International Monetary Fund
Fiscal Affairs Department Newsletter

Fiscal Affairs Department (FAD) - June 2016

IMF Working Papers

"Dispelling Fiscal Illusions: How Much Progress Have Governments Made in Getting Assets and Liabilities on Balance Sheet?" Timothy Irwin; WP No 16/95.

"Shifting the Beveridge Curve: What Affects Labor Market Matching?" Elva Bova; João Tovar Jalles; Christina Kolerus; WP No 16/93.

"Fiscal Councils: Rationale and Effectiveness" Roel M.W.J. Beetsma; Xavier Debrun; WP No 16/86.

"Do Subnational Fiscal Rules Foster Fiscal Discipline? New Empirical Evidence from Europe" Ananya Kotia; Victor Duarte Lledó; WP No 16/84.

"Reassessing the Productivity Gains from Trade Liberalization" JaeBin Ahn; Era Dabla-Norris; Romain Duval; Bingjie Hu; Lamin Njie; WP No 16/77.

"Optimal Fiscal Adjustment under Uncertainty" Rossen Rozenov; WP No 16/69.

"Tax Administration Reform in China: Achievements, Challenges, and Reform Priorities" John Brondolo; Zhiyong Zhang; WP No 16/68.

"Winning the Oil Lottery: The Impact of Natural Resource Extraction on Growth" Tiago Cavalcanti; Daniel Da Mata; Frederik G Toscani; WP No 16/61.

"Macroeconomic Stability in Resource-Rich Countries: The Role of Fiscal Policy" Elva Bova; Paulo A. Medas; Tigran Poghosyan; WP No 16/36.

"Leading Indicators of Fiscal Distress: Evidence from the Extreme Bound Analysis" Martin Bruns; Tigran Poghosyan; WP No 16/28.

"The Fiscal Costs of Contingent Liabilities: A New Dataset" Elva Bova; Marta Ruiz-Arranz; Frederik G Toscani; H. Elif Ture ; WP No 16/14.

"Flexible Fiscal Rules and Countercyclical Fiscal Policy" Martine Guerguil; Pierre Mandon; Rene Tapsoba; WP No 16/8.

"From Expenditure Consolidation to Expenditure Efficiency: Addressing Public Expenditure Pressures in Lithuania" David Coady; Nan Geng; WP No 15/278.

"The Unequal Benefits of Fuel Subsidies Revisited: Evidence for Developing Countries" David Coady; Valentina Flamini; Louis Sears; WP No 15/250.

"How Do Public Debt Cycles Interact with Financial Cycles?" Tigran Poghosyan; WP No 15/248.

"Functional Income Distribution and Its Role in Explaining Inequality" Maura Francese; Carlos Mulas-Granados; WP No 15/244.


"Debt, Taxes and Banks" Ruud A. de Mooij, Michael Keen; Journal of Money, Credit and Banking, Vol 48, No. 1; February 2016.

"Budget Institutions in Low-Income Countries" Sanjeev Gupta, et al.; OECD Journal on Budgeting, Vol 2015/3; April 2016.

"Does Conditionality in IMF-Supported Programs Promote Revenue Reform?" Ernesto Crivelli, Sanjeev Gupta; International Tax and Public Finance Vol 23, pp 550-579; June 2016.

"After Paris: Fiscal, Macroeconomic and Financial Implications of Global Climate Change" Mai Farid, Michael Keen, Michael G Papaioannou, Ian W.H. Parry, Catherine A. Pattillo, and Anna Ter-Martirosyan; January 2016.

"Is the WTO a World Tax Organization? : A Primer for WTO Rules for Policy Makers" Michael Daly; March 2016

"Managing Budgetary Virements" Sandeep Saxena, and Sami Ylaoutinen; April 2016.

"Fiscal Analysis of Resource Industries (FARI)"Oana Luca, Diego Mesa Puyo, and Michael Keen; February 2016.

"Expenditure Control: Key Features, Stages, and Actors" Sailendra Pattanayak, Vitor Gaspar; March 2016.

Technical Assistance Reports

"Republic of Kosovo: Technical Assistance Report- Public Investment Management Assessment" Johann Seiwald, Richard Allen, Duncan Last, and Isabel Rial; April 2016.

"Ukraine: Technical Assistance Report-Reforming the State Fiscal Services" Thomas Story, Enriko Aav, William Crandall, John Crotty, and David Hartnett; March 2016.

"Mali: Technical Assistance Report-Mining Taxation: Modeling of Five Mining Operations" Gregoire Rota Graziosi and Bertrand Laporte; March 2016.

