Securing Fiscal Discipline and Credibility in WAEMU: WAEMU

Fiscal consolidation and the reintroduction of the WAEMU fiscal framework is crucial for maintaining debt sustainability, external viability, and financial stability.
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Volume/Issue: Volume 2024 Issue 012
Publication date: May 2024
ISBN: 9798400275395
$15.00
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Topics covered in this book

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Exports and Imports , Economics- Macroeconomics , Money and Monetary Policy , Public Finance , International - Economics , monetary union , fiscal policy , fiscal consolidation , fiscal rules , debt , stock flow adjustment , stock-flow adjustment , credibility in WAEMU , deficit ceiling , deficit target , deficit rule , Debt sustainability , Fiscal space , Global

Summary

Fiscal consolidation and the reintroduction of the WAEMU fiscal framework is crucial for maintaining debt sustainability, external viability, and financial stability. The 3 and 70 percent of GDP deficit and debt ceilings envisaged by the expired rule remain appropriate, while addressing the stock-flow adjustments will help rebuild fiscal buffers. Convergence to a fiscal deficit of 3 percent of GDP should be ensured by 2025— barring exceptional circumstances—with focus on domestic revenue mobilization, while controlling expenditure. To secure fiscal discipline and credibility, it is essential to revamp the fiscal rule with a credible debt correction mechanism and exogenous escape clauses.