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Is Fiscal Policy the Answer? A Developing Country PerspectiveFiscal policy is an important instrument for maintaining and improving living standards. Such living standards can be viewed as an outcome of the interaction between the opportunities offered by society and the readiness and ability of each person to exploit them. Under certain circumstances, public finance can make an important contribution to the creation of opportunities within a given society by raising resources from the private sector through taxation or borrowing (domestic and external) and allocating those resources effectively and equitably in the form of public spending, including through public goods and transfers. The first chapters in this volume sketch out a framework that policy makers can use in adopting a more cohesive or integrated approach to the short- and long-term dimensions of fiscal policy. Here the traditional threefold rationale for fiscal policy proposed by Musgrave-stabilization, resource allocation, and distribution-continues to be useful. Other chapters in this volume take up some of the critical institutional challenges in implementing fiscal policy for longer-term growth and development. These chapters also look at the tools and approaches being developed to address these challenges. Improving the quality of public investment management is a particular priority in view of the recent evidence that as little as half of all public investment expenditure translates into productive capital stock. The last chapter in this volume is a case study of fiscal responses to the great recession in low-income Sub-Saharan Africa, looking at stabilization and the longer-run growth, as well as distributional aspects of such responses. The growing depth of domestic financial markets in many African countries rather unexpectedly is turning out to be a critical source of financing for fiscal policy responses.
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Tanzania Economic Update, October 2012Tanzania continues to stand out as a
 model of sound economic performance in the African
 continent, with a growth rate of over six per cent in 2011
 and 2012, surpassing other regional economies and
 demonstrating impressive resilience to the global economic
 crisis. This is the second issue of the Tanzania economic
 update series. The series aim to engage a broad audience in
 a discussion of the state of the economy in general, as well
 as in specific debates of topical importance in Tanzania.
 The current issue seeks to get the discussion going on how
 to achieve the structural transformation of the rural
 economy so that rural households can also benefit from the
 country's remarkable growth performance.
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Long-Term Fiscal Risks and Sustainability in an Oil-Rich Country : The Case of RussiaRussia entered the global crisis with
 strong fiscal position, low public debt, and large fiscal
 and monetary reserves, which helped it cushion the crisis
 shocks. But the rise in the non-oil fiscal deficit in
 2007-08 and, more importantly, the massive impact of the
 global crisis in late 2008 and 2009 have dramatically
 altered Russia's medium-term and long-term economic and
 fiscal outlook. While Russia is emerging from this crisis on
 a much stronger footing than during the 1998-09 crisis
 thanks to its strong-pre crisis fundamentals, large fiscal
 reserves and solid management of the crisis, it will
 nevertheless need to implement sustained fiscal adjustment
 in the coming years. Both revenue and expenditure measures
 will be needed. This will require 2-3 percentage points of
 GDP in fiscal adjustment for about five years in addition to
 keeping total expenditure levels at a relatively low 31.5
 percent of GDP, consistent with long-term social expenditure
 needs and requirements of long-term fiscal sustainability.
 Following a period of adjustment, if Russia would restrain
 its long-term non-oil deficits to the permanent income (PI)
 equivalent of its oil revenues as proposed in this paper,
 its fiscal policy will return to long-term sustainable path.
 The long-term, sustainable level of non-oil fiscal deficit
 is estimated at about 4.3 percent of GDP. With the 2009
 actual non-oil fiscal deficit of about 14 percent of GDP,
 this implies significant and sustained fiscal adjustment
 over the medium term. The expenditure needs of the social
 security system as well as a reduction in key non-oil taxes
 represent a major fiscal risk to all scenarios.