## EXECUTIVE SUMMARY

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**Canonical URL:** [EXECUTIVE SUMMARY](https://www.imf.org/-/media/files/publications/fiscal-monitor/2020/april/english/ch1execsum.pdf)

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### Context and purpose
- The COVID-19 pandemic has arrived amid a preexisting sluggish global growth outlook, with low inflation and nominal interest rates.
- Fiscal policy is elevated to an unprecedented role to: save lives; protect affected people and firms from income losses, unemployment, and bankruptcies; and reduce the likelihood of a deep, long-lasting slump.

### Immediate fiscal priorities and tools
- First priority: saving lives through fully accommodating spending on testing and treatment, which requires global coordination, including support to countries with limited health capacity through grants and concessional financing and development of a universally low-cost vaccine.
- Social distancing, as a public-health response, imposes larger economic costs—lower output, lower tax revenues, and the need to protect affected people and firms.
- Large, timely, temporary, and targeted fiscal measures recommended include:
  - government-funded paid sick and family leave;
  - transfers and unemployment benefits;
  - wage subsidies;
  - deferral of tax payments;
  - liquidity support to firms to reduce bankruptcy risk.

### Fiscal impact and size of measures (exact figures)
- Revenue is projected to be 2.5 percent of global GDP lower in the baseline scenario for 2020 than what was projected in the October 2019 Fiscal Monitor.
- Direct fiscal cost of necessary health expenditure and tax/spending measures to support people and firms: $3.3 trillion globally.
- Public sector loans and equity injections: $1.8 trillion (supportive but creating fiscal risks).
- Guarantees and other contingent liabilities: $2.7 trillion (supportive but creating fiscal risks).
- Global public debt was 83 percent of GDP in 2019.

### Cross-country implications and vulnerabilities
- Fiscal balances in 2020 are expected to deteriorate in almost all countries, with sizable estimated expansions in the United States, China, and several European and other Asian economies.
- Emerging market and developing economies face multiple shocks: the pandemic, abrupt worsening in financing conditions, weak external demand, and (for commodity exporters) lower commodity prices.
- These countries will need to:
  - reprioritize expenditure toward the health sector;
  - safeguard key public services (transport, energy, communications);
  - protect social safety nets;
  - manage financing constraints even after global efforts to alleviate such constraints.

### Uncertainty, transparency, and sequencing
- The size of the impact on public finances is highly uncertain and depends on the pandemic’s duration and whether recovery is swift or protracted.
- Extraordinary public-sector support at scale—including loans, equity injections, guarantees—creates fiscal risks that make transparency crucial for risk management.
- As containment succeeds and shutdowns end:
  - broad-based, coordinated fiscal stimulus will become a more effective tool to foster recovery, depending on countries’ financing constraints;
  - exit from exceptional crisis measures will be appropriate;
  - once economies recover, achieving progress on ensuring debt sustainability will be needed.

*Source: International Monetary Fund | April 2020*

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_Source: https://www.imf.org/-/media/files/publications/fiscal-monitor/2020/april/english/ch1execsum.pdf_