## dpea2024uffap ## Source details **Canonical URL:** [dpea2024uffap](https://www.imf.org/-/media/files/publications/dp/2024/english/dpea2024uffap.pdf) ## Other formats - [Markdown version](/-/media/files/publications/dp/2024/english/dpea2024uffap.pdf.md) - [Structured JSON version](/-/media/files/publications/dp/2024/english/dpea2024uffap.pdf.json) --- ### Overview - Countries in the Asia-Pacific region took unprecedented fiscal policy measures in response to large shocks in the past two decades, notably the global financial crisis and the COVID-19 pandemic. - Fiscal policy, together with central banks, reacted to the surge in global inflation in 2021–22 to contain inflationary pressures and help vulnerable households. ### Fiscal responses to crises - Exceptional fiscal support was particularly large in advanced economies and emerging markets; support measures were smaller in low-income countries due to tighter financing constraints. - Fiscal policy was broadly neutral before the global financial crisis and became more countercyclical afterwards (pre–global financial crisis sample: years 1995–2007; post–global financial crisis sample: years 2008–23). - Tools such as social safety nets were underdeveloped in some countries, requiring ad hoc actions that were not always well targeted or timely. - Lack of clear exit strategies in some cases led to procyclical expansionary policies after shocks. - Pandemic-era fiscal actions and characteristics: - 95 percent of Asia‑Pacific economies adopted a looser policy mix in 2020 by implementing both more expansionary fiscal and monetary policies. - In 2022 more than half of the region tightened both fiscal and monetary policies. - Examples of fiscal deterioration in 2020 relative to previous three-year averages: Australia and Japan deteriorated by more than 6 percent of GDP. - After strong rebounds in activity in 2021 (growth up by about 8 percentage points on average in AEs and 15 percentage points in EMs), fiscal balances improved only by 3 and 2 percentage points of GDP on average, respectively. ### Rising public debt and constrained fiscal space - Public debt has risen continuously since the global financial crisis, with particularly large increases after the COVID-19 pandemic. - Country-specific debt observations: - China: public debt has more than doubled to above 100 percent of GDP between 2007 and 2023. - Japan: public debt rose above 250 percent of GDP. - Average changes relative to 2007: - 50 percent of GDP higher among advanced economies. - 15 to 20 percent of GDP higher among emerging markets and LICs. - Near-term projections: - Asian AEs: public debt projected to increase to 59 percent of GDP by 2029, from 55 percent of GDP in 2023. - China’s debt ratio projected to increase by about 27 percentage points. - Pacific island countries: median debt projected to increase from 28 percent of GDP in 2023 to about 37 percent of GDP by 2029. - Vanuatu: expected largest increase, a rise of 23 percentage points, as the primary deficit would deteriorate sharply toward double digit territory. - Debt drivers and dynamics: - Between 2019 and 2023, debt rose by more than 8 percent of GDP in half of the economies; in some cases surged by more than 40 percent of GDP (Lao P.D.R. and Palau). - The deterioration in primary balances has been a key driver for worsening debt dynamics since the global financial crisis. ### Gaps in fiscal frameworks revealed by recent shocks - During the pandemic, large deviations from fiscal rules occurred across the region; in some cases rules were suspended. - Weaknesses identified: fiscal institutions, fiscal transparency, and fiscal coverage beyond the central government. - Coverage of fiscal framework elements among 37 Asia‑Pacific economies: - 23 have at least one fiscal rule. - 22 have an MTFF. - 3 have independent fiscal councils. - Fiscal rule counts and types (exact): - Budget balance rule: 16. - Debt rule: 17. - Expenditure rule: 5. - Revenue rule: 3. - Compliance and deviations: - Between 2004 and 2019, median deviation from the debt ceiling in Asia‑Pacific was just over 5 percent of GDP. - Median breach of the fiscal deficit rule in Asia‑Pacific was 1.2 percent of GDP; 7 out of 10 countries recorded breaches. - Between 2020 and 2022: - 70 percent in Asia‑Pacific breached deficit rules; 93 percent in the rest of the world breached deficit rules. - Median deviation in Asia‑Pacific reached 6.6 percent of GDP (postpandemic). - Deviations from debt limits were 25 percent in Asia‑Pacific and 60 percent elsewhere. - Among countries that breached debt ceilings, the median deviation reached 40 percent of GDP. - MTFF features and weaknesses: - MTFFs typically prepared over a three-year horizon; 11 countries have three-year horizons and 7 have five-year horizons; Australia has 12 years and Japan has 10 years. - Only 3 countries set binding MTFF targets: Malaysia, Mongolia, Thailand. - Quantitative risk assessment and debt sustainability analysis are limited: debt sustainability analysis conducted in 4 countries; long-term fiscal sustainability examined in 3 countries. - Ex post analysis absent in 16 of the 22 MTFF adopters. - Forecast biases documented: - Sri Lanka: revenue projections overly optimistic by 2.3 percent of GDP; average forecast error on primary spending reached 1 percent of GDP. - Mongolia: capital expenditure deviations from MTFF projections averaged 13.5 percent for the same year and 24 percent for the next year in 2021–23. - Vietnam: actual revenues around 8 percent higher than MTFF projections. ### Off‑budget measures, quasi‑fiscal operations, and subnational risks - Off‑budget support during the pandemic requires frameworks to assess cost/benefit, ensure transparency, and manage fiscal risks. - Japan: off‑budget support at 28 percent of GDP, including through public financial institutions. - Subnational fiscal exposure examples (Box 1): - In China, subnational governments account for 89 percent of government spending; local government debt estimated at 80 percent of GDP in 2023 when including local government financing vehicles. - In India, subnational governments account for 60 percent of government spending; state government debt reached 26 percent of GDP in fiscal year 2022/23 (versus a 20 percent of GDP target). - Contingent liabilities from public utility companies in India estimated at 2.3 percent of GDP. - Conditional transfers: 40 percent of total transfers in China and around 50 percent in India. - Fiscal costs related to bailouts and SOEs: - Fiscal costs related to subnational bailouts averaged 3.5 percent of GDP per incident over 1990 to 2014. - Average cost of government intervention in SOEs across a sample exceeded 5 percent of GDP. - In several Asia‑Pacific countries, SOE debt surpasses 10 percent of GDP. - Public banks hold more than 40 percent of total banking system assets in some cases (for example, China, India, Indonesia, and Vietnam). ### Fiscal rules and institutional design guidance - Design principles for fiscal rules and MTFFs: - Medium-term fiscal plans should be more ambitious depending on degree of fiscal risks; link fiscal anchors to a debt sustainability assessment. - Rules should be designed and calibrated to build buffers in good times and could include correction mechanisms for large deviations. - Frameworks should allow flexibility to react to large shocks via well-designed and transparent escape clauses. - Rules need to be accompanied by improved fiscal institutions, fiscal transparency, and independent monitoring to boost credibility and accountability. - Types of rules and operational implications (examples and exact values where cited): - Debt ceiling: limit on stock of public debt (as share of GDP). - Deficit ceiling: limit on overall or primary balance (as share of GDP). - Expenditure ceiling: multiyear limit on level or growth of total or primary expenditures. - Structural balances: balances corrected by the business cycle or commodities. - International and country examples of rule design and adjustment: - New Zealand: reintroduced fiscal rules in 2022; net core Crown debt objective estimated at "50 percent of GDP"; late 2023 updates target operating balance to surplus by "2027/28", and a net core Crown debt trajectory toward "40 percent of GDP" and over time maintain within "20 percent to 40 percent of GDP." - Colombia: debt limit "71 percent of GDP" and prudent debt anchor "55 percent of GDP"; correction mechanism requires structural primary balance of at least "1.8 percent of GDP" when debt is above the limit. - Brazil: real federal spending growth floor of "0.6 percent" and ceiling of "2.5 percent"; floor on public investment of "0.6 percent of GDP." - European Union 2024 framework: deficits to be brought below "3 percent of GDP" and maintained below this level for a postadjustment 10-year period; minimum safeguards for debt reductions if above "60 or 90 percent of GDP" (debt should fall by no less than "0.5 or 1 percent of GDP" annually). ### Fiscal limits, sensitivity, and implications for anchors - Fiscal limits can fall with weaker growth and higher interest rates: - Illustrative example: fiscal limit in a sample of Asian EMs contracted from around 95 percent of GDP to below 78 percent of GDP between the prepandemic and postpandemic periods. - Fiscal limits are sensitive to: - Interest rate–growth differential (R−G). - Elasticity of interest rates to debt-to-GDP levels. - Policy implication: medium-term fiscal anchor should promote building buffers; when debt is close to safe levels a debt anchor can be appropriate; where debt is well above safe levels a primary balance limit consistent with restoring debt sustainability may be preferable (example: Sri Lanka’s central government debt close to 116 percent of GDP in 2022). ### Long-term challenges: climate change and population aging - Demographic trends: - Population growth projected to become negative in early 2030s in Asia‑Pacific EMs and in the 2040s in Asia‑Pacific LICs; population already shrinking in some countries (for example, China, Japan, and Korea). - Rapid aging can raise fiscal pressures by "0.5 to 1 percentage point" in rapidly aging economies in Asia, such as China, Japan, Korea, and Thailand (IMF 2017). - Absent policy measures, age-related expenditure "is expected to rise by more than 2 percent of GDP during 2023–30 in some countries." - Climate vulnerability and fiscal costs: - Asia contains some of the most vulnerable countries to climate change (for example, Bangladesh and Pacific island countries); adapting infrastructure will likely have substantial costs. - Consideration of climate and demographic risks "is not common in the MTFFs of Asia‑Pacific economies." - Recommendations to integrate long-term risks: - Assess and communicate long-term impact of climate change and aging on public finances. - Upgrade MTFFs to incorporate effects of climate change and natural disasters in medium-term projections, debt