## CHAPTER 1 FISCAL POLICy UNDER UNCERTAINTy ## Source details **Canonical URL:** [CHAPTER 1 FISCAL POLICy UNDER UNCERTAINTy](https://www.imf.org/-/media/files/publications/fiscal-monitor/2025/english/text.pdf) ## Other formats - [Markdown version](/-/media/files/publications/fiscal-monitor/2025/english/text.pdf.md) - [Structured JSON version](/-/media/files/publications/fiscal-monitor/2025/english/text.pdf.json) --- ### Overview and context (Preface) - Projections drawn from the same database used for the April 2025 World Economic Outlook and Global Financial Stability Report and are referred to as “IMF staff projections.” - Estimates and projections based on statistical information available through April 14, 2025. - Fiscal projections refer to the general government, unless otherwise indicated. - Short-term projections based on officially announced budgets, adjusted for differences between national authorities and IMF staff regarding macroeconomic assumptions. - Fiscal projections incorporate policy measures judged by IMF staff as likely to be implemented. - For countries supported by an IMF arrangement, projections are those under the arrangement. - Where IMF staff lack information on authorities’ budget intentions, an unchanged cyclically adjusted primary balance is assumed, unless indicated otherwise. - Details on group composition and country-specific assumptions in the Methodological and Statistical Appendix of the April 2025 Fiscal Monitor. ### Key fiscal findings and projections (Executive Summary) - Fiscal outlook and uncertainty - Escalating uncertainty and substantial policy shifts are reshaping economic and fiscal outlooks; major tariff announcements by the United States and countermeasures by other countries contribute to financial market volatility and heighten downside risks. - Disinflation has stalled in many countries; growth projections significantly downgraded (see April 2025 World Economic Outlook). - Financial turbulence poses considerable downside risks to growth (see April 2025 Global Financial Stability Report). - Debt and deficits (selected aggregates) - Based on the April 2025 WEO “reference point” forecast, global public debt projected to rise by an additional 2.8 percentage points of GDP by 2025 and approach 100 percent of GDP by the end of the decade, surpassing the pandemic peak. - More than one-third of countries expected to see debt increase in 2025 compared to 2024; collectively represent about 75 percent of global GDP (includes China, the United States, Australia, Brazil, France, Germany, Indonesia, Italy, Mexico, Russia, Saudi Arabia, South Africa, and the United Kingdom). - Risk metrics and severe scenario - Global debt-at-risk three-years ahead increased by 2 percentage points of GDP. - In a severe adverse scenario, global public debt could soar to around 117 percent of GDP by 2027, about 20 percentage points above projections for that year. ### Executive summary — Aggregate fiscal statistics (selected exact figures) - General Government Fiscal Balance, World (Overall Balance, Percent of GDP): - World: –3.5 (2019), –9.5 (2020), –6.3 (2021), –3.7 (2022), –4.9 (2023), –5.0 (2024), –5.1 (2025), –4.7 (2026), –4.5 (2027), –4.5 (2028), –4.5 (2029), –4.6 (2030). - United States: –5.8 (2019), –14.1 (2020), –11.4 (2021), –3.7 (2022), –7.2 (2023), –7.3 (2024), –6.5 (2025), –5.5 (2026), –5.4 (2027), –5.6 (2028), –5.5 (2029), –5.6 (2030). - China: –6.0 (2019), –9.6 (2020), –5.9 (2021), –7.3 (2022), –6.7 (2023), –7.3 (2024), –8.6 (2025), –8.5 (2026), –8.1 (2027), –8.1 (2028), –8.0 (2029), –8.1 (2030). - India: –7.7 (2019), –12.9 (2020), –9.4 (2021), –9.0 (2022), –7.9 (2023), –7.4 (2024), –6.9 (2025), –7.2 (2026), –7.1 (2027), –7.0 (2028), –6.8 (2029), –6.7 (2030). - Low‑Income Developing Countries (aggregate): –4.1 (2019), –5.4 (2020), –4.6 (2021), –4.5 (2022), –3.9 (2023), –3.4 (2024), –3.5 (2025), –3.3 (2026), –3.1 (2027), –3.1 (2028), –3.2 (2029), –3.2 (2030). - General Government Gross Debt (Percent of GDP): - World: 83.8 (2019), 98.9 (2020), 94.0 (2021), 89.9 (2022), 91.3 (2023), 92.3 (2024), 95.1 (2025), 96.7 (2026), 97.5 (2027), 98.2 (2028), 98.9 (2029), 99.6 (2030). - Advanced Economies: 103.6 (2019), 122.0 (2020), 115.5 (2021), 109.3 (2022), 108.2 (2023), 108.5 (2024), 110.1 (2025), 110.9 (2026), 111.5 (2027), 112.0 (2028), 112.6 (2029), 113.3 (2030). - United States: 108.2 (2019), 132.0 (2020), 124.7 (2021), 118.8 (2022), 119.0 (2023), 120.8 (2024), 122.5 (2025), 123.7 (2026), 124.9 (2027), 125.9 (2028), 127.0 (2029), 128.2 (2030). - China: 59.4 (2019), 69.0 (2020), 70.1 (2021), 75.5 (2022), 82.0 (2023), 88.3 (2024), 96.3 (2025), 102.3 (2026), 105.9 (2027), 109.2 (2028), 112.6 (2029), 116.0 (2030). - Low‑Income Developing Countries (aggregate, gross debt): 43.1 (2019), 50.1 (2020), 49.4 (2021), 50.2 (2022), 53.7 (2023), 52.7 (2024), 52.0 (2025), 50.3 (2026), 48.9 (2027), 47.7 (2028), 46.4 (2029), 45.4 (2030). - General Government Net Debt (selected): - World (net debt): 67.0 (2019), 78.2 (2020), 75.7 (2021), 72.0 (2022), 72.0 (2023), 73.1 (2024), 75.0 (2025), 76.1 (2026), 76.8 (2027), 77.4 (2028), 78.0 (2029), 78.7 (2030). - Advanced Economies (net debt): 73.3 (2019), 84.8 (2020), 82.0 (2021), 78.6 (2022), 78.6 (2023), 79.6 (2024), 81.2 (2025), 82.2 (2026), 82.9 (2027), 83.7 (2028), 84.6 (2029), 85.6 (2030). ### Channels amplifying fiscal pressures (Executive Summary highlights) - Elevated geoeconomic uncertainties may increase public debt by pushing up spending, particularly defense in Europe. - Tighter and more volatile financial conditions in the United States may spill over into emerging market and developing economies, increasing financing costs and lowering commodity prices. - Higher-than-expected interest rates could crowd out essential spending, including social benefits and