FISCAL POLICY CONVERGENCE IN THE WEST AFRICAN MONETARY ZONE

Abstract

This study examines the convergence of fiscal policy in the West African Monetary Zone (WAMZ) using annual panel data between 2001-2020 in a log t regression convergence model. The findings reveal compelling evidence of divergences across the four fiscal policy instruments (tax revenue, expenditure, deficit and debt), with the largest divergences in debt (-4.32) and expenditure (-3.39) policies.  In view of its findings, the study proposes a multiple fiscal rule regime to accommodate the idiosyncrasies of member states; and advocates the introduction of non-binding tax and expenditure rules to complement the existing deficit and public debt rules, and enable a more complete evaluation of fiscal policy performance and compliance within the zone