scholarly journals Assessing fiscal sustainability in Swaziland

2018 ◽  
Vol 21 (1) ◽  
Author(s):  
Welcome N. Nxumalo ◽  
Nomvuyo F. Hlophe
Keyword(s):  
Fiscal Policy ◽  
South African ◽  
Stochastic Analysis ◽  
Sustainability Indicators ◽  
Fiscal Sustainability ◽  
Fiscal Crisis ◽  
Customs Union ◽  
Medium Term ◽  
Corrective Measures ◽  
Long Run

Background: Understanding and assessing fiscal sustainability is essential in ensuring financial and macro-economic stability. Fiscal sustainability has emerged as an important subject for Swaziland given the increasingly volatile government revenues especially those coming through the South African Customs Union (SACU), which threw the country into a severe fiscal crisis between 2010 and 2012, as well as the pressures on increased government spending in the post-fiscal crisis era. Aim: This article primarily focuses on studying whether Swaziland’s fiscal policy remains on a sustainable path or whether corrective measures would be required. Setting: Study focuses on Swaziland, a small open economy that is vulnerable to external shocks. The country also relies heavily on South African Customs Union (SACU) revenues. Methods: The study employs a broad approach to assessing fiscal sustainability in Swaziland covering both deterministic and stochastic analysis. On the deterministic analysis, the article studies the evolution of debt given macro-economic variables and further estimates fiscal sustainability indicators such as the primary gap and tax-gap. From a stochastic analysis, the article uses the Trehan and Walsh Methodology as well as Hakkio and Rush Methodology. Results: Fiscal sustainability indicators reflected that the country is on an unsustainable path with a primary gap and tax-gap of about 7% of gross domestic product (GDP) that has to be corrected. The econometric results also portray an evidence of ‘weak-form’ sustainability in the long-run. This is because public expenditures are rising at a faster pace than revenues thereby rendering government deficits unsustainable in the medium term. The econometric results also suggest a tax-spend hypothesis in the long-run, while short-run developments point to a spend-tax hypothesis. In both instances the correction measure is cutting expenditure, mainly recurrent expenditure. Conclusion: The study recommends corrective measures (mainly cuts in government expenditure) for fiscal policy to be brought back into a sustainable path without which a fiscal crisis is imminent. The recommendations are mainly based on the fiscal sustainability indicators as they are more forward looking for the short to medium term. The article suggests fiscal rules based on these indicators.

scholarly journals Assessing Swaziland’s Fiscal Sustainability and Policy Options

2015 ◽  
Vol 2015 ◽  
pp. 1-10
Author(s):  
Albert Mafusire
Keyword(s):  
Fiscal Policy ◽  
Government Expenditure ◽  
Fiscal Sustainability ◽  
Fiscal Crisis ◽  
Customs Union ◽  
Policy Options ◽  
Main Motivation ◽  
Trend Line ◽  
Fiscal Adjustment ◽  
Short Run

In 2011, Swaziland’s fiscal policy was extensively scrutinized following its worst fiscal crisis in decades. The impacts of fiscal adjustment on Swaziland’s growth, inflation, and sectoral allocations of resources were some of the issues analyzed. The fall in the Southern African Customs Union revenue receipts to levels below the trend line, for two consecutive years, and the fiscal challenges that followed were the main motivation behind this interest. This paper attempts to establish whether fiscal sustainability was threatened, and if so what were the policy options? Based on the results from econometric estimations, using a sample for the 1986 to 2012 period, I show that the country’s fiscal sustainability was not threatened. However, calculations of the tax gap and the primary gap covering the period 2000 to 2016 reveal that fiscal sustainability was threatened. Subject to the major drivers of government expenditure and revenue handles, it is concluded that, in the short run, the two needed to be realigned while also allocating more resources to support growth.

Features of realization of the budgetary policy of the Murmansk region in the medium term

2017 ◽  
Vol 31 (2) ◽  
pp. 96-100
Author(s):  
M. V. Ryazantseva
Keyword(s):  
Fiscal Policy ◽  
Preventive Measures ◽  
Fiscal Sustainability ◽  
Social Stability ◽  
Medium Term ◽  
Budgetary Policy ◽  
Murmansk Region

Fiscal policy of the Murmansk region is focused on the need to balance the budget and ensure fiscal sustainability while maintaining social stability. Balance is achieved through operational use of preventive measures aimed at optimization of emerging risks.

