Fiscal Policy and Current Account performance in Sierra Leone

The book focused on Sierra Leone, a small open economy typified by persistent fiscal imbalances and weak external sector performance. Government deficits on average have risen sharply and have exceeded the 4% of GDP reference value of the West African Monetary Zone on fiscal deficit to GDP ratio. The book gives an insight into the causes of changes in fiscal imbalances and the relationship between fiscal policy and current account imbalances. This may help in selecting the appropriate policy mix that would avoid the occurrence of unsustainably large government deficits, debts and current account imbalances. The book is sub-divided into two parts: In Part A, the book discussed the political and macroeconomic determinants of budget deficit. Specifically, it addressed a fundamental issue of whether fiscal deficit is explained by a set of economic variables or do political instability bias fiscal policy towards deficit spending. Part B focused on the influence of fiscal policy on the external position of the economy, and provide useful guidance for policy makers about the sensitivity of the current account imbalance to changes in the primary budget balance.