Are cash budgets a cure for excess fiscal deficits (and at what cost)?

David Stasavage, Dambisa Moyo

Research output: Contribution to journalArticle

Abstract

This paper investigates the effect of recent reforms of budgetary institutions in Uganda and Zambia. We argue that cash budgeting has brought clear benefits in terms of improved expenditure control with regard to line ministries. Contrary to what is often suggested, however, adoption of a cash budget has not provided a means for top politicians in either country to "tie their hands" with respect to intervention in fiscal policy decisions. In Uganda improved fiscal policy outcomes have, in fact, been achieved as a result of (and not in spite of) discretionary interventions by top politicians. In Zambia, a strict rule imposing a balanced budget on a monthly basis has proven partially effective, due in no small part to International Monetary Fund (IMF) enforcement, but costly in terms of increased volatility of expenditures. (C) 2000 Elsevier Science Ltd. All rights reserved.

Original languageEnglish (US)
Pages (from-to)2105-2122
Number of pages18
JournalWorld Development
Volume28
Issue number12
DOIs
StatePublished - 2000

Keywords

  • Budgetary institutions
  • Cash budgets
  • Credibility
  • Political economy
  • Uganda
  • Zambia

ASJC Scopus subject areas

  • Geography, Planning and Development
  • Development
  • Sociology and Political Science
  • Economics and Econometrics

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