The Sustainable Debts of Philip II

2017 ◽  
Author(s):  
Mauricio Drelichman ◽  
Hans-Joachim Voth
Keyword(s):  
Sixteenth Century ◽  
Strong Evidence ◽  
Military Expenditure ◽  
Debt Service ◽  
Fiscal Sustainability ◽  
Short Term ◽  
Systematic Analysis ◽  
Philip Ii ◽  
Long Run

This chapter addresses the sustainability of debt. A systematic analysis based on the International Monetary Fund's (IMF) methodology to evaluate fiscal sustainability shows that Castile was able to service its debts in the long run. While liquidity was scarce during periods of intense warfare, years of relative peace brought large surpluses. The data collected from Castile's annual fiscal accounts produced new yearly series of revenue, military expenditure, short-term debt issues, and short-term debt service. The resulting database spans a full 31-year period—enough to employ modern quantitative techniques. This analysis provides strong evidence that Castile's fiscal position in the second half of the sixteenth century was on a solid footing. The chapter then assesses whether the events that led to major downturns in Castile's financial fortunes could have been anticipated.

HABIT FORMATION AND GOVERNMENT SPENDING IN A SMALL OPEN ECONOMY

2003 ◽  
Vol 7 (3) ◽  
pp. 407-423 ◽  
Author(s):  
Cem Karayalçin
Keyword(s):  
Fiscal Policy ◽  
General Equilibrium ◽  
Current Account ◽  
Open Economy ◽  
Equilibrium Model ◽  
Government Spending ◽  
Time Preference ◽  
Small Open Economy ◽  
Long Run ◽  
Fiscal Shocks

The paper studies the effects of an expansionary fiscal policy in a general equilibrium model of a small open economy. Households are assumed to possess habit-forming, endogenous rates of time preference. In response to fiscal shocks, the model generates cyclical endogenous persistence and procyclical time paths for consumption, employment, and investment, as well as a countercyclical path for the current account. Furthermore, fiscal shocks are shown to have positive long-run effects on output and negative long-run effects on consumption.

scholarly journals Revisiting Banking Stability Using a New Panel Cointegration Test

2021 ◽  
Vol 9 (2) ◽  
pp. 21
Author(s):  
Hassan B. Ghassan ◽  
Zakaria Boulanouar ◽  
Kabir M. Hassan
Keyword(s):  
Cross Section ◽  
Serial Correlation ◽  
Panel Cointegration ◽  
Cointegration Test ◽  
Current Version ◽  
Medium Term ◽  
Long Run ◽  
Panel Cointegration Test ◽  
Banking Stability ◽  
Score Index

Using a new panel cointegration test that considers serial correlation and cross-section dependence on a mixed and heterogenous sample of Saudi banks, we revisit the cointegrating equation of the z-score index of banking stability. Our results show that even when we consider the cross-section dependency and serial correlation of the errors, there is a possibility of a long-run relationship, which holds in our sample of banks. Furthermore, in the medium term, we found some banks to be integrated, whereas others were non-cointegrated. We interpret this to suggest that some banks contribute to banking stability, whereas others do not. In other words, there exists at least one bank that acts as a destabilizer and the challenge for financial regulators is to identify which banks these are. However, the current version of the Hadri et al. test does not allow for the identification of the non-cointegrated banks. If the test was able to do that, the regulatory authorities would be able to develop corrective policies/measures specifically tailored to the non-cointegrated units.

The South African public service wage bill deadlock in 2021: living on the edge

2021 ◽  
Vol 11 (4) ◽  
pp. 1-15
Author(s):  
Marianne Matthee ◽  
Albert Wöcke
Keyword(s):  
Fiscal Policy ◽  
Learning Outcomes ◽  
South African ◽  
Public Service ◽  
Subject Area ◽  
The South ◽  
Content Type ◽  
Academic Level ◽  
Finance Minister ◽  
The Government

Subject area Macro-Economics. Study level/applicability Undergraduate and MBA. Case overview The COVID 19 pandemic-related restrictions devastated South Africa’s economy in 2020 and although the restrictions were generally less damaging than in 2020, the government had to budget for vaccinations and rebuild the economy. Public service unions had just announced that they were demanding an increase of 4% above inflation for their members and that they were preparing for a strike. They were bitter about the fact that the South African Government had withdrawn from the last year of a three-year wage agreement in February 2020 and their members had not received an increase for the two years. These demands and Finance Minister Mboweni’s response to them had to consider the structural and cyclical impact on the fiscus and economy. Expected learning outcomes The learning outcomes are as follows: understand the general objectives of fiscal policy and stakeholders’ interests; understand the tradeoffs in fiscal policy and the implications of taking a position; and make recommendations based on reasoned judgements about those recommendations. Complexity academic level Undergraduate and MBA level courses on Macro Economics. Supplementary materials Teaching notes are available for educators only. Subject code CSS 10: Public Sector Management.

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