sustainability assessments, and calibration of fiscal rules. - Introduce long-term fiscal sustainability analysis to gauge fiscal impacts from long-term spending pressures and reform measures. - International community support is critical for Pacific island countries and low-income countries to build capacity for preparing, adapting, and managing climate risks. ### Institutional responses, risk management, and practical tools - Strengthen fiscal-risk frameworks and institutions: - Build larger fiscal buffers during normal times depending on debt carrying capacity. - Raise tax revenues to address development needs and to build buffers. - Strengthen social safety nets to improve targeting, timeliness, and cost effectiveness (coverage in Pacific island countries particularly dire). - Establish fiscal risk units to coordinate risk identification and inform budgets and medium-term projections. - Improve coverage and quality of public-sector data (examples: Australia, New Zealand, Philippines). - Adopt controls and limits on government guarantees and subnational debt; strengthen governance for SOEs and public banks. - Checklist for exceptional crisis interventions (Annex 3 highlights): - Decide whether government intervention is needed and whether other macroeconomic levers can provide support. - Assess cost-effectiveness, targeting, administrative capacity, speed of deployment, longer-term adverse implications, and intergovernmental implications. - Determine fiscal costs, worst-case maximum costs, and compatibility with fiscal rules and credibility. - Identify and adopt risk-mitigation measures, ensure clear exit strategies, designate responsible management entities, and set arrangements for periodic reporting. ### Policy recommendations and conclusions - Upgrade fiscal frameworks across the Asia‑Pacific region through a comprehensive, risk-based approach to: - Improve crisis preparedness and response. - Rebuild fiscal buffers and manage fiscal risks. - Address long-term challenges from climate change and aging. - Specific recommended actions: - Introduce and upgrade MTFFs to identify measures today for medium- to long-term objectives and to support credible gradual fiscal adjustments. - Broaden fiscal coverage and improve government finance statistics and fiscal information. - Assess and communicate long-term impacts of climate change and aging; incorporate into MTFFs, debt sustainability assessments, and fiscal rule calibration. - Create incentives to accumulate larger fiscal buffers and enhance safety nets for swifter, better-targeted responses. - Adopt simple, risk-based fiscal rules within robust MTFFs, with operational rules, escape clauses, and strong fiscal institutions and independent analysis (for example, fiscal councils) to enhance credibility and accountability. *IMF DEPARTMENTAL PAPERS • Upgrading Fiscal Frameworks in Asia‑Pacific (content unit).* ### Executive Summary ...............................................................................................v ### Executive Summary ### Overview - Countries in the Asia-Pacific region took unprecedented fiscal policy measures in response to large shocks in the past two decades, notably the global financial crisis and the COVID-19 pandemic. - Fiscal policy, together with central banks, played a concerted role in managing those shocks, including reacting to the surge in global inflation in 2021–22 to contain inflationary pressures and help vulnerable households. ### Fiscal responses to crises - Exceptional fiscal support was particularly large in advanced economies and emerging markets in the region; support measures were smaller in low-income countries, reflecting tighter financing constraints. - Fiscal policy was broadly neutral before the global financial crisis and became more countercyclical afterwards as countries responded to crises (pre–global financial crisis sample: years 1995–2007; post–global financial crisis sample: years 2008–23). - Tools to respond to crises, including social safety nets, were underdeveloped in some countries, requiring ad hoc actions that were not always well targeted or timely. - In some cases, lack of clear exit strategies led to procyclical expansionary policies after shocks. ### Rising public debt and constrained fiscal space - Public debt has risen continuously since the global financial crisis, with particularly large increases after the COVID-19 pandemic. - Specific country examples and figures cited in the source text: - In China, public debt has more than doubled to above 100 percent of GDP between 2007 and 2023. - In Japan, public debt rose above 250 percent of GDP. - On average, debt levels in Asia-Pacific are: - 50 percent of GDP higher relative to 2007 among advanced economies. - 15 to 20 percent of GDP higher among emerging markets and LICs. - The weaker growth outlook and higher interest rates imply that the maximum public debt levels that governments can sustain have declined, constraining fiscal policy. ### Gaps in fiscal frameworks revealed by recent shocks - Fiscal frameworks in the Asia-Pacific region have not been sufficiently robust: - During the pandemic, there were large deviations from fiscal rules across the region and, in some cases, suspension of the rules. - The pandemic highlighted weaknesses in fiscal institutions, fiscal transparency, and the coverage of fiscal frameworks beyond the central government. - Many countries already have some form of medium-term fiscal frameworks (MTFFs)—including a fiscal plan or strategy, medium-term projections, and targets or rules to guide annual budgets—but these are not always well-developed or effective. ### Rationale for upgrading fiscal frameworks - Upgrading fiscal frameworks—regulations and procedures that influence how fiscal policy is planned, implemented, monitored, and assessed—could make fiscal policy more effective and better manage risks and policy tradeoffs. - Strengthening MTFFs would: - Help countries with high or rising debt risks develop credible medium-term plans to gradually reduce risks while avoiding disruptive fiscal adjustments. - Help low-income countries build support for medium-term strategies, including enhancing domestic revenues to achieve the Sustainable Development Goals. - Create stronger incentives to rebuild fiscal buffers during normal times and enhance safety nets and other crisis tools for swifter and better targeted responses. - Improve management of fiscal risks by broadening coverage beyond the central government and boosting the quality of government finance and debt statistics and fiscal information. ### Guidance on enhancing fiscal rules and institutions - More robust fiscal rules can guide and enhance the credibility of fiscal strategies. Key elements include: 1. Medium-term fiscal plans that are more ambitious depending on the degree of fiscal risks, including linking fiscal anchors to a debt sustainability assessment. When risks are high, rules should be less flexible. 2. Rules designed and calibrated taking into account evolving risks and the need to build enough buffers in good times. Countries could introduce correction mechanisms for large deviations from rules. 3. Frameworks that allow flexibility to react to large shocks through well-designed and transparent escape clauses. - To be effective and credible, rules and MTFFs need to be accompanied by improved fiscal institutions. Greater fiscal transparency and independent monitoring could help boost credibility and accountability. ### Long-term challenges: climate change and population aging - Climate change and population aging call for enhancements to fiscal frameworks: - Population growth is projected to become negative in the early 2030s and 2040s in emerging markets and low-income countries in the Asia-Pacific region, respectively; the population is already shrinking in some countries (for example, China, Japan, and Korea). - The region includes some of the most vulnerable countries to climate change, including Pacific island countries where climate change is a major risk. - Recommended enhancements: - Assess and communicate the long-term impact of climate change and aging on public finances to inform the design of reforms that involve large intergenerational trade-offs. - Upgrade MTFFs to reflect the transition to a green economy by incorporating effects of climate change and natural disasters in medium-term projections, debt sustainability assessment, and the calibration of fiscal rules. - Introduce long-term fiscal sustainability analysis to gauge fiscal impacts from long-term spending pressures and reform measures. - International community support is critical for Pacific island countries and low-income countries to build capacity for preparing, adapting, and managing climate risks. ### Conclusion - The paper argues for a comprehensive, risk-based upgrade of fiscal frameworks across the Asia-Pacific region to improve crisis preparedness and response, rebuild fiscal buffers, manage fiscal risks, and address long-term challenges from climate change and aging. *IMF Departmental Paper: Upgrading Fiscal Frameworks in Asia-Pacific — Executive Summary* ### 1. The Global Financial Crisis and the Pandemic Had a ### 1. The Global Financial Crisis and the Pandemic Had a Large Impact on Global Economic Activity ... ### Impact on output and trade - Output gap PPP-weighted average for 186 countries, percent: chart range shown from −6 to 3 (figure caption). - Global trade: percentage-point deviations illustrated with chart scale from −15 to 25 (figure caption). - Note: Output gaps are calculated using the Hodrick-Prescott filter. EMDEs = emerging market and developing economies; GFC = global financial crisis; p = percentile; PPP = purchasing power parity. ### Fiscal countercyclicality in Asia‑Pacific - For a 1 percentage point decline in real economic growth, the fiscal balance in advanced economies (AEs) is estimated to deteriorate by almost 0.6 percent of GDP (Figure 3). - Across country groups since the global financial crisis: - AEs: policies became more countercyclical; greater use of automatic stabilizers and discretionary measures. - EMs: degree of countercyclicality has been low throughout the entire sample period. - LICs: policies have become neutral with procyclical discretionary measures after the global financial crisis, but wide country variation exists. - Pacific island countries: fiscal stabilization coefficient stayed broadly similar and was not statistically different from zero after the global financial crisis (suggesting acyclical policies). - Regional differences: - After the global financial crisis, fiscal policy became more countercyclical in Asian AEs than in other regions (Figure 4). - Asian EMs: degree of countercyclicality broadly similar to peers. - Asian LICs: had fewer countercyclical policies, with considerable country variation. - Historical comparisons and magnitudes: - Before the global financial crisis, the countercyclicality estimate