public investment. - Shortfalls in foreign aid further aggravate financing risks in low-income developing countries. - Higher and persistent fiscal deficits in the United States, weaker-than-expected domestic demand in China, prolonged uncertainty, and stagnant productivity growth would further exacerbate fiscal risks. ### Policy conclusions and recommendations (Foreword and Executive Summary) - Stability and credibility - Fiscal policy should be part of overall stability-oriented macroeconomic policies and conducted within sound frameworks and institutions that anchor confidence and expectations. - Building political support and public trust is vital to advance fiscal and structural reforms. - Debt reduction and buffers - Fiscal policy should, in most countries, aim at reducing public debt and building buffers to create space to respond to spending pressures and other economic shocks. - If policy space allows, fiscal consolidation should be measured and gradual and designed to protect workers, communities, and businesses. - Country-specific priorities and sequencing - In emerging market and developing economies, where tax revenues are low, improving the tax system is key. - When under market pressure, governments may be forced into abrupt and front-loaded adjustments that, in extreme cases, may require timely and orderly debt restructuring. - Growth and structural policies - Fiscal policy, together with structural reforms, should aim at improving potential growth to ease policy trade-offs. - Role of fiscal authorities - In times of high uncertainty, fiscal policy must be an anchor for confidence and stability; ministers of finance must build trust, tax fairly, spend wisely, and take the long view. ### Advanced economies — recent developments and country highlights - United States (selected exact figures and projections) - 2024 overall fiscal deficit: 7.3 percent of GDP. - Primary fiscal deficit declined from 3.9 to 3.6 percent of GDP relative to 2019. - Interest expense increased by 1.4 percentage points of GDP compared to 2019. - Nominal yields on 10-year Treasury bonds: about 4.75 percent at the start of 2025, 4.2 percent at the end of March 2025, 4.5 percent by April 11, 2025. - Overall fiscal deficit projected to decrease to 6.5 percent of GDP in 2025; medium-term deficit projected to drop to 5.6 percent of GDP without significant policy changes. - Net interest expenses projected to remain historically high at about 3.8 percent of GDP. - Debt-to-GDP ratio could rise by about 1 percentage point annually, reaching 127.6 percent by 2030. - New analysis: an increase of 10 percentage points of GDP in US public debt between 2024 and 2029 could lead to a 60-basis-point rise in the 5-year forward to 10-year rate. - China (selected exact figures and projections) - 2024 fiscal deficit: 7.3 percent of GDP (increase of 0.6 percentage point). - General government revenues fell by 0.4 percent of GDP; tax revenues declined by 3.4 percent (year over year). - Land sales dropped by 22.4 percent (year over year); nontax revenues increased by 25.4 percent (year over year). - Plan to swap 10 trillion yuan of off-budget debt with official debt from 2024 to 2028. - 2025 projected deficit: 8.6 percent of GDP. - Projected public debt by 2030: 116 percent of GDP. - Advanced economies (ex US) and heterogeneity - Average primary deficit remained unchanged at 1.6 percent of GDP in 2024; overall deficit increased by 0.1 percent of GDP from 2023. - Fossil fuel subsidies in Finland in 2024: 0.5 percent of GDP. - Weighted average public debt projected to surpass 100 percent of GDP by 2030. - Projected five-year changes: +10 percentage points of GDP in Belgium, France, and the Slovak Republic; −15 percentage points of GDP in Cyprus, Greece, and Portugal. - Defense budget increases in the European Union averaged 0.2 percentage point of GDP between 2020 and 2023, with increases exceeding 1 percent of GDP in some cases (notably Poland). ### Emerging markets, low-income developing countries, and market dynamics - Emerging markets (ex China) - Average primary deficit stable at 1.3 percent of GDP in 2024; overall deficit increased to 4.3 percent of GDP in 2024. - Projected primary deficit in 2025: 1.2 percent of GDP (decline of 0.1 percentage point). - Medium-term projected primary deficit by 2030: 0.2 percent of GDP. - Under current policies, public debt projected to rise to 60 percent of GDP by 2030. - Notable projected public debt increases by 2030: Romania +18 percentage points of GDP; Gabon +25 percentage points of GDP. - Low‑Income Developing Countries (LIDCs) - Improvement in primary deficit in 2024 (specific numeric change not provided in excerpt). - About two-thirds of LIDCs expected to consolidate their debt in 2025; reductions exceeding 15 percentage points in Zambia and Zimbabwe. - Risks include lower aid, lower interest-growth differentials, and foreign-currency exposures on debt. ### Chapter 1 — Debt-at-risk, geoeconomic uncertainty, and spillovers (selected analytical findings) - Debt-at-risk framework (information up to December 2024) - Global debt-at-risk three years ahead estimated at about 117 percent of GDP for 2027, about 2 percentage points of GDP higher than in the October 2024 Fiscal Monitor. - Distributional markers (Figure 1.14, panel 1): Median = 97.5; 95th percentile = 116.6; upside risks estimated at 20 percentage points; downside risks estimated at 15 percentage points. - Increase in debt-at-risk primarily driven by higher projected debt levels for 2027 and persistently elevated primary deficits in 2024. - Geoeconomic uncertainty — quantified medium-term effects of a one-standard-deviation increase in the Geopolitical Fragmentation Index: - Persistent increase in public spending of 0.9 percentage point of GDP in the medium