US Emigration

Tim Kane at Growthology worries about the impact of the US fiscal crisis (and the baby boomer pension burden) in the context of a global economy. What if all the smart kids decide to pick up and emigrate rather than stick around to pick up their parents generation’s tab?

In passing he notes this startling stat from the BBC: 10% of all Brits live abroad.

A Greek Charter City?

Chris Dillow suggests that Greece should sell some uninhabited islands to pay off its debts.

How about a Greek Island Charter City - Greek (and EU!) law, with open immigration for North Africans?

How to painlessly balance the budget

We could auction off 10 million U.S passports. Suppose we could sell each for $200,000 --- that would yield a one time payment of 2 trillion dollars. Now that I think of it, that's a pretty good idea! 

As these "international superstars" sort across our cities, many of them will buy homes. This will help to slow down home price declines and thus slow down mortgage defaults. This will prop up the balance sheets of banks and make them more likely to make loans and this will help the economy to rev up again.

--Matthew Kahn on an untapped revenue opportunity (via James Choi)

The Challenge of Reforming Budgetary Institutions in Developing Countries

By Richard Allen (via the IMF PFM blog)

• Would-be reformers greatly underestimate the time taken to implement PFM reforms in LICs. 
• The experience of now-developed countries suggests that the process of establishing credible and robust budgetary institutions can take many decades, or longer. There is no reason to expect LICs to be different. 
• Many developing countries -- and their advisors -- are turning their backs on basic systems which are needed before moving on to more advanced reforms. 
• Because the necessary basics are not in place, many reforms are likely to fail. 
• While a few countries have made progress, in general, the evidence suggests that weak budgetary institutions tend to be the norm in many LICs. Some countries that were "shining stars" in the 1990s have stagnated or fallen back. 
• Donors and the international consultants they hire are often part of the problem rather than part of the solution. 
• Reform action plans tend to be much too complex (e.g., the "platform approach"), and the time periods for completion much too short. Donors compete for a share of the TA pie. Such plans are unlikely to be successful. 
• Much more attention needs to be given to the political economy constraints to reform since changing budgetary institutions is not at root a technocratic issue. 
• Not enough attention is given to monitoring and evaluating the results of reform programs, creating the right incentives for reform, and holding officials to account for success and failure. 
• The presentation gives examples of PFM reforms that should be given priority, and others that should not generally be attempted before basic systems are in place.

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Update: Great discussion by Ranil at AidThoughts on this issue

The Challenges of Budgeting in Oil-dependent Economies

Big News in Sudan

Apparently there was some kind of court ruling yesterday. Whatever. Far more excitingly the IMF released its latest monitoring report on Tuesday!!

It seems that the North wasted its oil windfall last year.

"The report reveals a sharp drop in Sudan’s foreign exchange reserves across the years from $2 billion in mid-2008 to $300 million in March 2009, which covers only 2 weeks of imports for the East African nation." Sudan Tribune

Here's the full report.

Budget Transparency

Vivek Ramkumar and Paulo de Renzio (an ex-ODI fellow) have a new paper on the role of donors in encouraging budget transparency.

One point they make is the distinction between the capacity of the government to produce data, and its willingness to make it publicly available. In Southern Sudan the hard work is done, there is actually a pretty sophisticated budget system by African standards (activity-budgeting!), and reams of data. All that is needed is a nudge to encourage this information to be made publicly available. Perhaps donors could fund a Ministry of Finance and Economic Planning website, allowing information to be made easily available to journalists and the public.

The answer to all our economic woes...

"Jemaine: Budgeting. Bret: Yeah, the government should do a budget. 

I believe we already have a budget. 

Jemaine: It doesn’t seem like it. Bret: They need to put aside a certain amount each week for rent and then some money for food and then some money for partying, having a good time. Jemaine: Put aside some for invasions!"

Read the whole thing

HT: Kids Prefer Cheese

In other, completely unrelated news, Salva shows he at least has a sense of humour.

"With falling oil prices, Sudan's budget has been drastically reduced. More than 95% of the southern government budget comes from your share of oil revenue. Now you're having trouble paying government workers and the military. 

It's a very serious crisis. Not only in the south. It will affect the whole Sudan. 

Where are you going to get the money to make up the shortfall? 

I don't know. Maybe you might loan me some money? (Laughter)"