for Asia‑Pacific AEs was about one-third of their peers in Europe and in North America (0.1 versus 0.3). - LICs around the world had broadly acyclical policy before the global financial crisis, with Asia‑Pacific LICs having somewhat larger countercyclical estimates (0.2 versus 0), but not statistically significant. ### Crisis episodes: GFC and the pandemic - Countercyclicality intensified during crises, especially the pandemic. - Behavior during large shocks (Figure 5): - AEs and EMs relied mainly on discretionary measures during both the global financial crisis and pandemic, indicating automatic stabilizers were too limited given shock magnitude. - EMs tend not to use discretionary measures outside of large crises. - Country examples for pandemic responses (deviation in overall balances from previous three-year averages and growth deviations): - Australia and Japan: overall balances deteriorated by more than 6 percent of GDP in 2020 relative to the previous three-year averages. - China and India: fiscal deficits expanded significantly; growth decline in India was much larger, with China relying more on discretionary measures. - Bangladesh: fiscal balance barely changed. - Cambodia: deficit deterioration larger than Bangladesh, but smaller than in AEs and EMs despite large growth decline. - Types of fiscal measures used during the pandemic included cash transfers, subsidies for public and private financial institutions’ lending, support to workers (employment guarantee, unemployment benefits, wage subsidies), and tax cuts and exemptions. - Fiscal unwind challenges: - After strong rebounds in activity in 2021 (growth up by about 8 percentage points on average in AEs and 15 percentage points in EMs), fiscal balances improved only by 3 and 2 percentage points of GDP on average, respectively—illustrating risks that timely exit from large-scale support can be difficult and may become procyclical. - Highlights the benefits of having automatic stabilizers (for example, social safety nets) and ex ante strategies and tools to deploy during large shocks. ### Off‑budget measures and quasi‑fiscal operations - Governments used substantial off-budget measures during the pandemic; need frameworks to assess cost/benefit, ensure transparency, and manage fiscal risks. - Off-budget support examples and magnitudes (Figure 6, percent of GDP): - Japan: off-budget support at 28 percent of GDP, including through public financial institutions. - Korea: quasi-fiscal operations via stabilization funds and additional measures under the Credit Recovery Program by the Korea Asset Management Corporation. - India: provided guarantee support for firm borrowings. - Singapore: set aside loan capital to support firms. - Off-budget measures categories illustrated: contingent liabilities (quasi-fiscal operations), contingent liabilities (guarantees), and below-the-line measures (equity injects, loans, etc.). ### Fiscal and monetary policy mix - During large shocks, fiscal and monetary policies in Asia‑Pacific tended to complement each other. - In 2020 (pandemic peak): 95 percent of the Asia‑Pacific economies adopted a looser policy mix by implementing both more expansionary fiscal and monetary policies. - In 2022 (inflation surprise): more than half of the region tightened both fiscal and monetary policies. - Policy mix index construction and interpretation: - Index = sum of year-over-year changes in a country’s primary balance and policy rate (after standardizing). - More positive index → fiscal and monetary policies consistently tightening; more negative → consistently loosening. - Results show fiscal and monetary policies consistently loosened during the global financial crisis and the pandemic and tightened during the cost-of-living crisis to counter large growth declines and high inflation (Figure 7). - Definition notes: - Tightening (loosening) fiscal policy = year-over-year increase (decrease) in primary balance (percent of GDP). - Tightening (loosening) monetary policy = year-over-year increase (decrease) in policy rates (percentage points). ### Use of price controls and subsidies during the cost-of-living crisis - During 2020–22, Asia‑Pacific countries used fiscal tools to contain price rises, especially for energy and food. - Some policies were immediately reflected in budgets; others passed costs to SOEs (reduced profits, losses, need for financial support, lower dividends), making them ill-targeted and costly over time. - Fuel subsidies (2020–22) measured as (supply cost − fuel user price) × (fuel consumption) and shown in percent of GDP (Figure 8); chart scale indicates values up to 3.0 percent of GDP for some groups. ### Managing public finances and debt dynamics - Debt dynamics have deteriorated since 2007 as countries responded decisively to crises. - Historically, Asia‑Pacific governments had lower public debt than other regions, helped by higher economic growth; after the global financial crisis, Asian AEs have seen faster debt increases than their counterparts (Figure 9). - During the COVID-19 pandemic, global debt rose as revenues fell and governments implemented support measures. - In Asia‑Pacific, between 2019 and 2023, debt rose by more than 8 percent of GDP in half of the economies; in some cases surged by more than 40 percent of GDP (Lao P.D.R. and Palau). - More than half of Pacific island countries experienced a decline in government debt, partly benefiting from donor support, though debt risks remain elevated in many owing to low debt-carrying capacity. - Drivers of fiscal deterioration: - Declining economic growth and rising deficits contributed to worsening public finances since 2008. - Example: In China, average growth in the post–global financial crisis period has been almost 5 percentage points lower than before, with rising debt. - The deterioration in primary balances has been a key driver for worsening debt dynamics since the global financial crisis, even more so than in other regions (Figure 10). - Fiscal balance observations by income group after the global financial crisis: - EMs: average fiscal deficit of 3.8 percent of GDP. - LICs: average fiscal deficit of 6.3 percent of GDP. - Asian AEs: despite deterioration, maintained stronger fiscal balances than other AEs. - Pacific island countries: strengthened fiscal balances since the global financial crisis, with large country variation. - Notes on special cases: - Singapore: debt increased significantly in gross terms driven by issuances to meet Central Provident Fund needs and deepen domestic debt market; large public financial assets result in a positive net asset position; pandemic fiscal support financed by reserves. - China: debt stock uses augmented definition including government-guided funds and activity of local government financing vehicles. - Commodity-exporting countries (e.g., Australia and Mongolia): deterioration in fiscal positions partly reflected sluggish commodity prices in the first half of the 2010s, which reduced revenues and boosted expenditures to support the economy. *Source: IMF Departmental Paper — Upgrading Fiscal Frameworks in Asia‑Pacific (chapter content provided).* ### 1. Public Debt ### 1. Public Debt ### Debt trends and near-term projections - Public debt levels in Asian AEs are projected to increase to 59 percent of GDP by 2029, from 55 percent of GDP in 2023. - China’s debt ratio is projected to increase by about 27 percentage points. - Pacific island countries: median debt level projected to increase from 28 percent of GDP in 2023 to about 37 percent of GDP by 2029. - Vanuatu is expected to have the largest increase, a rise of 23 percentage points, as the primary deficit would deteriorate sharply toward double digit territory. - Lower growth prospects and higher interest rates will make it more difficult to manage debt levels. - Tax revenues in the region tend to be lower, and Pacific island countries remain highly dependent on grants (for example, grants are almost 10 times of LICs in other regions), increasing difficulty in managing rising budgetary pressures including from an aging population and climate change. ### Debt dynamics and drivers (1998–2022 overview) - Debt movements reflect contributions from Primary balance, Real interest rate, and Stock-flow adjustments (as indicated in the decomposition of debt dynamics). - Comparative means illustrate different pre–GFC (1998–2007) and post–GFC (2008–22) debt dynamics for Asia-Pacific and the rest of the world. ### Effective interest rates - Effective interest rate is computed as the ratio of the government interest payments in year t to the stock of government debt (average of debt stocks of year-end t and t −1). - Dashed lines in the underlying figure indicate projections for 2024–29. - Groups shown include AE, EM, LIC, PIC. ### Fiscal frameworks in Asia-Pacific: cross-country snapshot - The analysis focuses on three key elements: (1) fiscal rules, (2) medium-term fiscal frameworks (MTFFs), and (3) independent fiscal councils. - Among 37 Asia-Pacific economies: - 12 have both fiscal rules and an MTFF (examples cited include India, Indonesia, Japan, Malaysia, New Zealand, Sri Lanka, and Thailand). - Australia and Korea have MTFFs and fiscal councils. - Mongolia has all three elements of a fiscal framework. - Several Pacific island countries often rely on only one component (either fiscal rules or an MTFF). - Some countries do not have any of the three elements (Brunei, China, Lao P.D.R., Macao SAR, Federated States of Micronesia), sometimes because of limited capacity. - Only three countries (Australia, Korea, Mongolia) have independent fiscal councils performing tasks such as assessing forecasts, evaluating long-term sustainability, and quantifying effects of measures and reforms. ### A. Fiscal rules — coverage, design, and compliance - Among Asia-Pacific economies with fiscal rules: - 23 countries have fiscal rules. - 15 of those 23 have more than one rule. - Most common rule types: debt rules and budget balance rules. - Specific counts from survey: Budget balance rule (16); Debt rule (17); Expenditure rule (5); Revenue rule (3). - Five countries have expenditure rules (ceilings on level or growth of expenditure), often used with deficit or debt rules. - A few countries (Mongolia, Tonga, Vietnam) have three rules. - Coverage: expenditure and budget balance rules usually limited to central government (India is an exception—its budget balance rule applies for central and subnational governments); debt rules often broader (half of countries have debt limits for general government or wider public sector). - Legal basis and enforcement: - Debt and budget balance rules tend to be set by law, often integrated into fiscal responsibility laws. - Expenditure rules often rely on political commitment rather than statutory enforcement. - Most rules do not include well-specified enforcement mechanisms or escape clauses; only a few countries have formal procedures (Marshall