Transparency, inclusivity and development needs take centre stage at the Seventh African Fiscal Forum
The International Monetary Fund’s African and Fiscal Affairs Department, the Kenyan Treasury and the European Commission organised the Seventh African Fiscal Forum in Nairobi, Kenya, on 14 and 15 February.
This annual event brings together senior officials from ministries responsible for finance across Sub-Saharan Africa (SSA) to discuss fiscal challenges facing the region. It is an opportunity for countries to share experiences and learn from each other – and its main aim is to entrench a more effective fiscal policy for the region. This year’s Forum comes at an important point, where countries are translating the UN Sustainable Development Goals into their national policy priorities, costing and financing frameworks.
The theme of this year’s Forum was Leveraging Fiscal Policy to Manage Risks and Support Inclusive Growth. Issues discussed included fiscal transparency and managing fiscal risks, addressing developmental needs, and spending to promote inclusivity. The event was attended by more than 80 participants, including officials from the finance ministries of about 30 countries and representatives from regional organisations.
In their opening presentations, Abebe Selassie, director of the African Department and Vitor Gaspar, director of the Fiscal Affairs Department of the IMF highlighted the need to build tax capacity and invest in human and physical capital in a context of still muted economic growth and rising debt burdens. Kenya’s Minister of Finance, Henry Rotich stressed that if SSA is to use fiscal policy more actively to manage risks and support inclusive growth, it must do so without compromising two strategic priorities: economic and fiscal sustainability. Félix Fernández-Shaw, director at the European Commission’s DG-DEVCO, stressed the importance of making best use of all financial resources and implementing reforms to improve policies and good governance.
A key theme running through the Forum was how to face the region’s developmental needs. According to recent IMF analysis, achieving the Sustainable Development Goals in Sub-Saharan Africa would require on average extra annual spending of 20 percent of GDP by 2030 – more than in any other region. Solutions discussed included raising government revenue by enhancing tax capacity, strengthening international taxation and limiting tax expenditures. Establishing strong governance frameworks for the much-needed scaling-up of public investment and for attracting private investment was another issue that was dealt with in depth.
How to gear government spending to promote inclusivity was another central theme. The discussions here centred around reforming subsidies and social assistance to reach those in greatest need. Gender-responsive budgeting was also considered as a way for governments to promote equality between sexes and raise economic growth through fiscal and budgetary policies.
The Forum broadly took the view of fiscal transparency as a core component of effective fiscal and risk management. Transparency in fiscal operations aids information flow and accountability, and by extension promotes good decision-making. It is an area where many countries in Sub-Saharan Africa are making a significant push, using means such as IMF-supported fiscal transparency evaluations.