"Mali: Technical Assistance Report-Tax Policy-Diagnostic Assessment" Gregoire Rota-Graziosi, Anne-Marie Geourjon, and Gilbert Mernard; March 2016.

Fiscal Monitor: Acting Now, Acting Together

Last year was a difficult one for the public finances, with public debt ratios rising in almost every corner of the world. In advanced economies, public debt now exceeds the level observed during the Great Depression and is approaching the level immediately after World War II. Upward trajectories for debt have been most pronounced in emerging market and middle income countries, with commodity producers especially hard hit. In low-income developing countries, the debt ratio increase in 2015 is the largest since the launch of debt relief initiatives at the end of the 1990s. With fiscal risks intensifying and a new reality emerging, the April 2016 issue of the Fiscal Monitor discusses how countries should act now to boost growth and make their public finances more resilient. Countries must also be prepared to act together to fend off global risks. Chapter 2 of the Fiscal Monitor, which discusses how fiscal policy can encourage innovation and growth, was presented on March 31 at the Peterson Institute for International Economics.

Fiscal Forum: Strengthening the International Tax System

Held for the seventh time at IMF Headquarters in Washington DC from April 16 to 17, this year’s Fiscal Forum gathered high-level policymakers from over 55 advanced and developing economies and 6 institutions to discuss longstanding issue in international taxation. Participants examined potential reforms in the context of governments’ frustration over lost revenue and ordinary citizens’ outrage over the perceived unfairness of taxation, further fueled by the leaked “Panama Papers”. The roundtable discussion that followed the forum included Christine Lagarde (Managing Director, IMF), David Wessel (Director, Brookings Institution), Magdalena Andersson (Minister of Finance, Sweden), Winnie Byanyima (Executive Director, Oxfam International) and Joseph Stiglitz (Professor, Columbia University).

IMF Launches New Paper on Corruption

FAD and the IMF’s legal department have just prepared a new paper examining the macroeconomic impact of corruption. The paper, entitled “Corruption: Costs and Mitigating Strategies”, finds that reducing corruption can improve growth and support economic stability and development. While hard to measure accurately, the economic costs of corruption could be considerable. A recent estimate put the annual cost of bribery at around $1.5 to $2 trillion (roughly 2 percent of global GDP). The economic and social costs of corruption could potentially be even greater.

First Arab Fiscal Forum Held in Abu Dhabi

On February 22 -23 the Arab Fiscal Forum – “Fiscal Policy and Growth” was held in Abu Dhabi. The event was jointly organized by the Arab Monetary Fund and the International Monetary Fund. The Forum was attended by Christine Lagarde (Managing Director, IMF), along with senior officials and experts from regional and international financial organizations, finance ministries and central banks. The forum sessions covered a diverse set of topics, including regional economic developments, the management of oil wealth, subsidies reform, improving tax compliance, and strengthening public investment management.

A New Initiative for International Tax Cooperation

Tax issues continue to attract massive attention, from the scandals of the Panama papers to the renewed emphasis on revenue mobilization as core to achieving the sustainable development goals. To help ensure that their differing expertise and experiences in this area are made most effective, the IMF, OECD, UN and World Bank announced on April 19 the creation of a Platform for Collaboration on Tax. An immediate priority of the Platform is developing ‘toolkits’ on a range of international tax issues of particular interest to developing countries. There is also an important link to the new implementation framework for the G20-OECD Base Erosion and Profit Shifting project.

“Collect More and Spend Better–The Role of Capacity Development” Seminar

Panelists at the IMF-World Bank Spring Meetings seminar “Collect More and Spend Better - the Role of Capacity Development” called for heightened partnerships for capacity development on fiscal matters. IMF Managing Director Christine Lagarde highlighted the importance of building institutional capacity for stronger economic policies, inclusive growth, and rising living standards as the global community pursues the post-2015 development agenda. Vitor Gaspar, Director of the IMF’s Fiscal Affairs Department, stressed that the IMF program on capacity development was about equity as strong tax compliance allows taxpayers to demand accountability on the use of resources: “When you have governments that are accountable to the people, what you see politically is that distribution becomes more prominent and the poor in general get better protection.”

ISORA/RA-FIT Memorandum of Understanding Signing

At the Spring Meetings on April 16, 2016, the IMF signed a Memorandum of Understanding with the Inter-American Center of Tax Administrations (CIAT), the Intra-European Organisation of Tax Administrations (IOTA), and the Organisation for Economic Cooperation and Development (OECD). The Memorandum covers the collection of revenue administration data. Collaboration began in early 2015 when a new International Survey on Revenue Administration (ISORA) was developed and is now hosted on the existing RA-FIT data collection platform. The single, shared survey will reduce the compliance cost of participation, particularly where an administration is a member of multiple organizations. The survey will also allow for the development of a much larger dataset for comparative purposes. The new survey is to be launched in mid-May 2016.