Islands, Mongolia, Papua New Guinea, Singapore). - Six countries have external monitoring mechanisms, but these are not always effective. - Frequent changes or suspensions of rules can undermine effectiveness and credibility (example: Mongolia’s frequent changes to debt limits and structural deficit ceiling). - Historical compliance and deviations: - Between 2004 and 2019 (prepandemic), the median deviation from the debt ceiling in Asia-Pacific was just over 5 percent of GDP, well below those observed in other regions. - The median breach of the fiscal deficit rule in Asia-Pacific was relatively low at 1.2 percent of GDP; 7 out of 10 countries recorded breaches (compared to 86 percent of countries in the rest of the world). - Country examples of variation: Sri Lanka systematically posted deficits above its limits; Mongolia mostly met its limits though they were frequently revised; India has repeatedly pushed out its timeline for meeting the medium-term deficit target. - Pandemic response and rule suspensions: - Governments bypassed or modified fiscal rules to address COVID-19 support needs; nearly 80 percent of countries with fiscal rules globally either suspended or modified their rules. - Between 2020 and 2022: - 70 percent in Asia-Pacific breached deficit rules; 93 percent in the rest of the world breached deficit rules. - The median deviation in Asia-Pacific reached 6.6 percent of GDP (postpandemic). - Deviations from debt limits were less frequent: 25 percent in Asia-Pacific and 60 percent elsewhere. - Among countries that breached debt ceilings, the median deviation reached 40 percent of GDP. - Some countries remained under debt ceilings due to significant space at the onset of the pandemic or reliance on grants (examples: Cambodia, Indonesia, Solomon Islands, Vietnam), while others revised ceilings upwards (examples: Malaysia, Papua New Guinea, Thailand). - Indonesia regained compliance with the budget balance rule in 2022, one year ahead of the target. - Note: budget balance limits could not be constructed for Nepal and Solomon Islands; debt ceilings could not be constructed for Timor-Leste due to specific definitions. ### B. Medium-Term Fiscal Frameworks (MTFFs) - Prevalence and legal basis: - 22 countries in the region have an MTFF. - In three-quarters of those cases the MTFF is established by law. - MTFFs are typically prepared over a three-year horizon and usually cover the central government; some countries have frameworks for subnational governments to varying degrees. - Targets and role in annual budgets: - Most MTFFs include targets or ceilings on debt and fiscal balances, mostly set on an indicative basis. - Only three countries set binding MTFF targets: Malaysia, Mongolia, Thailand. - MTFFs can guide fiscal planning and priorities (example: Malaysia’s MTFF guides a three- to five-year period with targets on debt, capital spending, deficit, and government guarantees). - The link between MTFFs and annual budgets remains relatively weak in many cases. - Risk assessment and analysis: - MTFFs typically include mostly qualitative discussion of risks; only a handful of countries undertake quantitative analyses such as debt sustainability analysis. - Ex post analysis of MTFF performance is sparse; some countries conduct analysis within government (Australia, New Zealand, Palau, Samoa), others outside it (Korea, Mongolia). - Implementation challenges and forecast biases: - Common challenges: weak technical capacity, weak enforcement, lack of integration between MTFF and annual budgets, and high volatility of revenues and expenditures. - In 8 out of the 22 countries with an MTFF, survey responses suggested budget projections are subject to an optimistic bias. - Country-specific forecast evidence: - Sri Lanka: revenue projections were systematically overly optimistic by 2.3 percent of GDP; average forecast error on primary spending reached 1 percent of GDP. - Mongolia: capital expenditure approved in the budget deviated from MTFF projections by an average of 13.5 percent for the same year and 24 percent for the next year in 2021–23. - Vietnam: actual revenues have been around 8 percent higher than MTFF projections. - Benefits where implemented and PFM links: - Developing economies with MTFFs tend to have a better articulated fiscal strategy as shown by Public Expenditure and Financial Accountability (PEFA) scores. - Markets may react favorably to the introduction of MTFFs; India’s sovereign rating was upgraded in the years following MTFF introduction, with rating agencies citing commitment to fiscal prudence, clearer path of consolidation, and improvements to transparency and accountability resulting from MTFF reforms. - Countries implementing public financial management reforms were able to strengthen budget credibility and implementation (example: Maldives’ improved PEFA scores associated with clearer strategic guidance and better quality of in-year budget reports). *IMF DEPARTMENTAL PAPERS • Upgrading Fiscal Frameworks in Asia-Pacific (chapter 1: Public Debt).* ### Box 1. Fiscal Accounts at the Subnational Level: The Cases of China and India ### Box 1. Fiscal Accounts at the Subnational Level: The Cases of China and India ### Overview - Effective fiscal policy requires sound public finances at the subnational level, especially in decentralized countries. - In China and India, subnational governments account for 89 and 60 percent of government spending, respectively (Wingender 2018). - Central governments use ceilings on new debt issuances to promote subnational fiscal responsibility; this has been undermined by off-budget borrowing and, in India, loss-making state-owned enterprises (SOEs). ### China and India: Subnational Fiscal Risks and Recent Trends - Local government debt in China is estimated to have reached 80 percent of GDP in 2023 when including the debt of local governments’ financing vehicles. - In India, state government debt reached 26 percent of GDP in fiscal year 2022/23 (versus a 20 percent of GDP target). - Contingent liabilities from public utility companies in India are estimated at 2.3 percent of GDP (Mukherjee and others 2022). - Conditional transfers constitute 40 percent of total transfers in China (Wingender 2018) and around 50 percent in India. - Differences in accounting practices and slow adoption of government finance reporting standards complicate monitoring: China has more than 3,200 budgeting authorities with varying capacity (Wong 2018). - Bond market signals imply perceived implicit guarantees: in India, spreads between state and central government debt are within a narrow range despite wide fiscal performance variation; in China, bond spreads do not correlate with fiscal fundamentals (Lam and Wang 2018). ### Institutional and Legislative Context - India: Fiscal responsibility laws were implemented by states following the 2003 Fiscal Responsibility and Budget Management Act at the central government; only some states have updated laws to include a debt anchor and align to the general government debt target. - China: State Council directives for shifting to a medium-term budget framework were released in 2014; implementation has been slow, with progress in areas like budget transparency (Wong 2018). ### Challenges in Designing and Implementing Subnational Fiscal Frameworks - Heterogeneity and horizontal imbalances among subnational governments complicate setting uniform fiscal targets; pre-pandemic India set the same deficit limit and debt target for all states assuming imbalances would be equalized through revenue sharing and grants. - Earmarked grants can address vertical imbalances but can reduce budgetary flexibility and hamper subnational autonomy and incentives for fiscal prudence. - Monitoring and enforcement issues are heightened by perceptions that the central government will bailout subnational governments, reducing market discipline. - Accounting differences and incomplete fiscal coverage (extrabudgetary activities, local financing vehicles, SOEs, public banks) obscure true fiscal risks. ### Quantified Fiscal Risk Examples and Public Sector Coverage Issues - Fiscal costs related to subnational bailouts averaged 3.5 percent of GDP per incident over 1990 to 2014. - Average cost of government intervention in SOEs across a sample of 80 countries over the past decades exceeded 5 percent of GDP (Baum and others 2020). - In several Asia-Pacific countries, SOE debt surpasses 10 percent of GDP. - Public banks hold more than 40 percent of the total banking system assets in some cases (for example, China, India, Indonesia, and Vietnam). ### Implications for Fiscal Framework Design and Monitoring - Expanding fiscal coverage to include the entire public sector balance sheet would improve policy design and vulnerability assessment. - Bolstering government statistics and fiscal information—timeliness, quality, and dissemination of comprehensive MTFFs and budgets—is critical to strengthen risk management and transparency. - Efforts to publish state government data on a Government Finance Statistics Manual 2014 basis are underway in India. ### Key Takeaways - Subnational liabilities (including financing vehicles and contingent liabilities) materially increase overall government fiscal exposure: examples include China’s augmented local government debt at 80 percent of GDP in 2023 and India’s state debt at 26 percent of GDP in fiscal year 2022/23. - Conditional transfers and off-budget activities complicate incentives and monitoring; conditional transfers account for 40 percent of transfers in China and around 50 percent in India. - Weak monitoring, heterogeneous accounting practices (more than 3,200 budgeting authorities in China), and perceived implicit guarantees undermine market discipline and fiscal responsibility at the subnational level. *Source: Box 1. Fiscal Accounts at the Subnational Level: The Cases of China and India (dpea2024uffap).