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Tobacco taxes are usually considered regressive, as the poorest individuals allocate larger shares of their budget toward the purchase of tobacco-related products. However, because these taxes also discourage tobacco use, some of the most adverse effects and their economic costs are reduced, including lower life expectancy at birth, higher medical expenses, increased years of disability among smokers, and the effects of secondhand smoke. This paper projects the effects of an increase in the tobacco tax on household welfare in Ukraine. It considers three price-elasticity scenarios among income deciles of the population. The results show that although tobacco taxes are often criticized for being regressive in the short run, in a more comprehensive scenario that includes medical expenses and working years, the benefits of tobacco taxes far exceed the increase in tax liability, benefitting in large measure lower income households. The results also indicate that lower health expenditure seems to be the main driver, because of the reduction in tobacco-related diseases that require expensive treatments. Tobacco taxes are also associated with positive distributional effects related to the higher long-term price elasticities of tobacco consumption.

Economic Adjustment and Lending --- Macroeconomics and Economic Growth --- Poverty Reduction --- Public Sector Development --- Regressive Tax --- Taxation --- Tobacco Control --- Tobacco Tax

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The first part of the Economic Update analyzes recent macroeconomic trends and presents an assessment of the country's short- and medium-term outlook. The Kyrgyz economy has remained resilient to the adverse regional environment, but growth prospects are modest and adjustments needed.Overall, the macroeconomic situation improved slightly since the shock stemming from Russia's recession hit in [late 2014]. In the medium term, growth prospects should improve as remittances and the external demand environment recover.However, although risks have moderated, they remain elevated. The main sources of risk relate to possible adverse developments in neighboring economies, principally related to oil prices and exchange rate dynamics. This implies the need to rebuild fiscal buffers over the next 2-3 years through a mix of expenditure consolidation and revenue mobilization. The Special Focus Section discusses tax revenue reforms, presenting the findings of a recent World Bank Tax Administration Diagnostics Assessment (TADAT).

Economic Adjustment and Lending --- Economic Growth --- Fiscal & Monetary Policy --- Inflation --- Law and Development --- Macroeconomics and Economic Growth --- Public Sector Development --- Tax Law --- Tax Reform --- Taxation & Subsidies --- Trade

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In 2016, Kazakhstan's GDP growth continued to slow and real wages declined further, negatively affecting poverty rates. The authorities reacted by extending additional spending measures and easing monetary conditions. In the medium term, Kazakhstan's economic growth rate is projected to pick up slowly, but it will remain below pre-2014 levels (when the oil price shock hit the economy). In the longer term, Kazakhstan's desire for an economic transformation to more sustainable and inclusive growth will require completing the macroeconomic adjustment, addressing the legacy of SOEs and financial sector issues, and fostering development of a more dynamic, export-oriented and productive private sector.

Agricultural Productivity --- Economic Adjustment and Lending --- Economic Conditions and Volatility --- Economic Growth --- Economic Stabilization --- Fiscal & Monetary Policy --- Macroeconomic Management --- Macroeconomics and Economic Growth

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This paper presents new empirical evidence on how fiscal space in Sub-Saharan Africa has evolved over the past 15 years. Fiscal space is a multi-dimensional concept that is proxied by indicators capturing aspects of fiscal sustainability, balance sheet vulnerabilities, external debt positions, and market perception. The analysis relies on a new comprehensive database developed on a wide array of indicators (28) for a large set of countries in the world-of which 48 are in Sub-Saharan Africa. The analysis finds that, breaking with history, Sub-Saharan African countries were able to conduct countercyclical policies amid the 2008-09 global financial crisis, thanks to built-up liquidity and policy buffers. The evidence shows that fiscal adjustment efforts in the region were reversed amid the 2014-16 plunge in commodity prices, and oil and minerals and metals exporters saw a sharp deterioration in their primary balance sustainability gap. The paper finds a great deal of heterogeneity in the post-global financial crisis evolution of the fiscal space in the region. In countries with reduced fiscal space, the increase in the number of tax years to repay the debt fully was 1.1 years for the representative country, and in over one-third of the countries, this increase was more than one standard deviation above the median.

Agriculture --- Capital Flows --- Capital Markets and Capital Flows --- Economic Adjustment and Lending --- Finance and Financial Sector Development --- Fiscal Space --- General Government Gross Debt --- International Economics & Trade --- Macroeconomics and Economic Growth --- Primary Surplus --- Public Sector Development

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Despite the obvious positive health impacts of tobacco taxation, an argument raised against it is that poor households bear the burden of the increased prices because of their higher share of spending on tobacco. This note includes estimates of the distributional impacts of price rises on cigarettes under various scenarios using the Household Income and Expenditure Survey 2016/17. One contribution of this analysis is to quantify the impacts by allowing price elasticities to vary across consumption deciles. This shows that an increase in the price of cigarettes in Bangladesh has small consumption impacts and does not significantly change the poverty rate or consumption inequality. These findings stem from relatively even cigarette consumption patterns between less and more well-off households. These results hold even considering some small substitution through the use of bidis, which are largely consumed by the poor. The short-term consumption impacts are also negligible compared with the estimated gains because of savings in medical costs and the greater number of productive years of life.

Disease Control & Prevention --- Economic Adjustment and Lending --- Health Care Services Industry --- Health, Nutrition and Population --- Income Distribution --- Industry --- Inequality --- Poverty Reduction --- Public Health Promotion --- Taxation --- Taxation & Subsidies --- Tobacco Price --- Tobacco Tax --- Tobacco Use and Control