A sound UEMOA fiscal policy must involve consolidation of macroeconomic governance
In order to achieve sound fiscal policies, members of the West African Economic and Monetary Union (UEMOA) must above all endeavour to increase spending on infrastructure and human capital to free up their growth potential, Mohamed Coulibaly, a macroeconomist and consultant at the University of Ouagadougou II (Burkina Faso), proposed in a paper presented on the third day of the eighth African Economic Conference (AEC) being held in Johannesburg (October 28-30).
He spoke during a panel discussion on the theme “Fiscal Policy and Regional Integration” and also stated that the soundness of UEMOA fiscal policies must be accompanied by the consolidation of macroeconomic governance in each member state, the reinforcement of the movement of people and goods by reducing obstacles and non-tariff barriers, and the diversification of exports.
Coulibaly, who presented his paper entitled “Fiscal policy regulations in the UEMOA: An empirical assessment of the limiting factor for public deficits”, nevertheless reminded his audience that good economic integration must first involve development in each member state of the union, arguments in favour of exchanges, and the free circulation of people and goods.
Integrating the UEMOA member states also means investing in industry, infrastructure and research and development, he said.
Within UEMOA there are regulations aimed at achieving fiscal convergence and ensuring sound management of public finances in a credible and lasting way, as well as the longevity of monetary and joint exchange rate policies.
However, if these rules are not well defined or adhered to, they may make it hard for fiscal policy to play a stabilizing and supporting role in activities, and even worsen the effects of a temporary shock. This is also dangerous for the viability of the union.
Coulibaly recognized that there are a lot of pressures on the specific fiscal policies of each UEMOA member state. This situation is connected in his view with a sort of forfeiting of their growth potential.
The UEMOA commission tries to work toward reinforcing integration and reducing some of the differences by implementing large-scale infrastructure projects.
The panel heard other papers on the “Status and challenges of harmonized reforms of fiscal planning in Africa: The case of MTEFs. Examining Senegal’s experience”, presented by Ligane Massamba Sène, an economic statistical technician at IFPRI West and Central Africa (Senegal), and “Monitoring fiscal sustainability in Africa: Symptoms and sources”, introduced by Moses Obinyeluaka, economist and Head of the International Trade Administration Commission of South Africa.
The African Economic Conference is organized jointly by the African Development Bank (AfDB), the United Nations Economic Commission for Africa (UNECA), and the United Nations Development Programme (UNDP). It brings together Heads of State and experts in business and development from around the world to discuss regional integration in Africa and its role in strengthening economic growth and the well-being of citizens all over the continent.
The conference is an opportunity to study efforts in different sectors and fields, such as finance, road transport, energy pools, water resource management, tax convergences, and labour mobility.