* ### 1. Additional, Climate-Adjusted, Cost to Achieve the ### dpea2024uffap - 1. Additional, Climate-Adjusted, Cost to Achieve the ### Fiscal pressures from shocks, SDGs, and climate - Additional, climate-adjusted costs to achieve the SDGs will put pressure on budgets over time (figures summarize percent of 2030 GDP in 2020 prices across country groups). - Many Asia-Pacific governments did not rebuild buffers between crises; public debt grew significantly between the global financial crisis and the pandemic. - Past studies show that, even excluding the COVID-19 pandemic, governments experienced, on average, an adverse fiscal shock of 6 percentage points of GDP approximately once every 12 years (IMF 2016). - A majority of Asia-Pacific economies hold over a quarter of their government debt in foreign currencies, increasing vulnerability to currency depreciation. - Excessive private-sector leverage (household and nonfinancial corporation debt) can generate large fiscal costs if governments bail out highly leveraged sectors (for example, real estate). ### Institutional responses and risk management - Governments should design policy frameworks that take greater account of the need to respond to large shocks while limiting fiscal costs and risks by: - Building larger fiscal buffers than previously thought; saving more during normal times depending on debt carrying capacity. - Raising tax revenues to address development needs and to build buffers. - Strengthening institutions to respond to shocks with timely and targeted measures; developing adequate traditional social safety nets to improve targeting, timeliness, and cost effectiveness (coverage in Pacific island countries particularly dire). - Building institutional capacity to design, deploy, and manage exceptional fiscal support before a major shock; ensuring such support is transparent, reflected in budget documents, and supported by sound governance and exit strategies. - Examples: Australia and the United Kingdom have established checklists and templates to ensure new financial support measures or contingent liabilities have adequate justification and risk assessment. - Countries can enhance fiscal-risk frameworks through better monitoring and mitigation by: - Establishing fiscal risk units to coordinate identification of key risks and inform budgets and medium-term projections. - Improving coverage and quality of public-sector data; examples: Australia has full coverage of general government flows and stocks, New Zealand publishes the public sector balance sheet, the Philippines publishes an annual fiscal risks statement. - Adopting policies to mitigate risks, for example: (1) controls and limits on government guarantees and subnational government debt, (2) strengthening governance across public agencies, public-private partnerships, and SOEs, and (3) strengthening supervision and regulation of systemically important banks and public banks. ### Fiscal rules: design, flexibility, and risk linkage - Fiscal rules can help restore fiscal credibility in a period of high debt but must balance constraints with flexibility to respond to adverse shocks. - Rules should constrain excessive and persistent deficits while allowing discretion to conduct fiscal policy consistent with sound principles. - Recommended design elements: - Simple fiscal rules embedded in a well-developed Medium-Term Fiscal Framework (MTFF) that allows flexibility to respond to shocks. - A medium-term fiscal anchor and one operational rule under government control to guide the budget process. - Rules based on assessment of fiscal risks and creating incentives to build sufficient buffers during normal times. - Risk-based approach examples: - Medium-term fiscal plans more ambitious depending on degree of fiscal risks; link fiscal anchors to a debt sustainability assessment. - Rules that incentivize building buffers over time (for instance, lower medium-term debt anchors and correction mechanisms for large deviations). Example: Colombia’s correction mechanism requires larger fiscal adjustment depending on how much public debt is above the debt anchor. - Well-designed escape clauses: define specific circumstances outside government’s control allowing temporary deviations; activation requires explanation of reasons and expected size, and a MTFF to return below limits; frequent public communication and a revised MTFF to anchor expectations. - Practical considerations: - Fiscal rules need to be accompanied by stronger fiscal institutions to be effective and credible. - The choice of rules depends on economic circumstances and institutional capacity; when debt is close to safe levels, a debt anchor can be appropriate; where debt is well above safe levels, a primary balance limit consistent with restoring debt sustainability may be preferable (example: Sri Lanka’s approach, with a primary balance limit and multiyear expenditure ceilings). - Commodity exporters need fiscal frameworks resilient to large terms-of-trade shocks and long-term depletion of nonrenewable resources. ### Fiscal limits, sensitivity, and implications for anchors - Fiscal limits vary significantly across countries and over time; they can be estimated as the maximum sustainable level of debt associated with a sustainable primary balance (Mian, Straub, and Sufi 2022). - Post-COVID-19, fiscal limits appear to have declined among Asian emerging markets, primarily driven by higher long-term interest rates and lower potential real growth. - Illustrative estimates for a hypothetical economy based on a sample of Asian EMs suggest the fiscal limit contracted from around 95 percent of GDP to below 78 percent of GDP between the prepandemic and postpandemic periods. - Fiscal limits are sensitive to: - Changes in the interest rate–growth differential (R-G). - The elasticity of interest rates to debt-to-GDP levels. - Tightening global financing conditions (for example, a rise in global interest rates) can reduce demand for EM debt and adversely affect debt dynamics. - High and volatile inflation and policies such as financial repression can reduce attractiveness of government bonds. - The medium-term fiscal anchor should promote building enough fiscal buffers to adopt countercyclical policies and withstand shocks; buffer size is country-specific and depends on shocks to growth, interest rates, exchange rates, debt management (maturity, composition, liquidity). - Example quantitative point: central government debt in Sri Lanka stood at close to 116 percent of GDP in 2022, illustrating that fixing a near-term numerical debt limit may be neither feasible nor desirable in certain contexts. ### Long-term pressures: climate change and aging - Aging and climate change in Asia-Pacific are expected to have a large impact on fiscal accounts over the next decades. - Demographic projections: - Population growth is projected to become negative in early 2030s in Asia-Pacific EMs and in the 2040s in Asia-Pacific LICs; it is already shrinking in some countries (for example, China, Japan, and Korea). - The adverse demographic trends could reduce the average annual growth rate during 2020–50 (text notes the effect but does not provide a single aggregated numeric reduction in this excerpt). *IMF Departmental Papers • Upgrading Fiscal Frameworks in Asia-Pacific — section 1.* ### 0.5 to 1 percentage point in rapidly aging economies in Asia, such as China, Japan, Korea, and Thailand ### dpea2024uffap - 0.5 to 1 percentage point in rapidly aging economies in Asia, such as China, Japan, Korea, and Thailand ### Aging and fiscal pressures - Rapid aging can raise fiscal pressures by "0.5 to 1 percentage point" in rapidly aging economies in Asia, including China, Japan, Korea, and Thailand (IMF 2017). - Absent policy measures, age-related expenditure (pensions and health care) "is expected to rise by more than 2 percent of GDP during 2023–30 in some countries." - Figure 25 information: - Shows increases in age-related spending and the elder population share in Asia-Pacific (Percent). - Bubble sizes show the net present value of the increase in age-related spending over 2022–50. - Data labels use ISO country codes. Countries identified in the figure include: KOR, THA, CHN, NZL, VNM, IND, JPN. - Axes/series in the figure: "Increase in age-related spending, 2022–30, percent of GDP" and "Increase in the share of population aged 65 and above, 2022–30, percent of total population." ### Climate change, vulnerability, and fiscal implications - Asia contains some of the most vulnerable countries to climate change (for example, Bangladesh and Pacific island countries), including sea-level rise and natural disasters; addressing these vulnerabilities "will likely have substantial costs, including on adapting infrastructure" (Dabla-Norris and others 2021). - Consideration of climate and demographic risks "is not common in the MTFFs of Asia-Pacific economies." - Examples of current country practice: - Bangladesh formulated a Climate Fiscal Framework in 2014 to help track climate-related expenditure and costs of climate-related fiscal policies; the framework "provided information on costing of climate fiscal policies and explicitly integrated climate into the annual budget process and MTFF." - Australia’s intergenerational report presents 40-year projections of the fiscal position under unchanged policy settings, accounting for demographic changes and other expected changes in the economy (Commonwealth of Australia 2023). - New Zealand’s 2021 sustainability report undertakes projections beyond the medium term to assess fiscal evolution with new policies. ### Upgrading MTFFs and integrating long-term risks - MTFFs can be upgraded to reflect the transition to a green economy and to incorporate long-term demographic and climate risks. - Caselli, Lagerborg, and Medas (2024) propose moving toward greener MTFFs by: - "Incorporating the effects of climate change and natural disasters in medium-term projections (for example, impact on growth and government revenue and expenditure). The MTFF should also include climate-related risks. Analysis of a longer-term projection would identify risks that may materialize beyond the medium-term horizon." - "Costing different policies and measures and their consistency with achieving climate objectives (for example, effects of carbon taxes or energy subsidies). Taking into account the economic and budgetary impact of mitigation and adaptation policies would help design an appropriate mix of fiscal tools consistent with the broader medium-term fiscal strategy." - "Better reflecting the effects of climate change and associated policies in designing rules. For example, fiscal and debt projections should incorporate the effects of climate change and adaptation measures, which will affect the calibration of the fiscal rules and the size of fiscal buffers needed. The rules should be reviewed regularly (for example, every five years) to reflect reassessments of climate risks. Countries are also adopting escape clauses to account for large natural disasters." - "Adopting other green PFM practices throughout the budget and investment process. Governments are increasingly adapting their budget institutions and processes to better align their policies with climate and environmental commitments." ### Fiscal rules: types, implications, and case examples - Main types of fiscal rules (as described in Table 1): - Debt ceiling: limit on total (or external) stock of public debt (as share of GDP). Main goals: Debt sustainability. Operational implications: Can lead to procyclical policies if debt levels are near the ceiling; debt can be volatile for reasons outside government control; allows flexibility in any given year; needs calibration with sufficient buffers and preferably accompanied by an operational rule. - Deficit ceiling: limit on overall or primary balance as share of GDP. Main goals: Debt sustainability. Implications: Effective to contain or reduce debt risks but could lead to procyclical policies; allows