Fiscal Sustainability in Burundi : Baseline Projections, Stochastic Simulations, and Policy Scenarios

Kida, Mizuho

World Bank, Washington, DC

关键词: ADVANCED ECONOMIES;    ADVERSE CONSEQUENCE;    AGRICULTURAL OUTPUT;    AGRICULTURAL SECTOR;    AGRICULTURE;   

DOI  :  10.1596/1813-9450-6581
RP-ID  :  WPS6581

学科分类：社会科学、人文和艺术（综合）

来源: World Bank Open Knowledge Repository

【 摘 要 】

This paper analyzes Burundi'smedium-term fiscal sustainability in the light of thecountry's vulnerability to various shocks. Earlierstudies have highlighted the country's vulnerability toexogenous shocks related to commodity exports, rain-fedagriculture, and volatile foreign aid. Internally,uncertainty about the implementation of thegovernment's fiscal reforms is a key risk. The earlierstudies, however, did not quantify the size and impact ofthe risks on the country's fiscal sustainability.Drawing initially on the standard inter-temporalsustainability framework, the baseline analysis shows thatBurundi's ongoing fiscal policy strategy is notsustainable, even with a gradually improving externalenvironment and relatively strong growth. Stochasticsimulations show that adverse shocks to rainfall or coffeeprices could increase the country's debt-to-grossdomestic product ratio by 5 to 7 percentage points above theprojected baseline ratio. Aid shocks could have an evenlarger impact but the estimates are less statisticallyreliable because of the short time series and becausehistorical volatility in part reflects endogenous shocks(such as reform implementation) as well as exogenous shocks(donors' behavior). The policy scenario analysis showsthat future fiscal sustainability will hinge on thegovernment's ability to stick to its plans to broadenthe tax base, streamline generous tax incentives andexemptions, and control civil service wages and short-runexpenditure pressures -- risks that need to be monitoredclosely over the political cycle in the country.