.Alun H. Thomas

Publisher: International Monetary Fund

Published: 2013-08-28

Total Pages: 19

ISBN-13: 1484391500

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High natural resource prices in recent years have resulted in sizeable increases in fiscal revenue for many resource-exporting countries in sub-Saharan Africa. However, this revenue source is volatile, and arguably these countries should also rely on other forms of taxation to help fund public expenditure. This paper asks whether the availability of higher resource revenue in these countries has led to lower taxation effort of other revenue categories. The question is analyzed both in terms of the relationship between non-resource tax revenue and resource revenue, and between non-resource tax revenue and statutory tax rates. The paper finds evidence suggesting that nonresource revenue is negatively influenced by a higher resource revenue-to-GDP ratio. The lower take up of nonresource taxes in resource-rich countries is correlated with higher levels of corruption in these countries, suggesting weaker institutions affect nonresource revenue through incentives for tax evasion and/or large tax exemptions as argued in the literature.

Boom, Bust, or Prosperity? Managing Sub-Saharan Africa’s Natural Resource Wealth

Boom, Bust, or Prosperity? Managing Sub-Saharan Africa’s Natural Resource Wealth PDF

Author: Charlotte J. Lundgren

Publisher: International Monetary Fund

Published: 2013-08-27

Total Pages: 85

ISBN-13: 1484369327

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Sizeable natural resource endowments and potentially large financial inflows from their extraction provide an unparalleled opportunity for economic growth and development in a growing number of sub-Saharan African countries. Empirical evidence suggests, however, that translating this resource wealth into stronger economic performance and a higher standard of living has proven challenging. Much has been written about the resource curse. This publication focuses on solutions to the challenges and outlines the main policy considerations and options in managing natural resource wealth, drawing on experience within and outside sub-Saharan Africa and referring closely to the latest analysis and policy advice in this area by the IMF, the World Bank, and leading academic research. A key feature of each chapter is a recommended reading list for those who wish additional, more in-depth material on these issues to further inform policymakers and other stakeholders on the theoretical and analytical underpinnings of the policy advice.

Resource Dependence and Fiscal Effort in Sub-Saharan Africa

Resource Dependence and Fiscal Effort in Sub-Saharan Africa PDF

Author: Mr.Alun H. Thomas

Publisher: International Monetary Fund

Published: 2013-08-28

Total Pages: 19

ISBN-13: 1484352424

DOWNLOAD EBOOK →

High natural resource prices in recent years have resulted in sizeable increases in fiscal revenue for many resource-exporting countries in sub-Saharan Africa. However, this revenue source is volatile, and arguably these countries should also rely on other forms of taxation to help fund public expenditure. This paper asks whether the availability of higher resource revenue in these countries has led to lower taxation effort of other revenue categories. The question is analyzed both in terms of the relationship between non-resource tax revenue and resource revenue, and between non-resource tax revenue and statutory tax rates. The paper finds evidence suggesting that nonresource revenue is negatively influenced by a higher resource revenue-to-GDP ratio. The lower take up of nonresource taxes in resource-rich countries is correlated with higher levels of corruption in these countries, suggesting weaker institutions affect nonresource revenue through incentives for tax evasion and/or large tax exemptions as argued in the literature.

Exiting From Fragility in sub-Saharan Africa

Exiting From Fragility in sub-Saharan Africa PDF

Author: Corinne Deléchat

Publisher: International Monetary Fund

Published: 2015-12-22

Total Pages: 46

ISBN-13: 1513521810

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This paper studies the role of fiscal policies and institutions in building resilience in sub-Saharan African countries during 1990-2013, with specific emphasis on a group of twenty-six countries that were deemed fragile in the 1990s. As the drivers of fragility and resilience are closely intertwined, we use GMM estimation as well as a probabilistic framework to address endogeneity and reverse causality. We find that fiscal institutions and fiscal space, namely the capacity to raise tax revenue and contain current spending, as well as lower military spending and, to some extent, higher social expenditure, are significantly and fairly robustly associated with building resilience. Similar conclusions arise from a study of the progression of a group of seven out of the twenty-six sub- Saharan African countries that managed to build resilience after years of civil unrest and/or violent conflict. These findings suggest relatively high returns to focusing on building sound fiscal institutions in fragile states. The international community can help this process through policy advice, technical assistance, and training on tax administration and budget reforms.

