A fiscal stimulus for Africa?

Many advanced economies, facing a deep recession, are launching large fiscal stimulus programs. Should African countries be following suit? This raises many questions, not least what is meant by fiscal stimulus. Where revenues are falling, budget deficits are widening automatically. Provided financing is available, this is appropriate. Indeed, it would not be helpful to cut spending on key public investment programs when the economy is already slowing down. But is there a case for increasing spending levels beyond what was initially planned? This depends on at least two things: can it be financed? and can the additional money be spent efficiently? Both questions are very country-specific and cannot be answered in the abstract. Country experiences will be front and center at the forthcoming conference in Tanzania and I expect that questions about fiscal stimulus programs will be extensively debated. Watch this space!
 
Roger Nord
Senior Advisor, African Department of the IMF