The Dynamics of Fiscal Deficits in Burundi: An Exploratory Review

This article provided an exploratory review of the trends and main determinants of fiscal deficits in Burundi during the period 1980 – 2017. While the country has undertaken various fiscal policy reforms, revenue growth has been lower than anticipated, and little progress has been achieved in improving public expenditure efficiency. Consequently, fiscal deficits remain large as a percentage of GDP. The major factors contributing to the persistently large fiscal deficits in Burundi include the following: low and volatile economic growth, small economic base with low incomes, large informal economy, and dominance of the primary sectors. In addition, conflict and fragility, large expenditure on military and peace operations, as well as dependency on aid have been identified as major determinants of fiscal deficits in Burundi

Resistance to pirimiphos-methyl in West African Anopheles is spreading via duplication and introgression of the Ace1 locus

Vector population control using insecticides is a key element of current strategies to prevent malaria transmission in Africa. The introduction of effective insecticides, such as the organophosphate pirimiphos-methyl, is essential to overcome the recurrent emergence of resistance driven by the highly diverse Anopheles genomes. Here, we use a population genomic approach to investigate the basis of pirimiphos-methyl resistance in the major malaria vectors Anopheles gambiae and A. coluzzii. A combination of copy number variation and a single non-synonymous substitution in the acetylcholinesterase gene, Ace1, provides the key resistance diagnostic in an A. coluzzii population from Coˆte d’Ivoire that we used for sequence-based association mapping, with replication in other West African populations. The Ace1 substitution and duplications occur on a unique resistance haplotype that evolved in A. gambiae and introgressed into A. coluzzii, and is now common in West Africa primarily due to selection imposed by other organophosphate or carbamate insecticides. Our findings highlight the predictive value of this complex resistance haplotype for phenotypic resistance and clarify its evolutionary history, providing tools to for molecular surveillance of the current and future effectiveness of pirimiphos-methyl based interventions

Macroeconomic determinants of fiscal policy in east Africa: a panel causality analysis

This study investigates the dynamic causality linkages between fiscal deficits and selected macroeconomic indicators in a panel of five East African countries. The research design is based on panel cointegration tests, panel cross-section dependence tests, panel error correction-based Granger causality tests, and panel impulse response functions. Results show that there is long run feedback causality among fiscal deficits and each of the variables that include: real GDP growth, current account balance, interest rates, inflation, grants, and debt service. Short run Granger causality dynamics indicate that there is feedback causality between fiscal deficits and GDP growth; no causality between fiscal deficits and inflation; no causality between fiscal deficits and current account; no causality between fiscal deficits and interest rates; feedback causality between fiscal deficits and grants; and no causality between fiscal deficits and debt service. Impulse response functions show positive and significant impacts of current account balance, inflation, and grants; negative and significant impacts of real GDP growth and lending rates; and insignificant effects of debt service. In the context of the East African Community’s aspirations to achieve convergence on key macroeconomic targets, including the fiscal deficit, this research provides novel insights on fiscal policy determinants and causality dynamics.Economic

The determinants and cyclicality of fiscal policy: empirical evidence from east Africa

As part of the regional integration process, East African Community (EAC) member countries agreed upon macroeconomic convergence criteria that include, among others, harmonizing and restricting the level of fiscal deficits. However, achieving these targets has been faced with heightened vulnerabilities, including those related to the global financial crisis, the COVID-19 pandemic, and domestic policy slippages. Consequently, high fiscal deficits are fast leading to accumulation of debt. This paper investigates the macroeconomic determinants and cyclicality of fiscal policy in a panel of five EAC countries for the period 1980 - 2020. Using a combination of linear and nonlinear panel ARDL methods, long run results show that the fiscal deficit is positively associated with current account balance, real per capita GDP, and interest rate; and negatively associated with the GDP deflator, grants, and debt service. Disaggregating fiscal balances into their revenue and expenditure components shows that government spending is procyclical, while tax effort is countercyclical. Specifically, both government expenditures and tax-to-GDP ratios are positively associated with real per capita GDP regardless of whether this relationship is observed during growth accelerations or decelerations. The size and statistical significance of short run asymmetric effects of real per capita GDP on fiscal policy vary between countries.Economic

Donor Aid Cuts, Kenya Elections Affect Uganda Business Climate

In the October – December quarter of 2012, the business climate index declined to 4.5 points having recorded a score of 8 points in the previous (July – September) quarter. The deterioration of business environment perceptions emanated from elevated risks arising from the budget support withdrawals by some development partners and anxiety over potential business interruptions emanating from the presidential elections in neighbouring Kenya. Expectations for the next quarter are such that the business climate will start to improve but at a slower pace compared to the previous quarter. The drivers of the expected business climate improvement are anchored on the expected continuity in macroeconomic stability, recovery in domestic demand, and an upturn in the global economic outlook that is expected to boost export demand. On the overall, the business environment remains largely unchanged, having improved only modestly, and is expected to remain weak in the short term

