Public expenditures in sub-Saharan Africa during a period of economic reforms

Abstract

Public expenditure restraint is the most direct means of reducing balance-of-payments and budget deficits, and is consequently a key aspect of macroeconomic adjustment programs. The results of this study indicate a steady increase in total central government and social services spending during 1977–1989 in sub-Saharan Africa. The growth in population, however, contributed to an overall erosion in per capita expenditures. While total government expenditures as a share of GDP have been stable during the past decade, they have declined net of interest repayments, which represent an increasingly large share of total spending. An analysis of spending in the three years before and after donor-financed adjustment programs began reveals no pattern of increase or decrease in real levels of total and social sector expenditures, or in social sector spending as a share of the total expenditures. Elasticities of health and education spending with respect to GDP were found to be greater than unity in recent years, indicating that as countries develop, social spending will constitute a larger share of GDP.

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