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Aid Scaling Up: Do Wage Bill Ceilings Stand in the Way?

37 Pages Posted: 21 Jun 2006  

Annalisa Fedelino

International Monetary Fund (IMF)

Gerd Schwartz

International Monetary Fund (IMF) - Fiscal Affairs Department

Marijn Verhoeven

International Monetary Fund (IMF) - Fiscal Affairs Department

Date Written: April 2006

Abstract

This paper assesses whether the scaling up of aid and the resulting increase in government spending that is needed to meet the Millennium Development Goals (MDGs) would be hampered by wage bill ceilings that are often part of government programs supported by the IMF`s Poverty Reduction and Growth Facility (PRGF). Based on country case studies for 2003-05, the paper suggests that, in the past, wage bill ceilings have not restricted the use of available donor funds. Yet the paper offers a number of suggestions for further enhancing the flexibility of wage bill conditionality in PRGF-supported programs to respond to higher aid flows that may result in the future.

Keywords: IMF conditionality, aid scaling up, wage bill, MDGs

JEL Classification: E62, F35, H53, J30, J31, J45, O19

Suggested Citation

Fedelino, Annalisa and Schwartz, Gerd and Verhoeven, Marijn, Aid Scaling Up: Do Wage Bill Ceilings Stand in the Way? (April 2006). IMF Working Paper, Vol. , pp. 1-37, 2006. Available at SSRN: https://ssrn.com/abstract=910671

Annalisa Fedelino (Contact Author)

International Monetary Fund (IMF) ( email )

700 19th Street NW
Washington, DC 20431
United States

Gerd Schwartz

International Monetary Fund (IMF) - Fiscal Affairs Department ( email )

700 19th Street, NW
Washington, DC 20431
United States

Marijn Verhoeven

International Monetary Fund (IMF) - Fiscal Affairs Department ( email )

700 19th Street, NW
Washington, DC 20431
United States

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