Facing runaway inflation and budget discipline problemsMore important, it has had a deeply pernicious effect on in the early 1990s, the Zambian government introduced the quality of service delivery to the poor. Features the so-called cash budget in which government domestic inherent to the cash budgeting system facilitated a spending is limited to domestic revenue, leaving no room substantial redirection of resources away from the for excess spending. Dinh, Adugna, and Myers review intended targets, such as agencies and ministries that Zambia's experience during the past decade, focusing on provide social and economic services. The cash budget the impact of the cash budget on poverty reduction. also eliminated the predictability of cash releases, making They conclude that after some initial success in effective planning by line ministries difficult. Going reducing hyperinflation, the cash budget has largely forward, Zambia must adopt measures that over time failed to keep inflation at low levels, created a false sense will restore the commitment to budget discipline and of fiscal security, and distracted policymakers from shelter budget execution decisions from the pressures of addressing the fundamental issue of fiscal discipline.purely short-term exigencies.This paper-a product of the Poverty Reduction and Economic Management Division 1, Africa Region-is part of a larger effort in the region to review public expenditure management. Copies of the paper are available free from the World Bank,

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