Tax Effort in Sub-Saharan Africa

Tax Effort in Sub-Saharan Africa PDF

Author: Ms.Janet Gale Stotsky

Publisher: International Monetary Fund

Published: 1997-09-01

Total Pages: 58

ISBN-13: 1451852940

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Many sub-Saharan African countries face difficulty in raising tax revenue for public purposes. This study uses panel data on 43 sub-Saharan African countries during 1990-95 to measure the determinants of the tax share in GDP and to construct a measure of tax effort. The analysis suggests that the countries with a relatively high tax share tend to have a relatively high index of tax effort, although these results are not uniform across the countries. The results can be used to provide guidance on to the proper mix of fiscal policy in the event of budgetary imbalance.

Boom, Bust, Or Prosperity?

Boom, Bust, Or Prosperity? PDF

Author: Charlotte J. Lundgren

Publisher:

Published: 2013

Total Pages: 75

ISBN-13: 9781484337431

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Sizable natural resource endowments and potentially large financial inflows from their extraction provide an unparalleled opportunity for economic growth and development in a growing number of sub-Saharan African countries. Empirical evidence suggests, however, that translating this resource wealth into stronger economic performance and a higher standard of living has proved challenging. Much has been written about the resource curse. This publication focuses on solutions to the challenges and outlines the main policy considerations and options in managing natural resource wealth, drawing on experience within and outside sub-Saharan Africa and referring closely to the latest analysis and policy advice in this area by the IMF, the World Bank, and leading academic research. A key feature of each chapter is a recommended reading list for those who wish additional, more in-depth material on these issues to further inform policymakers and other stakeholders on the theoretical and analytical underpinnings of the policy advice.

Alternative Exchange Rate Strategies and Fiscal Performance in Sub-Saharan Africa

Alternative Exchange Rate Strategies and Fiscal Performance in Sub-Saharan Africa PDF

Author: Mrs.Stefania Bazzoni

Publisher: International Monetary Fund

Published: 1993-08-01

Total Pages: 86

ISBN-13: 1451961057

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This paper investigates the relationship between fiscal performance in 28 sub-Saharan African countries over the 1980-91 period with movements in the exchange rates, the terms of trade, and other macroeconomic aggregates. It finds that the tax base in most of these countries is heavily dependent on imports and import substitutes. Consequently, an overvaluation of the exchange rate in countries which adopted a fixed exchange rate strategy undermines the tax base and results in a widening of the fiscal deficit when the purpose of the strategy is to restore the real exchange rate to its equilibrium through fiscal contraction. Those countries which pursued a variable exchange rate strategy failed in attaining price stability, but exchange rate adjustment was critical in contributing to other macroeconomic objectives, particularly fiscal balance, competitiveness, and growth.

Resource Blessing, Revenue Curse? Domestic Revenue Effort in Resource-Rich Countries

Resource Blessing, Revenue Curse? Domestic Revenue Effort in Resource-Rich Countries PDF

Author: Ernesto Crivelli

Publisher: International Monetary Fund

Published: 2014-01-14

Total Pages: 29

ISBN-13: 1484351487

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This paper uses a newly constructed revenue dataset of 35 resource-rich countries for the period 1992-2009 to analyze the impact of expanding resource revenues on different types of domestic (non resource) tax revenues. Overall, we find a statistically significant negative relationship between resource revenues and total domestic (non resource) revenues, including for the major tax components. For each additional percentage point of GDP in resource revenues, there is a reduction in domestic (non resource) revenues of about 0.3 percentage points of GDP. We find this primarily occurs through reduced effort on taxes on goods and services—in particular, the VAT— followed by a smaller negative impact on corporate income and trade taxes.

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