Determinants of the fiscal space of WAEMU member countries

This research analyzes the determinants of fiscal space in the eight WAEMU countries over the period 2002 to 2022 using an ARDL error-correction model estimated by the Pooled Mean Group method. The results reveal that current expenditures, particularly wages and salaries, debt service, capital expenditures, and military expenditures, have significantly contributed to the reduction of fiscal space. To address this, member states must rationalize their current expenditures to create fiscal space essential for financing development, macroeconomic stability, and growth. It is also recommended to strengthen domestic resource mobilization by broadening the tax base. The gradual inclusion of underexploited sectors such as agriculture, livestock, and non-timber forest products would better reflect the real economic structure, increase tax revenues, and improve the resilience of public finances. Moreover, in a tense security context, a pooling of defense efforts is essential. A coordinated regional response would allow for more efficient management of security resources while limiting their pressure on public finances and preserving the economic stability of the Union.