IMF Special Issues

Macroeconomic Challenges of Scaling Up Aid to Africa: A Checklist for Practitioners

By Yongzheng Yang, Sanjeev Gupta, Robert Powell

March 20, 2006

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Yongzheng Yang, Sanjeev Gupta, and Robert Powell. Macroeconomic Challenges of Scaling Up Aid to Africa: A Checklist for Practitioners, (USA: International Monetary Fund, 2006) accessed September 20, 2024

Summary

Over the next decade, African countries are expected to be the largest beneficiaries of increased donor aid, which is intended to improve their prospects for achieving the Millennium Development Goals. This handbook will help these countries assess the macroeconomic implications of increased aid and respond to the associated policy challenges. The handbook is directed at policymakers, practicing economists in African countries, and the staffs of international financial institutions and donor agencies who participate in preparing medium-term strategies for African countries, including in the context of poverty reduction strategy papers. It provides five main guidelines for developing scaling-up scenarios to help countries identify important policy issues involved in using higher aid flows effectively: to absorb as much aid as possible, to boost growth in the short to medium term, to promote good governance and reduce corruption, to prepare an exit strategy should aid levels decrease, and to regularly reassess the policy mix.

Keywords: Balance of payments, Budget expenditures, Central bank, Currency appreciation, Current account, Current account balance, Current account deficit, Debt burden, Debt burdens, Debt dynamics, Debt management, Debt obligations, Debt ratios, Debt relief, Debt relief mechanisms, Debt service, Debt situation, Debt stock, Debt strategy, Debt sustainability, Debt sustainability analysis, Debt-management strategy, Debt-service obligations, Domestic absorption, Domestic borrowing, Domestic currency, Domestic debt, Domestic debt burden, Domestic financial markets, Domestic financing, Equilibrium exchange rate, Excessive debt, Exchange controls, Exchange earnings, Exchange rate, Exchange rate adjustment, Exchange rate appreciation, Exchange rate behavior, Exchange rate changes, Exchange rate depreciation, Exchange rate instability, Exchange rate management, Exchange rate misalignment, Exchange rate misalignments, Exchange rate policy, Exchange rate regime, Exchange rate volatility, Exchange rates, Exchange reserves, Exchange sales, External debt, External debt management, External debt situation, External debt sustainability, External financing, External public debt, External resources, Fixed exchange rate, Fixed nominal exchange rate, Foreign aid, Foreign debt, Foreign exchange, Foreign exchange earnings, Foreign exchange reserves, Foreign exchange sales, Foreign investment, Liquidity injection, Loan disbursements, Nominal exchange rate, Nominal exchange rates, Principal repayments, Private banks, Private credit, Private debt, Public and publicly guaranteed, Public and publicly guaranteed debt, Public borrowing, Public debt, Public enterprise debt, Public finances, Public sector borrowing, Real exchange rate, Real exchange rate appreciation, Real exchange rate behavior, Real exchange rate changes, Real exchange rate depreciation, Real exchange rate misalignments, Real exchange rate volatility, Real exchange rates, Relief mechanisms, Repayments, Reserve assets, Traditional debt relief, Traditional debt relief mechanisms

Publication Details

  • Pages:

    76

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  • Series:

    IMF Special Issues

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    MCSUEA

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