Tunisia - Macroeconomic and Fiscal Framework Mario

Transcript:Tunisia - Macroeconomic and Fiscal Framework Mario:
Tunisia - Macroeconomic and Fiscal Framework Mario A. Gutierrez Macroeconomic and Fiscal Expert 1 Contents Concept and Uses of a Macroeconomic Framework Functional Relationships in Financial Programming: How it works. Flow of Funds concept. Example of Financial Programming short-term: Demand Management Policies; and Financial Programming medium-term: Supply side Policies (Structural Policies). National Accounts. External accounts. Government Accounts. Monetary/Financial accounts.. Interrelationships among the macroeconomic accounts. Macroeconomic Framework and Economic Policy 2 What is a Macroeconomic Framework? A macroeconomic framework provides a consistent picture of the macroeconomic situation of a country: GDP growth, inflation, the government balance and financing, and relations to the external accounts. Relies on interrelationships among key macroeconomic variables: ex. GDP growth and tax revenue. As it takes into account the interrelationships among the four macroeconomic sectors of the economy (real, fiscal, external and monetary/financial sectors) it ensures consistent projections for GDP and the government budget: i.e., projections that satisfy macro-economic identities and constraints. Macroeconomic Framework and Economic Policy 3 Uses of a Macroeconomic Framework Budget preparation: – Revenue envelope (GDP growth and transfers) and interest payments: determines room for primary expenditures – Financing required (government borrowing requirements) and how it affect the public debt? – What room does the budget leave for private sector credit? Financial Programming (short and medium term): – Consistent set of policy measures designed to achieve a sustainable balance of payments and induce price stability and growth. – What adjustments are required for fiscal sustainability and price stability, and to stimulate economic growth? Macroeconomic Framework and Economic Policy 4 Functional Relationships in Financial Programming: How it works: Flow of Funds concept The economy is divided into four aggregate analytical sectors: Private sector, Non-Financial Public sector, Banking sector, and External sector. For each sector we distinguish between the sources and uses of funds: Sources (right side): sources to finance the acquisition of financial assets. Uses (left side): net acquisition of financial assets (including money). Macroeconomic Framework and Economic Policy 5 Macroeconomic Sectors Private Sector Government Monetary/Financial Sector Rest of the World Macroeconomic Accounts National Accounts Fiscal Accounts Monetary/Financial Accounts Balance of Payments Macroeconomic Framework and Economic Policy 6 Sources: Sp - Ip: Private Saving (national disposable income – private consumption)- Private Investment. Uses: dMd - Dp - dFp: Change in the demand for money – Change in the private sector’s domestic and foreign demand for credit. Macroeconomic Framework and Economic Policy 7 Sources: Sg -