1. The PRGF/PSI, Fiscal Space and Financing for Development A focus on Africa: Trends, Prospects, and Challenges
October 11, 2008
Dan Ghura
Jan Kees Martijn
International Monetary Fund

2. PRGF/PSI Support for Development Spending
Programs help create fiscal space:
Full use of aid over time
Explain to donors the scope for using higher aid
Support domestic revenue mobilization
Develop domestic and foreign borrowing strategies that keep debt sustainable
Help development of financial markets to channel savings to public and private sector
NB. Monetary financing is not a sustainable source of fiscal space

3. PRGF/PSI Support for Development Spending (cont’d)
Programs support effective expenditure management:
Promote medium-term budgeting
Smooth spending despite aid volatility
Increase budgetary transparency
Monitor social spending
Use wage bill-ceilings only as a temporary measure in exceptional cases

4. PRGF and PSI
PRGF
Provides concessional balance of payments support
To build track record for HIPC/MDRI debt relief
PSI
For mature stabilizers
Signal to donors
Possible financial support in case of shocks (ESF)