flexibility as only need to converge to anchor over time; should be done with an operational rule. - Expenditure ceiling: multiyear limit on level (or growth rate) of total or primary expenditures. Main goals: Debt sustainability; stabilization; control size of expenditures. Implications: Easy to implement; spending levels should include buffers for frequent shocks (for example, inflation); should be set consistent with an anchor closely linked to debt sustainability (for example, debt or deficit limits). - Revenue floor or ceiling: either minimum level of revenue or ceiling. Main goals: Ensure desirable level of revenues to fund the budget. Implications: Will not ensure debt sustainability or stabilization on its own. - Structural balances: balances corrected by the business cycle or commodities. Main goals: Debt sustainability and stabilization. Implications: Counter-cyclical advantage but can be complex and lack transparency; needs calibration to achieve safe debt levels. - Country experiences in enhancing fiscal rules: - New Zealand: - Public Finance Act of 1989; numerical fiscal rules first introduced in 1994. - Reintroduced new fiscal rules in 2022: (1) operating rule to bring operating balance before gains and losses back to a surplus and maintain small surpluses on average over time; (2) maintain net debt as share of GDP at a prudent level, estimated at "50 percent of GDP" based on the net core Crown debt measure. - Late 2023 updates: bring operating balance to surplus by "2027/28" and over time maintain operating surpluses consistent with the debt objective; put net core Crown debt on a downward trajectory toward "40 percent of GDP" and over time maintain it within a range of "20 percent to 40 percent of GDP," subject to economic shocks. - Sri Lanka: - Fiscal Management (Responsibility) Act of 2003 introduced limits on debt, fiscal deficit, and government guarantees but weak compliance led to fiscal deterioration and a default in 2022. - Draft public financial management bill centers on long-term objectives of debt reduction and building fiscal buffers; core elements include a medium-term primary balance anchor consistent with debt sustainability and a primary expenditure ceiling as the operational rule. The expenditure ceiling is set in law and would apply for an initial five-year period. - The draft law requires an annual Fiscal Strategy Statement, cabinet-set primary balance targets, draft budgets consistent with the primary expenditure ceiling, and a Fiscal Responsibility Report. Ex ante deviations must be justified by the Minister of Finance with remedial measures; ex post deviations permitted only if the escape clause is triggered and require justification to parliament and a supplementary budget with updated MTFF. ### Recent international reforms and lessons - European Union (new governance framework in 2024): - Emphasis on country-specific medium-term fiscal structural plans. - Countries facing risks must submit adjustment plans based on long-term debt sustainability analysis. - Operational rule: primary expenditures net of cyclical unemployment expenditure, one-offs, and temporary measures (net expenditure path). - Adjustment period can last "between four and seven years" depending on reform commitments. - Debt and deficit benchmarks: public debt should be plausibly on a downward path or maintained at prudent levels; deficits should be brought below "3 percent of GDP" and maintained below this level for a postadjustment 10-year period. - Minimum safeguards: if debt levels are above "60 or 90 percent of GDP," debt should fall by no less than "0.5 or 1 percent of GDP" annually. If structural deficit is above "1.5 percent of GDP," a minimum required annual adjustment applies. Excessive Deficit Procedure may require a minimum annual fiscal adjustment of "0.5 percent of GDP." - Brazil: - Replaced constitutional expenditure rule with a new framework: (1) three-year path, within a band, for primary balance to stabilize public debt at sustainable levels; (2) real federal spending growth with a floor of "0.6 percent" and ceiling of "2.5 percent," contingent on revenue collection and distance to primary balance targets. Floor on public investment of "0.6 percent of GDP" and a cap on increases in public investment. - Colombia: - Added a correction mechanism tied to how far debt is from the debt anchor. Debt limit "71 percent of GDP" and prudent debt anchor "55 percent of GDP." If debt is above the limit, the structural primary balance needs to be at least "1.8 percent of GDP" to ensure faster debt reduction. - Chile: - Framework remains anchored on the structural balance and is to be consistent with a medium-term debt anchor of "45 percent of GDP" (adopted in 2022). A fiscal council was created in 2019. ### Policy recommendations and conclusions - Introduce and upgrade medium-term fiscal frameworks (MTFFs) to: - Identify measures needed today to achieve medium- to long-term objectives. - Support credible gradual fiscal adjustments to address debt sustainability while avoiding large abrupt adjustments. - Help build support to raise tax revenue to fund the SDGs and manage fiscal risks. - Broaden fiscal coverage and improve the quality of government finance statistics and fiscal information. - Assess and communicate long-term impacts of climate change and aging on public finances; incorporate these effects into MTFFs, debt sustainability assessments, and calibration of fiscal rules. - Strengthen ability to manage economic shocks while protecting public finances: - Create incentives to accumulate larger fiscal buffers during normal times. - Enhance underdeveloped safety nets to allow swifter and better-targeted responses. - Upgrade institutional capacity to design, deploy, and manage exceptional measures to ensure they are timely and better targeted. - Improve monitoring and mitigation of fiscal risks. - Adopt simple and risk-based fiscal rules within a robust MTFF to increase ownership and accountability: - Rules should constrain excessive deficits and prevent unsustainable debt dynamics while allowing discretion to respond to shocks. - Simple operational rules and escape clauses can provide flexibility but require strong fiscal institutions. - Promote independent analysis of fiscal developments and plans (for example, fiscal councils) to enhance credibility and accountability. _Italic: IMF DEPARTMENTAL PAPERS • Upgrading Fiscal Frameworks in Asia-Pacific (content unit)._ ### Annex 1. Fiscal Stabilization in Asia-Pacific ### Annex 1. Fiscal Stabilization in Asia-Pacific ### Estimating Fiscal Stabilization Coefficients - Framework follows Jalles and others (2023): degree of fiscal stabilization = degree of fiscal countercyclicality × fiscal multiplier. - Due to difficulty measuring time-varying fiscal multipliers, the countercyclical coefficient is used as a proxy for fiscal stabilization, with caveats about endogeneity and potential downward bias when fiscal multipliers are positive. - Baseline panel regression (equation (1)): b_ct = α_c + τ_t + β x_ct + ε_ct, where: - b_ct = government balance in country c at time t (percent of GDP), - x_ct = measure of economic activity (real GDP growth), - α_c and τ_t = country and time fixed effects, - β = degree of fiscal countercyclicality (parameter of interest). - Composition analysis: re-estimate equation (1) with b_ct as: - cyclically adjusted balance (percent of GDP) to capture discretionary policy countercyclicality; - remaining balance (overall minus cyclically adjusted, percent of GDP) to capture automatic stabilizers. - Time-varying/country-specific estimation (equation (2)): b_ct = α_ct + β_ct x_ct + ε_ct, where β_ct is estimated in a 10-year rolling window (or five-year windows for crisis-specific estimates). - Data: IMF World Economic Outlook database. Whole sample: 187 economies including 35 Asia-Pacific economies, covering 1995–2023. - Subperiod definitions: pre–global financial crisis (years before and including 2007); post–global financial crisis (years after and including 2008). - Statistical significance reported at a 90 percent confidence level. - Baseline sample excludes oil exporters because fiscal balance and real GDP growth can be significantly affected by oil prices. Excluded countries listed in source: Algeria, Angola, Azerbaijan, Bahrain, Bolivia, Brunei Darussalam, Chad, Colombia, Democratic Republic of Timor-Leste, Ecuador, Equatorial Guinea, Gabon, Guyana, Iran, Iraq, Kazakhstan, Kuwait, Libya, Nigeria, Norway, Oman, Papua New Guinea, Qatar, Republic of Congo, Saudi Arabia, South Sudan, Turkmenistan, United Arab Emirates, Venezuela, and Yemen. - For countries without WEO cyclically adjusted balances, cyclically adjusted balances are calculated using a Hodrick–Prescott–based output gap and assumed elasticities: revenues elasticity = one, expenditures elasticity = zero. ### Average and Time-Varying Fiscal Countercyclicality: Key Findings - For the entire Asia-Pacific sample during 1995–2023: - On average, fiscal balance would be about 0.2 percent of GDP lower (higher) in response to 1 percentage point lower (higher) growth — not statistically different from zero. - By income group and period: - Advanced economies (AEs): coefficient rose from 0.1 to 0.6 after the global financial crisis. - Emerging markets (EMs): estimates stable at about 0.2 in both samples. - Low-income countries (LICs): shift from somewhat countercyclical (0.2 percent) to neutral (0 percent), both not statistically significant. - Pacific island countries (PICs): countercyclicality estimates fell from 0.3 percent before the global financial crisis to 0.2 percent afterwards, and are not statistically significant after the global financial crisis. - Time-varying estimates indicate variation mainly driven by responses during large shocks, e.g., the global financial crisis and the pandemic. ### Composition of Countercyclicality - Overall countercyclicality is largest in AEs. - Automatic stabilizers: - Largest in AEs, followed by EMs and LICs — likely reflecting differences in revenue mobilization and social safety nets. - Discretionary measures: - Larger in AEs, followed by EMs (neutral discretionary measures), while LICs appear to have procyclical discretionary measures. - PICs have countercyclical automatic stabilizers but neutral discretionary measures. ### Asymmetric Responses (Weak versus Strong Growth) - Augmented regression interacts growth with a dummy for below-median growth years (by country). - Results: - AEs in Asia-Pacific pursue more countercyclical policies during below-median growth: fiscal balances decline by an additional 0.2 percent of GDP in response to 1 percentage point reduction in growth, compared to periods of above-median growth. - EMs and LICs show similar asymmetric responses but to a smaller degree — additional deterioration in fiscal balances is less than 0.1 percent of GDP. - PICs show an estimated additional deterioration of about 0.2 percent of