Aid Scaling Up: Do Wage Bill Ceilings Stand in the Way?

IMF Working Papers, April 1, 2006

Source details

Assesses whether the scaling up of aid and the resulting increase in government spending needed to meet the Millennium Development Goals (MDGs) would be hampered by wage bill ceilings that are often part of government programs supported by the IMF's Poverty Reduction and Growth Facility (PRGF).
Based on country case studies for 2003-05.
Concludes that, in the past, wage bill ceilings have not restricted the use of available donor funds.
Offers suggestions for further enhancing the flexibility of wage bill conditionality in PRGF-supported programs to respond to higher aid flows that may result in the future.

Wage bill ceilings included in PRGF-supported programs did not, historically, prevent governments from using available donor funds to increase spending needed to meet MDGs.
The paper identifies a need to enhance flexibility of wage bill conditionality to better accommodate prospective increases in aid flows.

Proposes a number of suggestions aimed at further enhancing the flexibility of wage bill conditionality in PRGF-supported programs.
Emphasizes adapting conditionality mechanisms to respond to higher aid flows that may arise in the future.

Subject: Civil service reform, Expenditure, Government wage bill, Labor, Public sector wages, Wage adjustments, Wages
Keywords: aid scaling up, bill adjuster, bill ceiling, bill conditionality, bill PC, Central America, Civil service reform, Government wage bill, IMF conditionality, MDGs, Public sector wages, Sub-Saharan Africa, Wage adjustments, wage bill, Wages, WP

Wage Bill Conditionality in PRGF Countries, 2003–05
- Wage Bill Conditionality in PRGF Countries, 2003–05 (Markdown version)
- Wage Bill Conditionality in PRGF Countries, 2003–05 (PDF)