term. - Initial decline in revenues of 0.1 percentage point of GDP. - Persistent reduction of 2.3 percent in GDP in the medium term. - Temporary 0.2 percentage point increase in long-term interest rates. - Associated increase in public debt: about 4 percentage points of GDP in advanced economies and 6 percentage points of GDP in emerging market and developing economies. - US financial volatility and spillovers - Common factors account for more than 50 percent of fluctuations in foreign-currency-denominated sovereign bond yields for emerging market and developing economies and more than 30 percent in local-currency-denominated yields. - A two-standard-deviation increase in US financial volatility associated with a rise in emerging market bond yield volatility of approximately 30 percent after four months. - A two-standard-deviation increase in US financial volatility could lead to an approximate 8 percent decline in commodity prices and a 20 percent increase in commodity price volatility. - A 100-basis-point increase in the 10-year US nominal interest rate could trigger increases in long-term nominal interest rates peaking at 90 basis points in advanced economies and 100 basis points in emerging markets. ### Risks from higher-than-expected interest rates and policy shifts - Effective yields on government debt expected to stabilize at elevated levels. - Increased financial market volatility and larger-than-anticipated fiscal deficits heighten risks of rising interest rates and expenses. - Recent policy shifts (April 2025 tariffs and subsequent partial pause) amplify geoeconomic uncertainty and financial turbulence risks. - Model-based forecasts indicate ratcheting trade wars between China and the United States projected to lower growth outcomes for both countries, increasing global deficits and debt. ### Fiscal adjustments, crowding-out, and debt-stabilizing needs - Empirical evidence: a 1 percentage point of potential GDP increase in interest expenditures typically results in: - permanent reduction of about 0.6 percentage point of potential GDP in non-interest expenditures in the medium term; - social benefits decline by an average of 0.5 percent of potential GDP; - public investments fall by an average of 0.1 percentage point of potential GDP. - Primary deficit that economies could sustain while stabilizing debt decreased by 0.6 percentage point of GDP on average (from 2.9 percentage points in 2023 to 2.3 percentage points in 2024). - Share of economies with primary deficit above debt-stabilizing level in 2024: - Advanced economies: 57 percent (2024) vs 22 percent (2023). - Emerging market economies: 51 percent (2024) vs 33 percent (2023). - Low-income developing countries: 36 percent (2024) vs 39 percent (2023). - Average adjustments required to stabilize debt for economies with PD > DSPD in 2030: - Advanced economies excluding the United States: 1.8 percentage points of GDP. - Emerging markets excluding China: 1 percentage point of GDP. - Low-income developing countries: 0.4 percentage point of GDP. - Effects of a 1 percent of GDP fiscal adjustment: - reduces the three-year-ahead debt-at-risk by about 0.3 percentage point of GDP in the short term; - reduces the three-year-ahead debt-at-risk by about 1.2 percentage points of GDP in the medium term. ### Chapter 2 — Public sentiment, energy subsidies, and pension reforms (key findings) - Databases and coverage - Energy Subsidy Reform Measures database: covers more than 170 countries from 1990 to 2023; supplemented with granular retail fuel price data and information from more than 1.4 million news articles. - Global Pension Reform database: spans 134 countries from 1960 to 2024; uses insights from 600,000 news articles. - Stylized facts on measures - Energy subsidy measures: countries implement an average of 0.6 measures per year. - Fuel price measures: median price changes about 5 percent; combined measures within 12 months yield median increase of 23 percent; about 17 percent of energy subsidy measures are reversed, usually within eight months. - Pension measures: about 50 percent of countries implement pension measures annually; pension age measures represent about 1 out of 10 pension measures in advanced economies; pension age increases typically implemented gradually, taking an average of 10 years to increase retirement ages by 3.7 years. - About 15 percent of pension age measures are fully or partially reversed. - Political economy and sentiment - Public sentiment from households, unions, CSOs, private sector, and opposition groups crucial for reform success. - Sentiment measured on a scale from −5 (most opposed) to +5 (most supportive) using print media direct quotes. - For energy reforms, sentiment ranks second to fuel price growth as predictor; for pension age measures, sentiment is the primary predictor during announcement and legislation stages. - Causal effects (instrumenting domestic sentiment with trading partners’ sentiment): - A two-standard-deviation increase in sentiment raises the probability of an announcement by 30 percent and the probability of implementation by 10 percent. - Improved sentiment increases probability of multiple measures by 13 percent. - Fuel price changes are, on average, 37 percent larger following significant improvements in sentiment. - Drivers of sentiment and reform design implications - Gradual reforms and implementation during periods of stronger growth reduce negative sentiment. - Compensatory transfers (example: about 10 percent cash/in-kind transfer in preceding year) mitigate negative sentiment. - Transparency, trust, and stronger fiscal institutions improve sentiment recovery. - Targeted compensatory measures and clear reinvestment plans enhance acceptability; targeted transfers are cost-effective but require administrative