GDP, but it is not statistically significant. ### Fiscal Responses during the Global Financial Crisis (GFC) and the Pandemic - Crisis-window estimates use five-year windows that include crisis years (2005–09 for GFC; 2016–20 for pandemic). - Advanced economies (AEs): - Estimated overall countercyclicality coefficient increased from 0.9 during the global financial crisis to 1.2 during the pandemic. - Discretionary measures increased from 0.7 during the global financial crisis to 1.0 during the pandemic. - Fiscal balances in AEs in Asia-Pacific deteriorated the most during the pandemic compared to other groups, by almost 6.5 percent of GDP on average, while growth declines are smaller on average. - Emerging markets (EMs): - Both discretionary measures and automatic stabilizers became more countercyclical during the pandemic than during the global financial crisis (discretionary measures to a lesser degree), increasing overall countercyclicality. - Fiscal balances deteriorated significantly during the pandemic, but the decline in growth was larger than in other groups. - Low-income countries (LICs): - Discretionary measures remained neutral during the pandemic (contrary to the global financial crisis when discretionary measures had an estimated countercyclicality of 0.2). - Little deterioration in fiscal balances during the pandemic despite large growth declines. - Pacific island countries (PICs): - Overall countercyclicality increased during the pandemic, mainly driven by discretionary measures turning countercyclical. - Fiscal responses to large shocks in PICs have relied significantly on automatic stabilizers while discretionary measures became countercyclical during the pandemic. ### Regional Comparisons: Asia-Pacific versus Rest of World (ROW) - Before the global financial crisis: - Countercyclicality in Asia-Pacific AEs was one-third of peers in Europe and North America (0.1 versus 0.3). - EMs in Asia-Pacific were more countercyclical than peers in other regions (0.2 versus 0.1). - LICs in both Asia-Pacific and other regions tended to pursue acyclical policies with statistically insignificant estimates. - After the global financial crisis: - Fiscal policy became more countercyclical in AEs in Asia-Pacific than in other regions. - During large crises: - AEs and EMs in Asia-Pacific pursued more countercyclical fiscal policies than peers in other regions. - During the pandemic, increased countercyclicality in AEs in Asia-Pacific was achieved by pursuing more discretionary measures but having lower automatic stabilizers relative to peers. - In EMs, Asia-Pacific relied more on discretionary measures for countercyclicality while automatic stabilizers were smaller than peers. - LICs in Asia-Pacific pursued less countercyclical responses to both crises, mainly driven by less countercyclical or procyclical discretionary measures—contrasting with peers in other regions. - PICs relied significantly on automatic stabilizers; discretionary measures became countercyclical during the pandemic. ### Sensitivity: Inclusion of Oil Exporters - Including oil exporters adds noise because fiscal balances and growth can be heavily affected by oil prices; estimates based on overall balance and overall GDP growth may be contaminated. - With oil exporters included: - EMs in Asia-Pacific would have procyclical fiscal policies after the global financial crisis. - LICs would have neutral discretionary measures after the global financial crisis but overall procyclical policies before the global financial crisis. - Differences in estimated countercyclicality are mainly driven by outlier estimates of oil exporters. *IMF Departmental Papers — Upgrading Fiscal Frameworks in Asia-Pacific, Annex 1.* ### Annex Figure 1.7. Fiscal Countercyclicality: ### Annex Figure 1.7. Fiscal Countercyclicality: Asia-Pacific, Pre– and Post–Global Financial Crisis, Including Oil Exporters (Percent of GDP) ### Fiscal countercyclicality (figure note) - Axis ticks recorded in source figure: −0.6, 0.8, −0.4, −0.2, 0, 0.2, 0.4, 0.6. - Legend and coding in figure: - Blue and light blue bars: estimated fiscal countercyclicality coefficient for the discretionary measures and the automatic stabilizers on post–global financial crisis sample, respectively. - Orange diamonds: estimated fiscal countercyclicality coefficient for the overall budget balance on pre–global financial crisis samples. - Country group abbreviations: AE = advanced economies; EM = emerging markets; LIC = low-income countries; PIC = Pacific island countries. - Source attribution in figure: Authors’ calculations. ### Key takeaway from the Annex Figure - The figure presents estimated fiscal countercyclicality coefficients (percent of GDP) separated by discretionary measures, automatic stabilizers (post–GFC), and overall budget balance (pre–GFC), across Asia-Pacific country groups including oil exporters. --- ### Fiscal Rules in Asia-Pacific ### Definition and scope - Fiscal rules defined as numerical limits on budgetary aggregates, binding for at least three years and revised on a low-frequency basis; MTFFs or expenditure ceilings that can be changed annually are not considered fiscal rules. - Rules must cover aggregates that capture a large share of public finances and at minimum central government level; subnational or subaggregate rules excluded. - Focus is on de jure arrangements. ### Types and prevalence (exact counts) - Total countries in survey: 37. - Countries with at least one fiscal rule: 23 out of 37. - Budget balance rules adopted in: 16 countries. - Debt rules adopted in: 17 countries. - Expenditure rules adopted in: 5 countries. - Revenue rules adopted in: 3 countries. - Combined counts in Annex Table summary: ER: 5; RR: 3; BBR: 16; DR: 17; Total: 23. ### Design and legal features - Coverage: - Fiscal rules, especially expenditure and budget balance rules, are generally limited to the central government. - Debt rules tend to have wider scope; half of the countries implement debt limits for either the general government or the wider public sector. - Legal basis categories: political commitment; coalition agreement; statutory basis; international treaty; constitution. Highest statutory basis recorded when multiple apply. - Debt and budget balance rules often rely on a statutory basis and in some cases on the constitution. - Expenditure rules, especially in Pacific island countries, often rely on political commitment. - Escape clauses: well-defined escape clauses exist in only 8 countries. - Stabilization features: only Mongolia’s budget balance rule refers to a structural deficit that takes into account fluctuations in mineral prices. - Investment exclusions: 5 countries have specific exclusions for public investment from their fiscal rules. ### Enforcement and monitoring (exact counts) - Formal enforcement procedures present for fiscal rules in: 5 countries (regionwide count reported). - Monitoring mechanism outside the government present in: 6 countries (regionwide count reported). --- ### Medium-Term Fiscal Frameworks (MTFFs) ### Definition - MTFFs defined as reporting of multiyear projections of key fiscal aggregates (expenditures, revenues, budget balances), and can include standing requirements to commit to, report against, and be held accountable for medium-term aggregate fiscal objectives. ### Prevalence and coverage (exact counts) - Countries with MTFFs: 22 out of 37. - Coverage of MTFFs: - MTFFs covering the central government: 17 countries. - MTFFs covering the general government: 5 countries. - No country extends MTFF remit to the wider public sector (for example, SOEs). ### Projection horizons (exact counts and values) - Projection horizon of three years: 11 countries. - Projection horizon of five years: 7 countries. - Long projection horizons: Australia (12 years) and Japan (10 years). ### Role in budget formulation (exact counts and examples) - MTFFs provide a binding ceiling for fiscal aggregates in the budget in: 3 countries (Malaysia, Mongolia, Thailand). - Malaysia: MTFF provides a ceiling for debt and the fiscal balance. - Mongolia: MTFF binds expenditure, budget balance, and debt. - Thailand: MTFF places a ceiling on debt. - Weak link between MTFF and annual budget process: Bangladesh, Sri Lanka, Vanuatu. - MTFFs serve as indicative guidance in: 16 countries. ### Risk consideration and analysis (exact counts) - MTFFs including macroeconomic shocks: 13 countries. - MTFFs taking into account climate change and natural disasters: 10 countries. - MTFFs taking into account contingent liabilities: 10 countries. - MTFFs considering population aging: 5 countries (mostly advanced economies). - Quantitative assessment of risks conducted in: 8 countries. - Debt sustainability analysis conducted in: 4 countries. - Long-term fiscal sustainability examined in: 3 countries. - Australia and New Zealand examine effects of risks on the government’s balance sheet. ### Monitoring and ex post analysis (exact counts and performance) - Countries with no ex post analysis of adherence to MTFFs: 16 (over two-thirds of MTFF adopters). - Entities outside the administrative government evaluating MTFF outcomes: Korea and Mongolia. - Governments held accountable for execution of MTFF: Australia, Palau, Samoa. - Performance biases among MTFFs without monitoring: - Consistently optimistic projections: 7 countries. - Consistently pessimistic projections: 2 countries. - Among countries with some monitoring, persistent bias observed in: Mongolia (only country noted). - MTFF projections with no clear bias or generally in line with outturns: 10 countries. --- ### Fiscal Councils ### Definition - Fiscal council: permanent agency with statutory or executive mandate to assess publicly and independently the government’s fiscal policies, plans, and performance against macroeconomic objectives related to long-term sustainability, short- to medium-term stability, and other official objectives. ### Prevalence and mandates (exact counts) - Number of countries with a fiscal council in Asia-Pacific: 3. ### Country-specific descriptions (exact features) - Australia: - Institution: Parliamentary Budget Office. - Legal and operational autonomy: both present. - Functions: ex ante analyses of long-term sustainability issues; quantification of impacts of policy measures and reforms. - Produces public reports and guaranteed timely access to relevant information. - Korea: - Institution: National Assembly Budget Office. - Legal and operational autonomy: both present. - Mandate: produce and assess macroeconomic forecasts; evaluate long-term sustainability; assess government budgetary and fiscal performance; quantify effects of measures and reforms; provide recommendations. - Forecasts are incorporated into the budget process; publishes reports and guaranteed timely access to pertinent information. - Mongolia: - Institution: Fiscal Stability Council. - Coverage: general government. - Mandate: produce and assess macroeconomic