This paper analyzes the impact of decentralization on overall fiscal performance in the European Union, taking into account fiscal institutional arrangements. We find that spending decentralization has been associated with sizably better fiscal performance, especially when transfer dependency of...

In many countries the decentralization of spending responsibilities has outpaced the decentralization of revenue powers. Sub-national governments have then to rely on transfers from the center and borrowing to finance their spending. When this occurs, we find that the overall fiscal deficit...

This paper describes the institutional changes that have induced a decline in the vertical fiscal imbalance (VFI) - defined as the share of sub-national own spending not financed through own revenues - in four European countries: Belgium, Italy, Norway, and Spain. The decline in VFI was achieved...

A weakness of decentralization and overall tax reforms in Latin America is the lack of attention to adequate taxation at the subnational government. A reliance on shared taxes with extensive earmarking leads to weak subnational accountability and soft budget constraints. The paper explores the...

Austria’s federal system comprises the federal government and nine provinces (Länder). The federal system is rather centralized by international standards, with the federal government (including social security funds) accounting for about 70 percent of general government spending, the...

The purpose of this paper is to assess whether expenditure decentralization has contributed to weakening fiscal performance in Europe. Using a panel of EU15 countries for the period 1995-2011, we estimate three econometric models and ask the following questions: (1) does the form of spending...

The Swaziland economy continues to suffer from the global economic crisis and an overvalued real exchange rate. The fiscal crisis is starting to affect external stability. Notwithstanding the fiscal crisis, banks continue to remain well capitalized and profitable. The 2011–12 budget...

This 2007 Article IV Consultation highlights that Japan’s external position remains strong. Boosted by investment income, the current account surplus widened in 2006 to nearly 4 percent of Japan’s GDP, despite a shrinking trade balance. Financial outflows also picked up, reflecting...

The Gambian economy performed well in the face of external shocks under the Extended Credit Facility. Executive Directors welcomed the 2011 budget, which focuses mainly on revenue enhancement, limiting government’s domestic borrowing, and reduction of poverty. They agreed that IMF...

Kiribati is one of the poorest and most remote microstates in the Pacific. It is highly dependent on volatile fishing license fees, remittances, and donor assistance. The challenge is to implement fiscal and structural reforms to help ensure fiscal sustainability, promote private sector...