capacity. - Case studies and sequencing - Morocco: rapid initial fuel price increase helped pave the way for liberalization (2013–2015). - Colombia: scheduled gasoline adjustments over two years in 2022 strengthened trust; diesel subsidy elimination delayed. - Uruguay, Germany, Greece, Australia: examples illustrating phased pension reforms, bipartisan mechanisms, and combinations of benefit adjustments with age increases. - Policy recommendations for reform design - Timing: avoid announcements close to elections where feasible; enact reforms during stronger growth when possible. - Design: prefer gradual adjustments or clear phasing rules; link retirement ages to life expectancy where appropriate. - Accompanying measures: use targeted transfers, expand coverage or benefit adequacy for vulnerable groups, and strengthen social safety nets. - Institutional strengthening: improve transparency, fiscal councils, procurement, and governance to build trust and enable front-loaded reforms when needed. ### Methodology, data, and country-specific projection notes (Methodological and Statistical Appendix highlights) - Data cutoff for appendix: information available through April 14, 2025. - Primary data source for country-specific data and projections: April 2025 World Economic Outlook database. - Country groups: 41 advanced economies, 96 emerging market and middle-income economies, and 58 low-income developing countries. - Fiscal year vs calendar year reporting conventions listed for specific economies. - Projection conventions: - Short-term projections based on officially announced budgets adjusted for IMF staff macro assumptions. - Medium-term projections incorporate measures judged likely to be implemented; unchanged structural primary balance assumed where staff lack information. - Composite data construction: weighted averages by annual nominal GDP in US dollars at average market exchange rates. - Definitions: “public debt” used as synonymous with gross debt of the general government unless specified otherwise; “overall fiscal balance” refers to net lending and borrowing under GFSM 2001 unless noted. _International Monetary Fund | April 2025 — excerpts from the Fiscal Monitor: Fiscal Policy Under Uncertainty (text as provided)._ ### Preface viii ### Preface viii ### Overview and context - Projections included in this issue of the Fiscal Monitor are drawn from the same database used for the April 2025 World Economic Outlook and Global Financial Stability Report and are referred to as “IMF staff projections.” - The estimates and projections are based on statistical information available through April 14, 2025. - Fiscal projections refer to the general government, unless otherwise indicated. - Short-term projections are based on officially announced budgets, adjusted for differences between the national authorities and the IMF staff regarding macroeconomic assumptions. - The fiscal projections incorporate policy measures that are judged by the IMF staff as likely to be implemented. - For countries supported by an IMF arrangement, the projections are those under the arrangement. - In cases in which the IMF staff has insufficient information to assess the authorities’ budget intentions and prospects for policy implementation, an unchanged cyclically adjusted primary balance is assumed, unless indicated otherwise. - Details on group composition and country-specific assumptions can be found in the Methodological and Statistical Appendix of the April 2025 Fiscal Monitor. ### Key fiscal findings and projections (Executive Summary) - Fiscal outlook and uncertainty - Escalating uncertainty and substantial policy shifts are reshaping economic and fiscal outlooks. - Major tariff announcements by the United States and countermeasures by other countries are contributing to financial market volatility, deteriorating prospects, and heightening downside risks. - Disinflation has stalled in many countries, and growth projections have been significantly downgraded (see April 2025 World Economic Outlook). - Financial turbulence poses considerable downside risks to growth (see April 2025 Global Financial Stability Report). - Debt and deficits - Based on the April 2025 World Economic Outlook “reference point” forecast, global public debt is projected to rise by an additional 2.8 percentage points of GDP by 2025 and approach 100 percent of GDP by the end of the decade, surpassing the pandemic peak. - More than one-third of countries are expected to see debt increase in 2025 compared to 2024. - Collectively, these economies represent about 75 percent of global GDP and include China, the United States, Australia, Brazil, France, Germany, Indonesia, Italy, Mexico, Russia, Saudi Arabia, South Africa, and the United Kingdom. - Risk metrics and downside scenarios - Global debt-at-risk three-years ahead—a metric encompassing all risk determinants to the end of 2024—has increased by 2 percentage points of GDP. - In a severe adverse scenario, global public debt could soar to around 117 percent of GDP by 2027, marking levels not seen since World War II and about 20 percentage points above projections for that year. - Channels amplifying fiscal pressures - Elevated geoeconomic uncertainties may increase public debt by pushing up spending, particularly in defense, especially in Europe. - Tighter and more volatile financial conditions in the United States may spill over into emerging market and developing economies, increasing financing costs and lowering commodity prices. - Higher-than-expected interest rates could crowd out essential spending, including social benefits and public investment. - Shortfalls in foreign aid further aggravate financing risks in low-income developing countries. - Higher and persistent fiscal deficits in the United