"International Taxation: Opportunities and Risks" Conference

The International Monetary Fund and the World Bank hosted their second annual Spring Meetings conference on taxation: International Taxation: Opportunities and Risks. The conference was a dialogue between the IMF, the World Bank and officials from developing countries, partner organizations, and civil society representatives. The conference examined the emerging opportunities and risks in international tax issues, and discussed the role of the IMF and WBG in the global fight against profit shifting and tax avoidance.

Natural Resource Fiscal Transparency Code Revised Draft Release

In April 2016, FAD released a revised draft of the Natural Resource Fiscal Transparency Code for public consultation and comment. This follows the public consultation held in 2015 on the first draft of the Resource Revenue Management pillar (Pillar IV), which allowed for constructive debate and comment on the framework’s principles and practices by a wide range of extractive industry stakeholders. The online consultation process will be open until September 9, 2016.

Does Asia Need More Official Financing for Investment?

With international financial conditions less accommodative, economic growth in Asia is likely to settle below the high rates of the past decade. Therefore, upgrading public investment has become a key policy challenge in many Asian economies. This was the topic discussed in the high level panel, titled “Infrastructure investment, fiscal space, and growth: Does Asia need more official financing for investment?” at the “Advancing Asia: Investing for the Future” conference in New Delhi in March. The event featured Jayant Sinha (Minister of State Finance, India), Masatsugu Asakawa (Vice Minister of Finance for Foreign Affairs, Japan), Vitor Gaspar (Director, IMF Fiscal Affairs Department), Bambang Brodjonegoro (Minister of Finance, Indonesia) and Rakesh Mohan (former Chairman, National Transport Development Committee, India).

PPP Fiscal Risk Assessment Model (PFRAM) Release

The PPP Fiscal Risk Assessment Model (PFRAM), developed by the IMF and the World Bank, is an analytical tool to assess the potential fiscal costs and risks arising from PPP projects. In many countries, investment projects have been procured as PPPs, not for efficiency reasons, but to circumvent budget constraints. In many cases, these actions have exposed public finances to excessive fiscal risks. To address these concerns, PFRAM has been developed as an analytical tool to quantify the macro-fiscal implications of PPP projects. It can be used both in the context of IMF and World Bank technical assistance and also by PPP units in ministries of finance. PFRAM was launched on April 11 during the PEFA 2016 and Other Fiscal Diagnostics Expo and Reception held at the World Bank - an event hosted by the PEFA Secretariat, the Fiscal Affairs Department and the World Bank’s Governance Global Practice. The PFRAM Excel template as well as the user manual are now available on the IMF’s public investment website.

Technical Assistance in Action: Rebuilding Fiscal Institutions in Central African Republic

In March, technical teams from the IMF’s Fiscal Affairs Department and Central Africa Regional Technical Assistance Center (AFRITAC Central) worked with the government of the Central African Republic (CAR) to provide advice on how to rebuild the country’s key fiscal institutions. Building on its extensive experience of post-crisis situations and fragile states, the IMF’s technical teams—in close collaboration with other development partners—supported the preparation of a credible short-term action plan aimed to raise the performance of the revenue collection system, secure the management of government liquidities, normalize budget execution procedures and accounting, and restore market confidence.

CEMAC Officials Take Stock of Public Financial Management Reform

The IMF and the Central African Economic and Monetary Community (CEMAC) held a regional seminar in Yaoundé in early April. The event took stock of public financial management (PFM) reforms in the CEMAC countries (Gabon, Cameroon, the Central African Republic(CAR), Chad, the Republic of the Congo and Equatorial Guinea) since the adoption of regional directives—five years ago—that aimed at modernizing and improving the management of public finance and strengthening the regional integration process. It also highlighted the major contribution of Japan to support their implementation in partnership with the IMF and to foster fiscal institutions in Central Africa.

Book Launch : Public Financial Management in Latin America

This new book is a joint initiative of the IDB and the IMF, in cooperation with the Latin American Treasury Forum (FOTEGAL). It documents reforms in the public financial management area and examine concrete experiences. In particular, it gathers lessons learned from effective practices, extensive research, and exchanges of experiences of 16 countries in the region. The book covers reforms related to cash and debt management, treasury indicators, treasury single account, government accounting, procurement, financial management information systems, and cost accounting.

