Macroeconomic challenges of structural transformation : public investment, growth and debt sustainability in Sierra Leone /

Macroeconomic challenges of structural transformation : public investment, growth and debt sustainability in Sierra Leone /

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Bibliographic Details
Author / Creator:Balma, Lacina, author.
Imprint:[Washington, D.C.] : International Monetary Fund, ©2015.
Description:1 online resource (38 pages) : color illustrations.
Language:English
Series:IMF working paper, 1018-5941 ; WP/15/164
IMF working paper ; WP/15/164.
Subject:
Structural adjustment (Economic policy) -- Sierra Leone -- Econometric models.
Public investments -- Sierra Leone -- Econometric models.
Economic development -- Sierra Leone -- Econometric models.
Debts, Public -- Sierra Leone -- Econometric models.
Debts, Public -- Econometric models.
Economic development -- Econometric models.
Public investments -- Econometric models.
Structural adjustment (Economic policy) -- Econometric models.
Sierra Leone.
Electronic books.
Format: E-Resource Book
URL for this record:http://pi.lib.uchicago.edu/1001/cat/bib/12504642
Hidden Bibliographic Details
Other authors / contributors:Ncube, Mthuli, 1968- author.
International Monetary Fund. Research Department.
International Monetary Fund. Strategy, Policy, and Review Department.
ISBN:1513599038
9781513599038
1513543474
9781513543475
1513552368
9781513552361
Notes:"July 2015."
"Research Department and Strategy, Policy, and Review Department."
Includes bibliographical references (pages 35-36).
Online resource; title from pdf title page (IMF.org Web site, viewed July 23, 2015).
Summary:This paper analyzes the link between public investment, economic growth and debt sustainability in Sierra Leone using an inter-temporal macroeconomic model. In the model, public capital improves the productive capacity of private capital, generating positive medium and long term effects to increases in public investment. The model application indicates that a large increase in public investment would have positive macroeconomic effects in the medium term. However, since there is no free lunch, rigidities in tax adjustment would entail unrealistic and unachievable adjustment in the current spending to cover recurrent costs and ensure debt sustainability. A more ambitious increase in public investment would entail more fiscal adjustment, particularly if external commercial loans are secured to complement the adjustment. The model simulations also emphasize the importance of improvements in the structural economic conditions to reap growth dividends. In addition, even if the macroeconomic implications of public investment scaling-up can be favorable in the long term under changes in certain structural conditions, downside risks such as terms of trade shifts and Ebola-induced productivity shortfall expose the country to increased risk of unsustainable debt dynamics. This underscores the need to remove bottlenecks to growth and maintain prudent borrowing policies.--Abstract.
Other form:1513599038
1513549677
Standard no.:10.5089/9781513599038.001
Table of Contents:
  • Cover; Table of Contents; I. Introduction; II. Public Investment and Infrastructure Needs, and Debt Policy in Sierra Leone; III. Features of the Model and Calibration to Sierra Leone; 1. Features of the Model; Tables; Table 1. Sierra Leone: Debt Stock Evolution, 2007-11; A. Firms; B. Consumers; C. Government; 2. Calibration to Sierra Leone; Table 2. Calibration of Main Parameters (Base Case); IV. Base Case Analysis; A. Short Run Effects; B. Medium to Long Run Effects; Figures; Figure 1. Frontloaded investment scaling-up, constrained tax adjustment and increasing loans and grants.
  • Figure 2. Frontloaded investment scaling-up, unconstrained tax adjustment and increasing loans and grantsV. Alternative Assumptions; A. Closing the Financing Gap with External Commercial Borrowing; B. Closing the Financing Gap with Domestic Borrowing vs. External Commercial Borrowing; Figure 3. External commercial versus concessional borrowing only; C. Alternative Case Investment Strategies; Figure 4. Domestic borrowing versus external commercial borrowing; Figure 5. Aggressive Public Investment scaling Up; VI. Baseline Investment Strategy with Structural Reforms and Policy Conditions.
  • A. Structural ReformsFigure 6. Lower Public Investment scaling Up; Table 3. Sensitivity Analysis Assumptions; Figure 7. Optimistic scenario: Efficiency of public investment (s, in %); B. Policy Conditions: Fiscal Limits; Figure 8. Higher efficiency of public investment and allowing for commercial public debt; Figure 9. Lower structural conditions and allowing for commercial public debt; C. Time and Speed of Fiscal Adjustment; Figure 10. Different fiscal limits and allowing for external commercial borrowing.
  • Figure 11. Speed of tax adjustments with external commercial borrowing and different paths of the grant-financingVII. Downside Risks; Boxes; Box 1. Speed of Fiscal Adjustment; A. Terms-of-Trade Shocks; B. Total Factor Productivity Shocks; Figure 12. Negative TOT and TFP Shocks; VIII. Concluding Remarks; Figure 13. Estimated GDP impact of Ebola (2014-17); References; Appendix; Table; 1. Agenda for Prosperity ESTIMATES (in Millions US).

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