States, weaker-than-expected domestic demand in China, prolonged uncertainty, and stagnant productivity growth would further exacerbate fiscal risks. ### Policy conclusions and recommendations (Foreword and Executive Summary) - Stability and credibility - Fiscal policy should be part of overall stability-oriented macroeconomic policies and conducted within sound frameworks and institutions that anchor confidence and expectations. - Building political support and public trust is vital to advance fiscal and structural reforms. - Debt reduction and buffers - Fiscal policy should, in most countries, aim at reducing public debt and building buffers to create space to respond to spending pressures and other economic shocks. - If policy space allows, fiscal consolidation should be measured and gradual. - Consolidation should be designed carefully to allow countries to protect workers, communities, and businesses. - Country-specific priorities and sequencing - In emerging market and developing economies, where tax revenues are low, improving the tax system is key. - When under market pressure, governments may be forced into abrupt and front-loaded adjustments that, in extreme cases, may require timely and orderly debt restructuring. - Country-specific factors and circumstances are crucial in choosing the appropriate fiscal strategy. - Growth and structural policies - Fiscal policy, together with other structural policies, should aim at improving potential growth to ease policy trade-offs. - Improving growth reduces the binding nature of the policy trilemma among financial stability and public debt sustainability, spending pressures, and political red lines on taxation. - Role of fiscal authorities - In times of high uncertainty, fiscal policy must be an anchor for confidence and stability that contributes to a competitive economy delivering growth and prosperity for all. - Ministers of finance must build trust, tax fairly, spend wisely, and take the long view. ### Institutional and editorial information (Preface) - The Fiscal Monitor is prepared by the IMF Fiscal Affairs Department under the general guidance of Vitor Gaspar, Director of the Department. - Project direction: Era Dabla-Norris, Deputy Director, and Davide Furceri, Division Chief. - Main authors of Chapter 1: Marcos Poplawski-Ribeiro (team lead), Clara Arroyo, Mathieu Bellon, Yongquan Cao, Hamid Davoodi, Carlos Eduardo Gonçalves, Gabriel Hegab, Salma Khalid, Faizaan Kisat, Emanuelle Massetti, Jeta Menkulasi, Danielle Minnett, Anh Dinh Minh Nguyen, Manabu Nose, Nicola Pierri, Ervin Prifti, Galen Sher, and Alexandra Solovyeva; with contributions from Francesco Frangiamore, Domenico Giannone, Victoria Haver, Arika Kayastha, Hongchi Li, Xueqi Li, and Pietro Pizzuto. - Authors of Chapter 2: Davide Furceri (co-lead) and Mauricio Soto (co-lead), Diala Al Masri, Hussein Bidawi, Christoph Freudenberg, Radhika Goyal, Mengfei Gu, Emine Hanedar, Samir Jahan, Julieth Pico Mejía, Ana Sofia Pessoa, Delphine Prady, and Alexandre Sollaci; with contributions from Miyoko Asai, Nusrat Chowdhury, Kardelen Cicek, Yomna Gaafar, Victoria Haver, Huy Nguyen, Sultan Orazbayev, Vishal Parmar, Ervin Prifti, Irene Rausell, Jiemin Ren, Arash Sheikholeslam, Zobaed Sm, and Nate Vernon. - The Methodological and Statistical Appendix was prepared by Xueqi Li. - Editorial and production led by Axana Abreu Panfilova from the Communications Department, with support from David Einhorn, Linda Long, Nancy Morrison, Devlan O’Connor, James Unwin, and MPS Limited. *International Monetary Fund | April 2025 — Preface (text - Preface viii) — projections and editorial information as provided in the source content.* ### exeCutIve suMMAry ### exeCutIve suMMAry ### Fiscal Outlook and Risks - Elevated uncertainty and significant policy shifts—major tariff announcements by the United States, countermeasures by other countries, and exceptionally high policy uncertainty—are contributing to worsening prospects and heightened risks. - Progress with disinflation appears to have stalled in many countries; growth prospects have been significantly downgraded (see April 2025 World Economic Outlook). - The global fiscal situation deteriorated in 2024: - The global fiscal deficit increased by 0.1 percentage point, reaching an average of 5.0 percent of GDP. - Public debt rose by 1 percentage point to 92.3 percent of GDP. - Based on the April 2025 World Economic Outlook “reference point” forecast (information available as of April 4, 2025): - Global public debt is projected to rise by an additional 2.8 percentage points of GDP in 2025. - Global public debt is projected to approach 100 percent of GDP in 2030 and surpass the pandemic peak. - Compounding challenges include: - Ongoing legacies of high subsidies and social benefits and other current spending from the COVID-19 pandemic. - Rising net interest expenses. - Higher defense spending—particularly in Europe—and a challenging foreign aid landscape. - Financial turbulence: rising yields in key economies and widening spreads in emerging markets. - Debt distress: - 53 percent of low-income developing countries and 23 percent of emerging markets were at high risk of debt distress or in debt distress. ### Aggregate Fiscal and Debt Statistics (selected highlights from Tables 1.1 and 1.2) - General Government Fiscal Balance, World (Overall Balance, Percent of GDP): - World: –3.5 (2019), –9.5 (2020), –6.3 (2021), –3.7 (2022), –4.9 (2023), –5.0 (2024), –5.1 (2025), –4.7 (2026), –4.5 (2027), –4.5 (2028), –4.5 (2029), –4.6 (2030). - Advanced Economies: –3.0 (2019), –10.3 (2020), –7.2 (2021), –2.9 (2022), –4.6 (2023), –4.7 (2024), –4.3 (2025), –3.9 (2026), –3.8 (2027), –3.9 (2028), –3.9 (2029), –4.0 (2030). - Advanced Economies excl. US: –1.0 (2019), –7.6 (2020), –4.3 (2021), –2.3 (2022), –2.5 (2023), –2.6 (2024), –2.5 (2025), –2.5 (2026), –2.4 (2027), –2.5 (2028), –2.6 (2029), –2.6 (2030). - United States: –5.8 (2019), –14.1 (2020), –11.4 (2021), –3.7 (2022), –7.2 (2023), –7.3 (2024), –6.5 (2025), –5.5 (2026), –5.4 (2027), –5.6 (2028), –5.5 (2029), –5.6 (2030). - China: –6.0 (2019), –9.6 (2020), –5.9 (2021), –7.3 (2022), –6.7 (2023), –7.3 (2024), –8.6 (2025), –8.5 (2026), –8.1 (2027), –8.1 (2028), –8.0 (2029), –8.1 (2030). - India: –7.7 (2019), –12.9 (2020), –9.4 (2021), –9.0 (2022), –7.9 (2023), –7.4 (2024), –6.9 (2025), –7.2 (2026), –7.1 (2027), –7.0 (2028), –6.8 (2029), –6.7 (2030). - Low‑Income Developing Countries (aggregate): –4.1 (2019), –5.4 (2020), –4.6 (2021), –4.5 (2022), –3.9 (2023), –3.4 (2024), –3.5 (2025), –3.3 (2026), –3.1 (2027), –3.1 (2028), –3.2 (2029), –3.2 (2030). - General Government Gross Debt (Percent of GDP): - World: 83.8 (2019), 98.9 (2020), 94.0 (2021), 89.9 (2022), 91.3 (2023), 92.3 (2024), 95.1 (2025), 96.7 (2026), 97.5 (2027), 98.2 (2028), 98.9 (2029), 99.6 (2030). - Advanced Economies: 103.6 (2019), 122.0 (2020), 115.5 (2021), 109.3 (2022), 108.2 (2023), 108.5 (2024), 110.1 (2025), 110.9 (2026), 111.5 (2027), 112.0 (2028), 112.6 (2029), 113.3 (2030). - Japan: 236.4 (2019), 258.4 (2020), 253.7 (2021), 248.3 (2022), 240.0 (2023), 236.7 (2024), 234.9 (2025), 233.7 (2026), 232.1 (2027), 231.2 (2028), 231.1 (2029), 231.7 (2030). - United States: 108.2 (2019), 132.0 (2020), 124.7 (2021), 118.8 (2022), 119.0 (2023), 120.8 (2024), 122.5 (2025), 123.7 (2026), 124.9 (2027), 125.9 (2028), 127.0 (2029), 128.2 (2030). - China: 59.4 (2019), 69.0 (2020), 70.1 (2021), 75.5 (2022), 82.0 (2023), 88.3 (2024), 96.3 (2025), 102.3 (2026), 105.9 (2027), 109.2 (2028), 112.6 (2029), 116.0 (2030). - Low‑Income Developing Countries (aggregate, gross debt): 43.1 (2019), 50.1 (2020), 49.4 (2021), 50.2 (2022), 53.7 (2023), 52.7 (2024), 52.0 (2025), 50.3 (2026), 48.9 (2027), 47.7 (2028), 46.4 (2029), 45.4 (2030). - General Government Net Debt (selected entries, Percent of GDP): - World (net debt): 67.0 (2019), 78.2 (2020), 75.7 (2021), 72.0 (2022), 72.0 (2023), 73.1 (2024), 75.0 (2025), 76.1 (2026), 76.8 (2027), 77.4 (2028), 78.0 (2029), 78.7 (2030). - Advanced Economies (net debt): 73.3 (2019), 84.8 (2020), 82.0 (2021), 78.6 (2022), 78.6 (2023), 79.6 (2024), 81.2 (2025), 82.2 (2026), 82.9 (2027), 83.7 (2028), 84.6 (2029), 85.6 (2030). ### Fiscal Policy Priorities and Recommendations - Countries should first and foremost put their own fiscal house in order: - A gradual fiscal adjustment within a credible medium-term framework is crucial for most countries to reduce debt, build fiscal buffers against uncertainties, accommodate priority spending, and improve long-term growth prospects. - Advanced economies with fiscal room should: - Utilize space within well-defined medium-term fiscal frameworks to address significant spending pressures and public investment needs (for example, Germany). - Reprioritize expenditures, advance pension and health care reforms, eliminate inefficient tax incentives, and broaden the tax base—particularly given aging populations. - United States: - Substantial fiscal adjustments are necessary to put public debt on a decisively downward path, requiring building social consensus to address ongoing fiscal imbalances. - China: - On-budget fiscal expansion should help support the economy and lower the current account surplus. Given higher tariffs and unusually high uncertainty, some additional fiscal support is warranted. - Low‑income developing countries: - Should stay the course on planned fiscal adjustment in light of financing challenges. - For those in debt distress, timely restructuring and coordinated efforts to provide concessional financing are essential. - Emerging market and developing economies: - Rationalizing spending and increasing revenues through tax reform, broadening tax bases, and enhancing revenue administration remain critical priorities. ### Public Financial Management, Frameworks, and Transparency - Medium-term frameworks and modern public financial management systems should: - Anchor adjustment paths effectively and reduce fiscal policy uncertainty. - Ensure transparency for new spending needs, particularly defense, while maintaining the integrity of fiscal rules. - Any permanent increase in fiscal outlays for investment and defense must be accompanied by: - Enhanced spending efficiency. - Strengthened procurement systems. - Improved multiyear fiscal planning and macroeconomic forecasting to ensure realistic assessments of their impacts on economic growth and fiscal positions. - Credible and detailed financing plans that clarify how increased outlays will be funded. ### Crisis Preparedness and Role of Fiscal Policy during Financial Instability - The recent volatility in financial markets underscores the need for preparedness against severe economic disruptions. - During times of financial instability, fiscal policy can support central banks through: - Direct lending, guarantees, and equity injections to help mitigate deleveraging and restore confidence. - Governments should provide timely, temporary, and targeted support to businesses and communities affected by significant trade dislocations, ensuring transparency and careful cost management. - If trade disruptions become permanent, fiscal policy should facilitate transitions by supporting: - Active labor market policies and skills retraining. ### Structural Reforms and Social Acceptability - Advancing fiscal and structural reforms is essential for reigniting medium-term economic growth and mitigating growth-debt sustainability trade-offs. - Well-designed tax and spending reforms can boost employment and investment; improving the efficiency of spending—especially on health, education, and infrastructure—can increase