The determinants of fiscal deficits and fiscal adjustment in a small open economy : the case of the Gambia
Author(s)/Corporate Author (s)Secka, Mod A. K.;
United Nations. Economic Commission for Africa. African Institute for Economic Development and Planning(IDEP);
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This study mms at examining the determinants of government revenue and government expenditure and fiscal deficit. First a trend analysis was undertaken of government revenue, government expenditure and the fiscal deficit. This was done using a "before and after" approach and scenarios. In addition, public expenditure reviews in the health and education sectors form part of the analysis. The main methodology was econometric estimation of the determinants of government revenue, government expenditure and the fiscal deficits. These determinants include demographic, policy, statistical and qualitative factors. Government revenues and government expenditures are sub-classified and estimated in their dis aggregated forms. The results indicate that fiscal deficits can be reduced via expenditure, revenue and monetary policies coupled with some administrative reforms. The major conclusions of this work are the following. Firstly, the Tanzi "effect" of revenue adjusting faster than expenditure, and thus fiscal deficits will increase with inflation, is shown to be valid in the case of the Gambia. Secondly, appreciation of the real exchange rate would reduce total revenue, increase total government expenditure and at the same time increase the fiscal deficit. Thirdly, changes in tax regimes would increase revenue and expenditure at the same time. Fourthly, the degree of openness is found to have weak or no relationship with revenue. Policy switch from one of poor fiscal policies to better fiscal policies would increase revenue while reducing government expenditure. Finally, public expenditure reviews are found to be alternative ways of reducing fiscal deficits.
Citation“Secka, Mod A. K.; United Nations. Economic Commission for Africa. African Institute for Economic Development and Planning(IDEP) (1998-08). The determinants of fiscal deficits and fiscal adjustment in a small open economy : the case of the Gambia. Dakar. © UN. IDEP. ”
- Development Finance