forecasts; quantify effects of proposed measures and reforms; monitor compliance with fiscal rules; provide recommendations. - Council’s opinions and recommendations on the draft budget are distributed to Parliament members ahead of discussion; prepares reports and is legislatively guaranteed timely access to information. --- ### Annex Figures and Tables Referenced (contents summarized) - Annex Figure 2.1 (Fiscal Frameworks in Asia-Pacific Countries): shows percent of countries with fiscal rules, MTFF, fiscal council across country groupings. - Annex Figure 2.2 (Type of Fiscal Rule in Place): regional comparisons showing prevalence of expenditure, revenue, budget balance, and debt rules. - Annex Figure 2.3 (Countries in Asia with an MTFF): chronology of MTFF adoption (noting New Zealand adoption in 1994; Malaysia, Papua New Guinea, Philippines introduced MTFFs in 2022–23). - Annex Figure 2.4 (Key Features of Fiscal Rules in Asia and Pacific, 2022): breakdown by monitoring by agency outside government; formal enforcement procedure; coverage; legal basis; escape clause; supporting procedures/institutions. - Annex Figure 2.5 (Key Features of MTFFs in Asia and Pacific, 2022): coverage, legal basis, role in annual budget formulation, risk consideration, approach of risk analysis, monitoring/ex post analysis (percent and number counts summarized above). - Annex Table 2.1 and Annex Table 2.2: country-by-country listings of fiscal rules, MTFFs, and fiscal councils and key characteristics (examples and aggregate tallies cited above). *IMF DEPARTMENTAL PAPERS • Upgrading Fiscal Frameworks in Asia-Pacific (excerpts from annex figures, tables, and text).* ### Annex Table 2.2. (continued) ### Annex Table 2.2. (continued) ### Fiscal rules and institutional features (Vietnam) - Type of Rules: Revenue; Budget Balance; Debt - Monitoring Outside Government: Ye s; Ye s; Ye s - Formal Enforcement Procedures: No; No; No - Coverage: General government; General government; General government - Legal Basis: Political commitment; Political commitment; Law - Escape Clause: No; No; No - Investment or Others Excluded from Rules: No; No; No - Sources: Survey of IMF country teams; and staff estimates. - Note: There is, however, a provision in the Fiscal Responsibility Act (Section 20) that protects public investment: “Capital expenditure must account for no less than 20 percent of the annual budget and must not be less than the fiscal year budget deficit.” ### Annex Table 2.3. Medium-term Fiscal Frameworks in Asia and Pacific ### Framework features by country (projection horizon, year of adoption, coverage, basis, role in annual budget formulation, consideration of risks, monitoring/ex post analysis) - Australia — Projection Horizon (in years): 12; Year of Adoption: 1998; Coverage: Central government; Basis: Legal; Role in Annual Budget Formulation: Indicative Ye s; Consideration of Risks: Government; Monitoring/Ex Post Analysis: (blank) - Bangladesh — Projection Horizon (in years): 3; Year of Adoption: 2006; Coverage: Central government; Basis: None legal; Role in Annual Budget Formulation: None; Consideration of Risks: None; Monitoring/Ex Post Analysis: None - Fiji — Projection Horizon (in years): 3; Year of Adoption: 2022; Coverage: Central government; Basis: Legal; Role in Annual Budget Formulation: Indicative Ye s; Consideration of Risks: None; Monitoring/Ex Post Analysis: (blank) - India — Projection Horizon (in years): 3; Year of Adoption: 2003; Coverage: Central government; Basis: Legal; Role in Annual Budget Formulation: Indicative Ye s; Consideration of Risks: None; Monitoring/Ex Post Analysis: (blank) - Indonesia — Projection Horizon (in years): 3; Year of Adoption: 2017; Coverage: General government; Basis: Legal; Role in Annual Budget Formulation: Indicative Ye s; Consideration of Risks: None; Monitoring/Ex Post Analysis: (blank) - Japan — Projection Horizon (in years): 10; Year of Adoption: 2018; Coverage: General government; Basis: None legal; Role in Annual Budget Formulation: Indicative Ye s; Consideration of Risks: None; Monitoring/Ex Post Analysis: (blank) - Korea — Projection Horizon (in years): 5; Year of Adoption: 2004; Coverage: Central government; Basis: Legal; Role in Annual Budget Formulation: Indicative Ye s; Consideration of Risks: Entity outside government; Monitoring/Ex Post Analysis: (blank) - Malaysia — Projection Horizon (in years): 3; Year of Adoption: 2023; Coverage: Central government; Basis: Legal; Role in Annual Budget Formulation: Binding Ye s; Consideration of Risks: None; Monitoring/Ex Post Analysis: (blank) - Maldives — Projection Horizon (in years): 3; Year of Adoption: 2003; Coverage: Central government; Basis: Legal; Role in Annual Budget Formulation: Indicative Ye s; Consideration of Risks: None; Monitoring/Ex Post Analysis: (blank) - Mongolia — Projection Horizon (in years): 3; Year of Adoption: 2003; Coverage: General government; Basis: Legal; Role in Annual Budget Formulation: Binding Ye s; Consideration of Risks: Entity outside government; Monitoring/Ex Post Analysis: (blank) - Myanmar — Projection Horizon (in years): 3; Year of Adoption: 2017; Coverage: Central government; Basis: Legal; Role in Annual Budget Formulation: Indicative None; Consideration of Risks: None; Monitoring/Ex Post Analysis: (blank) - Nepal — Projection Horizon (in years): 3; Year of Adoption: 2018; Coverage: General government; Basis: Legal; Role in Annual Budget Formulation: Indicative None; Consideration of Risks: None; Monitoring/Ex Post Analysis: (blank) - New Zealand — Projection Horizon (in years): 4; Year of Adoption: 1994; Coverage: Central government; Basis: Legal; Role in Annual Budget Formulation: Indicative Ye s; Consideration of Risks: Government; Monitoring/Ex Post Analysis: (blank) - Palau — Projection Horizon (in years): 5; Year of Adoption: 2021; Coverage: Central government; Basis: Legal; Role in Annual Budget Formulation: Indicative Ye s; Consideration of Risks: Government; Monitoring/Ex Post Analysis: (blank) - Papua New Guinea — Projection Horizon (in years): 5; Year of Adoption: 2022; Coverage: Central government; Basis: None legal; Role in Annual Budget Formulation: Indicative Ye s; Consideration of Risks: None; Monitoring/Ex Post Analysis: (blank) - Philippines — Projection Horizon (in years): 7; Year of Adoption: 2022; Coverage: Central government; Basis: Legal; Role in Annual Budget Formulation: Indicative Ye s; Consideration of Risks: None; Monitoring/Ex Post Analysis: (blank) - Samoa — Projection Horizon (in years): 3; Year of Adoption: 2001; Coverage: Central government; Basis: Legal; Role in Annual Budget Formulation: Indicative Ye s; Consideration of Risks: Government; Monitoring/Ex Post Analysis: (blank) - Sri Lanka — Projection Horizon (in years): 5; Year of Adoption: 2003; Coverage: Central government; Basis: Legal; Role in Annual Budget Formulation: None; Consideration of Risks: None; Monitoring/Ex Post Analysis: None - Thailand — Projection Horizon (in years): 5; Year of Adoption: 2018; Coverage: Central government; Basis: Legal; Role in Annual Budget Formulation: Binding Ye s; Consideration of Risks: None; Monitoring/Ex Post Analysis: (blank) - Tuvalu — Projection Horizon (in years): 3; Year of Adoption: 2012; Coverage: Central government; Basis: None; Role in Annual Budget Formulation: Indicative Ye s; Consideration of Risks: None; Monitoring/Ex Post Analysis: (blank) - Vanuatu — Projection Horizon (in years): 5; Year of Adoption: n.a.; Coverage: Central government; Basis: Legal; Role in Annual Budget Formulation: None; Consideration of Risks: None; Monitoring/Ex Post Analysis: None - Vietnam — Projection Horizon (in years): 5; Year of Adoption: 2016; Coverage: General government; Basis: None legal; Role in Annual Budget Formulation: Indicative None; Consideration of Risks: None; Monitoring/Ex Post Analysis: None - Sources: Survey of IMF country teams; and staff estimates. - Note: In case the role differs among fiscal aggregates (that is, expenditure, fiscal balance, or debt), the most binding role is presented. ### Annex 3. When to Adopt Exceptional Support Measures for Crisis Interventions? ### Policy Approval Framework for Crisis Interventions: A Concise Checklist - Deciding whether to intervene: - Is there a need for government intervention? - Can other macroeconomic policy levers provide the needed support? - What are the areas fiscal policy measures need to support (for example, liquidity or income support)? - What form of policy instrument is likely to be most effective in meeting these challenges? - Deciding on particular interventions: - Is this measure the most cost-effective way of providing the needed support? - Is the measure well targeted to those sectors, individuals, and firms most in need and/or where the impact will be largest? How will targeting affect the administrative burden and speed of deployment? - Is there an advantage in government exposure to the sector or entity over the medium term? - Does the government have capacity to administer and implement these measures? - How quickly can the support be provided, and what are the lags associated with its economic impact? - Are there any longer-term adverse implications of taking this action (for example, adverse incentives that distort behavior, asset allocation, and moral hazard)? How can these be managed? - Are there implications for other government levels, and have they been consulted? - Determining whether costs can be accommodated: - What are the costs of the measure? How will this impact the deficit, financing requirements, and debt? - Are there longer-term costs that are not factored into the medium-term budget framework? - What are the fiscal risks? What are the maximum costs under the worst-case scenario? - Can the costs be accommodated within fiscal rules and undermining fiscal credibility? - Should budget provisions be made for actions that may give rise to future budget costs? - How do we best communicate the fiscal impacts to maintain credibility? ### Risk mitigation - Have risks been identified as part of the proposal? - Have appropriate risk mitigation measures been adopted? What will be their impact? - Is there a clear exit strategy in place? How to best communicate to manage public expectations? ### Management - Does the entity responsible for managing the intervention have the required capacities to do it effectively? - Who will be responsible for monitoring and managing its associated risks? - Are arrangements for periodic reporting of the financial impacts and risks clear? - Should advice on implementation or design be sought from external experts? *Annex Table 2.2. (continued); Annex Table 2.3. Medium-term Fiscal Frameworks in Asia and Pacific; Annex 3. When to Adopt Exceptional Support Measures for Crisis Interventions? — Excerpts from IMF DEPARTMENTAL PAPERS • Upgrading Fiscal Frameworks in Asia-Pacific* --- _Source: https://www.imf.org/-/media/files/publications/dp/2024/english/dpea2024uffap.pdf_