productive capacity. - Chapter 2 main findings on reform acceptability (energy subsidies and pensions): - Sentiment from major stakeholders—including households, unions, civil society organizations, private sector entities, and opposition groups—plays a crucial role in advancing reforms. - Reform design, timing, and accompanying measures—particularly those alleviating impacts on affected groups—are critical for bolstering public support. - Reforms are often considered in challenging macroeconomic environments, where larger, front-loaded measures may be necessary to stabilize the economy and gain public backing. - Enhanced governance, trust, accompanying social transfers, effective communication strategies, ownership, and political commitment are essential for building consensus and enhancing the credibility of reforms. *International Monetary Fund | April 2025 — exeCutIve suMMAry* ### 1. Advanced Economies ### 1. Advanced Economies ### Recent fiscal developments and outlook - Global public debt increased in recent years, with contributions from large economies, notably the United States and China. - Gross financing needs are expected to remain elevated across many countries; risks of even higher debt levels have increased due to tighter and more volatile financial conditions and heightened economic uncertainty. - Fiscal outlook (April 2025 WEO “reference point”, information as of April 4, 2025) is influenced by three main factors: - Tariffs: impose negative supply shocks on importing countries (higher prices, reduced output and productivity) and negative demand shocks on exporting countries (short-term demand decline and downward price pressures). Tariffs directly affect import revenues and can yield short-term revenue increases that wane as imports and output decline. - Uncertainty: recent tariff announcements have increased uncertainty and contributed to tighter, more volatile financial conditions. - Financial conditions: tighter conditions raise borrowing costs and affect exchange rates and revenue projections. - External financing dynamics: - External debt issuance fell by 20 percent year over year in the first quarter of 2025. - Total issuance increased by 6 percent in the same period. - Sovereign spreads: - Spreads, on average, declined in many emerging market and developing economies in 2024, but widened since April following higher financial market volatility. ### The Two largest economies: United States - 2024 outcomes: - General government fiscal deficit in the United States remained elevated at 7.3 percent of GDP in 2024. - Primary fiscal deficit declined from 3.9 to 3.6 percent of GDP relative to 2019. - Interest expense increased by 1.4 percentage points of GDP compared to 2019, offsetting primary-deficit improvements. - Revenue increased by 0.4 percentage point of GDP, partly due to postponed tax deadlines for some disaster-affected taxpayers. - Primary spending as a share of GDP remained broadly unchanged. - Interest rates and yields: - On April 11, 2025, the 10-year US nominal interest rate had increased 31 basis points (relative to a recent reference). - Nominal yields on 10-year Treasury bonds surged to about 4.75 percent at the start of 2025, fell to 4.2 percent at the end of March, then climbed back to 4.5 percent by April 11, 2025. - Projections and risks: - Overall fiscal deficit projected to decrease from 7.3 percent of GDP in 2024 to 6.5 percent in 2025, contingent on higher tariff revenues with highly uncertain magnitude. - Without significant policy changes, deficit projected to drop to 5.6 percent of GDP in the medium term, driven by a 0.7 percentage point rise in revenues. - Net interest expenses projected to remain historically high at about 3.8 percent of GDP. - Debt-to-GDP ratio could rise by about 1 percentage point annually, reaching 127.6 percent by 2030. - New analysis indicates that an increase of 10 percentage points of GDP in US public debt between 2024 and 2029 could lead to a 60-basis-point rise in the 5-year forward to 10-year rate; similar results hold for the 10-year Treasury nominal yield. ### China - 2024 outcomes: - Fiscal deficit increased by 0.6 percentage point of GDP in 2024, reaching 7.3 percent of GDP. - General government revenues fell by 0.4 percent of GDP, including a 3.4 percent decline in tax revenues. - Land sales dropped by 22.4 percent year over year due to a depressed property market. - Nontax revenues increased by 25.4 percent, likely driven by state-owned enterprise contributions and increased fines and fees collection. - Budget execution was slow until September 2024; local government financial vehicles faced financing limitations and net bond issuance from these vehicles turned negative since Q4 2023 despite low spreads. - Policy response and projections: - Since September 2024, authorities announced policies including a multiyear plan to address local governments’ hidden debt. - Plan to swap 10 trillion yuan of off-budget debt with official debt from 2024 to 2028 (this will raise the official debt-to-GDP ratio while alleviating some local financing pressures). - Fiscal stance expansionary in 2025: deficit projected to increase to 8.6 percent of GDP in 2025, driven by lower nontax revenues and on-budget policies to boost consumption and strengthen social safety nets. - Public debt projected to reach 116 percent of GDP by 2030. - Outlook characterized by unusually high uncertainty due to geoeconomic tensions and trade policy uncertainty that could reduce the tax base and increase fiscal support needs. ### Advanced economies (excluding the United States) - 2024 outcomes: - Average primary deficit remained unchanged at 1.6 percent of GDP in 2024. - Overall deficit increased slightly by 0.1 percent of GDP from 2023. - Lower short-term interest rates and longer