IMF-Japan High Level Conference on Tax

Together with the Japanese Ministry of Finance, FAD co-hosted the Seventh IMF-Japan High-Level Tax Conference for Asian Countries from April 5-7, 2016 in Tokyo. This regular event was attended by 38 senior officials from 19 countries. The conference was marked by a lively debate on a wide range of current issues in tax policy and administration, ranging from problems in VAT design and implementation, improving compliance and the scope for carbon pricing in implementing the Paris climate agreement. The keynote address - provided by IMF Deputy Managing Director Furusawa and open to the public - took on some highly technical issues that proved of wide interest.

FAD and USAID Partnership: Training and Experience Sharing

From March 25-29, 2016, FAD delivered a 5-day public financial management (PFM) training course to 30 USAID officials. It was the first activity conducted under the recent partnership between the IMF and USAID. This training highlighted selected PFM issues addressed by FAD technical assistance and provided an effective venue for experience sharing between FAD and USAID staff. In the coming weeks, further training sessions will take place, including two in Africa. In addition, it will be offered as an online training in early 2017. We trust these activities will foster enhanced synergies between FAD and USAID activities in the field.

FAD in the News

"Global corruption risks tipping more countries into crisis, IMF warns"-The Telegraph.

"‘Double debt bind’ can only be lifted with growth and inflation"-The Financial Times.

"Subsidizing R&D delivers returns even fraudsters dare not promise"-The Financial Times.

"IMF takes a long look at aggregate demand and finds it wanting"-The Financial Times.

"Worsening public finances threaten recovery, fears IMF"-The Financial Times.

"IMF says debt levels highest since Second World War"-Business Day Live.

"Transparency key to PHL gains, but only first step -- Purisima"-BusinessWorld.

"IMF warns of possible 'Spiral' of Waning Growth, escalating debt"-Bloomberg.

"A sound fiscal policy can stabilize the economy: Vitor Gaspar"-Business Standard.

"Vítor Gaspar: “A política orçamental deve estar orientada para o crescimento”"-Economia.

Recent Blogs

"Climate Change: How To Price Paris" Vitor Gaspar, Michael Keen, Ian Parry; iMFdirect; January 2016.

"Act Now, Act Together" Vitor Gaspar, Luc Eyraud; iMFdirect; April 2016.

"Imagine What Fiscal Policy Could Do For Innovation" Vitor Gaspar, and Ruud De Mooij; iMFdirect; March 2016.

"Countries Are Signing Up for Sizeable Carbon Prices" Ian Parry; iMFdirect; April 2016.

"Fiscal Costs of Hidden Deficits: Beware—When It Rains, It Pours" Elva Bova, Marta Ruiz-Arranz, Frederik Toscani, and Elif Ture; iMFdirect; February 2016.

"Impulso público para innovar y crecer" Vitor Gaspar, Carlos Mulas-Granados; EL PAIS Tribuna; April 2016.


Press Briefing: Fiscal Monitor.

IMF Fiscal Forum 2016: Strengthening the International Tax System: - Future of International Taxation.

Avoiding Tax.

Fiscal Policy, Innovation and Productivity Growth.

Min Zhu opening remarks: High-Level Conference on Economic Linkages between Asia and Latin America.

Speeches and Presentations

"Managing complexity: Economic policy cooperation after the crisis" Vitor Gaspar - panelist; Brookings Institution, Washington DC; May 2016.

"Thinking about Tax Administration" Michael Keen; ICTD 5th Annual Centre Meeting, Addis Ababa; February 2016.

"Risk of slowdown in world economy; short and medium-term response via fiscal policy and rules" Vitor Gaspar at Brookings Institution; WashingtonDC; April 2016.

"Challenges and Opportunities of Blended Finance and Risk Sharing" Vitor Gaspar, The Global Infrastructure Forum 2016, European Investment Bank; International Financial Corporation, Washington DC; April 2016.

"Completing Europe’s Economic and Monetary Union" Vitor Gaspar, International Research Forum on Monetary Policy; Frankfurt am Main; March 2016.

"Public Financial Management in Latin America"Vitor Gaspar, FAD/Inter-American Development Bank, Washington DC; March 2016.

"After Paris: Fiscal, Macroeconomic and Financial Implications of Global Climate Change" Vitor Gaspar, Launch of Staff Discussion Note, Center for Global Development, Washington DC; January 2016.

Useful Links

IMF Fiscal Monitor

Contacts in FAD

PFM Blog

Fiscal Issues at the IMF

FAD Brochure

Tax Policy and Administration Topical Trust Fund (TPA TTF)

Further Information

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