The IMF has published a Working Paper entitled Exiting from fragility in sub-Saharan Africa: The role of fiscal policies and fiscal institutions. This Working Paper looks at the role of fiscal policies and institutions in building resilience in sub-Saharan Africa in the period from 1990 to 2013. The study focuses on 26 sub-Saharan countries that were deemed fragile in the 1990s according to the Country Policy and Institutional Assessment (CPIA) ratings issued by the World Bank.

The study considers that in the medium term governments could promote development and stability by building fiscal capacity, defined as the ability to raise revenue. Effective tax collection institutions can spur demand for democracy as taxpayers look for improved public services and demand more accountability and transparency in managing tax revenues.

Academic studies suggest that there are high returns from building sound fiscal institutions in fragile states. The international community can help in this task with policy advice; technical assistance; and training on tax administration and budget reforms. The study concludes that stronger fiscal institutions are significantly associated with building resilience. In the case of resource rich countries those that do well are the countries that develop strong institutions to manage the fiscal space resulting from resource wealth.

A higher share of taxes on income and profits tends to be associated with building resilience. The international community can help develop strong fiscal institutions through knowledge transfer and capacity building. Fiscal space can be widened by delivery of aid and debt relief.

The paper stresses the importance of home grown leadership of the reform process, including reforms such as enhancing budget institutions, strengthening tax collection and allocating public spending to priority areas of investment.