Are Cash Budgets a Cure for Excess Fiscal Deficits (and at What Cost)?

Posted: 19 Jun 2001

See all articles by David Stasavage

David Stasavage

New York University (NYU)

Dambisa Moyo

University of Oxford - Department of Economics

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.

Keywords: cash budgets, political economy, budgetary institutions, credibility, Uganda, Zambia

Suggested Citation

Stasavage, David and Moyo, Dambisa, Are Cash Budgets a Cure for Excess Fiscal Deficits (and at What Cost)?. World Development, Vol. 28, No. 12, December 2000. Available at SSRN: https://ssrn.com/abstract=252827

David Stasavage (Contact Author)

New York University (NYU) ( email )

Bobst Library, E-resource Acquisitions
20 Cooper Square 3rd Floor
New York, NY 10003-711
United States

Dambisa Moyo

University of Oxford - Department of Economics ( email )

Manor Road Building
Manor Road
Oxford, OX1 3BJ
United Kingdom

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