How macroeconomic projections in policy framework papers for the African region compare with outcomes

Policy framework papers (PFPs) have become important documents because they provide a framework for the economic policies that a country will pursue and for donor assistance. The projections included in these documents reflect the policy targets and the expected outcomes of policy reforms. The author focuses on the quality and relevance of these projections, comparing actual outcomes with the projected or targeted outcomes for selected variables. The idea is that a retrospective survey such as this will eventually improve projections. The author recommends further country-by-country analysis and actual outcomes to identify how much of the divergence between the two is due to external factors (such as weather and terms of trade) and how much to lack of progress in policy reform. Delayed progress could be due to unforseen circumstances (such as political changes or internal strife) or to unrealistic targets. The quality and realism of PFP projections are likely to improve, says the author if certain steps are taken in making projections: all PFPs after the first one should contain a review of outcomes in relation to projections in previous PFPs; whenever the chances of falling short of projected or targeted outcomes are high, the PFP should say so; using references such as this review, the projections could consider benchmark figures based on experience with successful cases of adjustment; from time to time each country department could carry out a review to assess the realism of departmental PFPprojections, and the Chief Economist's Office could review projections to assess their quality.