Aid and fiscal deficits
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Date
2007
Authors
Journal Title
Journal ISSN
Volume Title
Publisher
Willey
Abstract
This article contributes to the ongoing debate on the macroeconomic management of large aid inflows to low-income countries by analysing lessons drawn from Uganda, where the fiscal deficit before grants, which was largely aid-funded, doubled to over 12% of GDP in the early 2000s. It focuses on the implications of the widening fiscal deficit for monetary policy, the real exchange rate, debt sustainability and the vulnerability of the budget to fiscal shocks, and argues that large fiscal deficits, even when funded predominantly by aid, risk undermining macroeconomic objectives and long-run fiscal sustainability.
Description
Keywords
Aid, Fiscal deficits, Uganda, Macroeconomic Management, Fiscal Sustainability
Citation
Brownbridge, M., & Tumusiime‐Mutebile, E. (2007). Aid and fiscal deficits: lessons from Uganda on the implications for macroeconomic management and fiscal sustainability. Development Policy Review, 25(2), 193-213.