Transcript Expenditure Policy Work in FAD

Expenditure Policy Work in FAD
Shamsuddin M. Tareq
Deputy Division Chief
Fiscal Affairs Department
Seminar of Public Expenditure Planning and
Management for UNICEF Staff
Washington, D.C.
October 8, 2009
Outline
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Overview of Financial Programming
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Why focus on expenditure policy?
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Main divisional activities
Objectives of Fund-supported
Programs
Financial programs are typically designed to
restore balance of payments viability and
more generally to restore macroeconomic
stability
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Based on view that macroeconomic stability
is a necessary condition for economic growth
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Building Blocks of Fund-supported
Programs
Program
Objectives
Policy
Measures
Consistent
Program
Projections
Program Objectives
 Economic Growth (targeted growth rate)
 Relative price stability (low inflation)
 Sustainable Balance of Payments
 Others (e.g., bank recapitalization, poverty
reduction, etc.)
Outline of Policy Mix
Demand management policies (change in
expenditure level)
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Fiscal policy
Monetary policy
Expenditure-switching policies
Exchange rate policy
Income (price) policy
 Trade policy
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Outline of Policy Mix (cont.)
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Supply-oriented policies
Enhance efficiency of resource
allocation (factor productivity)
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Increase potential output (input levels)
Why Focus on Expenditure
Policy?
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Govt. expenditure is a key component of aggregate
demand in the economy
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Fiscal consolidation
 Further revenue increases may be difficult
 Across-the-board cuts may not be desirable
 Increasing productivity of public resources could
release resources for critical public programs
Main Objectives of Expenditure
Policy
 Macro
objectives:
 Support
macroeconomic stability
 Facilitate economic growth
 Micro
objectives
 Promote
efficiency in resource allocation
 Facilitate the achievement of social objectives
(e.g., poverty reduction)
Main Divisional Activities
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Technical assistance (TA) across the spectrum of
expenditure policy topics
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Policy development and research
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Operational support to area departments on
expenditure policy issues
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Training and outreach activities
Overview of the Main Topics
Covered by the Division
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Public expenditure efficiency and productivity;
composition of public spending
Macro fiscal and distributional impact of economic
policies
Options for subsidy reform
Sustainability of social security systems and pension
reform
Fiscal policies in low-income countries
Public investment, public-private partnerships (PPPs),
and fiscal risks
Reform of public wages and employment
Macrofiscal aspects of health expenditure
Policy Development and
Research
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Global financial crisis
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Impact of Financial Crisis on Low-Income Countries (two
Board papers)
Looking beyond the crisis—exit strategies for LICs
(forthcoming)
Impact of the financial crisis on PPPs
Financial crisis and funded pension systems
Age-related spending in G-20 countries (on-going)
Policy Development and
Research (cont.)
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Fuel and food prices
Recent Developments, Macroeconomic Impact, and Policy
Responses (2 Board papers jointly with other department)
 Food and Fuel Price Subsidies—Issues and Reform Options; paper
for G-8
 Forthcoming paper on fossil fuel subsidies (request from G-20)
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Expenditure reform
Age-related spending (pension and health)
 Broader cross-sector issues (short-term expenditure rationalization)
linked to efficiency & flexibility issues
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Macrofiscal and Distributional
Impact of Economic Policies
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Purpose of this work
To identify the likely impact of policy measures on the welfare of different
social groups
 To propose countervailing measures to mitigate the adverse impact on the
poorest and most vulnerable households
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Divisional activities
Assisting country teams to integrate into surveillance and program design the
findings of studies conducted by others
 Undertaking our own studies
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Main topics addressed
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Subsidy reform
Tariff and tax reform
Agriculture sector reforms
Exchange rate devaluation