Tax evasion, informality and the business environment in uganda

Uganda has recorded impressive economic growth rates over the last two decades. How¬ever despite the sustained period of growth, the tax effort measured by the tax-to-GDP ratio has stagnated between 10-13 percent of GDP over the same period. Non-empirical evidence has identified the pervasiveness of the informal sector, tax evasion, narrow tax base, and tax breaks variously given out by the government as some of the factors that might explain the inelastic tax system in Uganda. While the informal sector has implications for tax effort, there is limited research on the microeconomic level determinants of informality and tax evasion in Uganda. This paper provides some empirical evidence on how a poor business environment causes tax evasion. In particular, the paper examines specific components of the business environ¬ment that include the efficiency of the legal systems, bureaucratic bribery and the provision of public capital such as adequate provision of electricity and transport infrastructure which is complementary to firm performance and how they relate to tax evasion. I construct an instrument for bureaucratic bribery as the interaction between a firm’s ability to pay and corruption as a business constraint. I compute an individual firm’s ability to pay bribes as the total cost of labour, including wages, salaries, bonuses and social payments adjusted for the level of annual sales. I use instrumental variable OLS and Tobit estimation procedures separately and find that the extent of tax evasion is determined by the quality and efficiency of the legal systems, bureaucratic bribery and inadequate provision of public capital. In addi¬tion I find that the business environment has implications for tax evasion. These results sug¬gest that ameliorating the business environment, strengthening the legal system, adequate provision of public capital such as transport and electricity infrastructure as well as reigning in on bureaucratic bribery will reduce tax evasion and ultimately lead to increasing Govern¬ment revenue collections

Economic PConsumer demand, export markets help maintain favourable business climate

The Uganda business climate has continued to improve for the second successive quarter. This implies that the conditions for doing business in Uganda are getting better. The current (January - March 2014) index is 113.4 points and is 16.4 percentage points higher when compared to the corresponding period last year (January - March 2013) when the index was 97.4 points. The annual improvement in the business climate was sustained by a stronger than expected consumer demand, stable macroeconomic environment characterized by low and falling inflation, stable exchange rates, and lower interest rates. In addition, the business environment was aided by stronger export demand for Ugandan products in both regional and international markets. However, perceptions and expectations for next quarter (April – June 2014) are downcast. Overall, results suggest that the business climate improved modestly but maintained a favourable sentiment. In addition, the business climate index indicates some modest improvements in job creation in the current quarter

Elevated macroeconomic risks hurt business environment perceptions

The Uganda business climate index declined by 22.4 points to 94.8 during the July – September 2015 quarter from 117.2 during the July – September 2014 quarter. This indicates a remarkable slowdown in the conditions for doing business in Uganda. This is the first time in five survey rounds that the index points to an uncertain business environment and elevated business climate risks. The slowdown in business perceptions was largely driven by some persistent challenges in doing business and some new emerging ones. In particular, the business environment suffered on account of volatility in the macroeconomic environment characterized by the weakening of the Uganda Shilling, rising interest rates and an unfavorable inflationary outlook. Moreover, macroeconomic factors, substandard products, and tax policy were considered more of a problem in the current period than in the previous. At the sectoral level, business sentiment in the agricultural sector was particularly downcast due to falling international commodity prices particularly for coffee, tea and cotton. Business perceptions and expectations for the next quarter (October – December 2015) remain subdued on account of the forthcoming general election, rising inflation and interest rates, low global demand for commodities, and fragility of the regional political environment. The Uganda business climate index declined by 22.4 points to 94.8 during the July – September 2015 quarter from 117.2 during the July – September 2014 quarter. This indicates a remarkable slowdown in the conditions for doing business in Uganda. This is the first time in five survey rounds that the index points to an uncertain business environment and elevated business climate risks. The slowdown in business perceptions was largely driven by some persistent challenges in doing business and some new emerging ones. In particular, the business environment suffered on account of volatility in the macroeconomic environment characterized by the weakening of the Uganda Shilling, rising interest rates and an unfavorable inflationary outlook. Moreover, macroeconomic factors, substandard products, and tax policy were considered more of a problem in the current period than in the previous. At the sectoral level, business sentiment in the agricultural sector was particularly downcast due to falling international commodity prices particularly for coffee, tea and cotton. Business perceptions and expectations for the next quarter (October – December 2015) remain subdued on account of the forthcoming general election, rising inflation and interest rates, low global demand for commodities, and fragility of the regional political environment