Abstract

Empirical literature states over the last 10 years that fiscal policy in developing countries is pro-cyclical comparing to industrial countries where it is countercyclical or acyclical. Some researchers have questioned this assumption and they criticized that empirical literature ignored endogeneity problems related to developing countries. For instance, the critical issues such as growth, poverty reduction, and social peace are all undermined when public expenditures management and taxation system are weak, and when the fiscal deficit and public debt are not successfully managed. CFA Zone governments have to found out how to mobilize revenues and to wisely spend it on infrastructures, public goods, services, health care programs and education in order to reach their macroeconomic goals and to improve general welfare. CFA franc Zone countries as many Sub-Saharan African economies are regularly characterized by a broad range of political and economical instabilities that prevent them to implement efficient fiscal and monetary policies. To settle this issue this paper investigates fiscal policy of selected African countries named CFA Zone Countries, and how they attempt to respond to the global financial crisis.

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