debt maturities relative to the United States helped mitigate interest expense increases. - Some countries experienced rising deficits, in part from persistent or slightly rising fossil fuel subsidies (Finland’s fossil fuel subsidies in 2024 amounted to 0.5 percent of GDP). - Bond yields and term spreads: - Long-term bond yields somewhat volatile since early 2023; term spreads (10- minus 2-year yields) have been on a rising trend since mid-2024. - Example: a spike in the German Bund term spread followed an announcement to ease government debt limits. - The April 2 tariffs initially led to a decline in long-term yields of benchmark government bonds as investors sought safe havens, but 10-year yields rose sharply within days; 2-year yields have generally decreased, reflecting expectations of policy rate cuts. - Debt projections and heterogeneity: - Planned fiscal consolidation expected to stabilize debt at about prepandemic levels in the medium term, with significant cross-country differences and high uncertainty due to trade policy uncertainty. - Weighted average of public debt projected to surpass 100 percent of GDP by 2030. - Projected changes over the next five years: - Public debt projected to rise by more than 10 percentage points of GDP in Belgium, France, and the Slovak Republic. - Public debt projected to decline by more than 15 percentage points of GDP in Cyprus, Greece, and Portugal. - Expenditure pressures that could increase debt risks include population aging and higher defense spending; defense budget increases in the European Union averaged 0.2 percentage point of GDP between 2020 and 2023, with increases exceeding 1 percent of GDP in some cases (notably Poland). ### Emerging markets (excluding China) - 2024 outcomes: - Average primary deficit remained stable in 2024 at 1.3 percent of GDP. - Overall deficit increased slightly to 4.3 percent of GDP, attributable to higher revenues in some oil-exporting countries that partially offset rising expenditures. - Fiscal outcomes varied: Argentina achieved its first primary surplus since 2008 by cutting expenditures by more than 5 percentage points of GDP; many countries with 2024 elections and large emerging markets (Indonesia, Mexico, Saudi Arabia) reported higher fiscal deficits versus 2023. - Issuance and yields: - Domestic and external issuance yields fluctuated, affecting issuance levels; some countries (Mexico, Saudi Arabia) saw similar or lower foreign-currency yields enabling higher issuance volumes, while others (Egypt) saw significant rises in external bond yields. - Projections and risks: - Emerging markets (excluding China) projected to gradually reduce primary deficits, mainly through spending cuts. - By 2025, the primary deficit expected to decline by 0.1 percentage point to 1.2 percent of GDP, driven by stricter public spending controls and reforms in countries such as India, Mexico, and Türkiye. - Medium-term outlook: primary deficit projected to decline to 0.2 percent of GDP on average by 2030. - Under current policies, public debt projected to rise to 60 percent of GDP by 2030. - Notable country-level projected increases in public debt by 2030: Romania by more than 18 percentage points of GDP; Gabon by 25 percentage points of GDP. - Improvements constrained by high debt-servicing costs, slow fiscal adjustments, and risks from new sources of unidentified debt. ### Low-income developing countries (LIDCs) - 2024 outcomes and context: - Low-income developing countries experienced an improvement in their primary deficit in 2024 (specific numeric change not provided in the excerpt). - Afghanistan and Sudan excluded from the LIDC sample analyzed in panel 3. - Financing environment: - Sovereign spreads and external financing trends: spreads declined for many emerging market and developing economies in 2024 but widened since April 2025. - External issuance dropped by 20 percent year over year in Q1 2025; total issuance rose by 6 percent in the same period. - Risks: - Lower aid and a lower interest-growth rate differential noted as concerns (explicit quantitative values not provided in the excerpt). - Vulnerabilities remain from foreign-currency exposures on debt and potential depreciation pressures, given prevalence of short foreign-currency debt positions in some economies. ### Key figures and projections (selected) - United States: - 2024 overall fiscal deficit: 7.3 percent of GDP. - Projected 2025 overall deficit: 6.5 percent of GDP. - Medium-term projected deficit (without major policy changes): 5.6 percent of GDP. - Primary deficit: 3.9 to 3.6 percent of GDP (decline relative to 2019). - Interest expense increase relative to 2019: 1.4 percentage points of GDP. - Net interest expenses projected: about 3.8 percent of GDP (medium term). - Projected debt-to-GDP by 2030: 127.6 percent. - 10-year Treasury nominal yields: about 4.75 percent (start of 2025), 4.2 percent (end of March 2025), 4.5 percent (April 11, 2025). - A 10 percentage point of GDP increase in public debt (2024–2029) could raise the 5y–10y forward rate by 60 basis points. - China: - 2024 fiscal deficit: 7.3 percent of GDP (increase of 0.6 percentage point). - Tax revenues decline in 2024: 3.4 percent (year over year). - Land sales decline: 22.4 percent (year over year). - Nontax revenues increase: 25.4 percent (year over year). - Swap of off-budget debt planned: 10 trillion yuan (2024–2028). - 2025 projected deficit: 8.6 percent of GDP. - Projected public debt by 2030: 116 percent of GDP. - Advanced economies (ex US): - Average primary deficit in 2024: 1.6 percent of GDP. - Overall deficit increase from 2023: 0.1 percent of GDP. - Fossil fuel subsidies in Finland in 2024: 0.5 percent of GDP. - Weighted average public debt projected to surpass 100 percent of GDP by 2030. - Emerging markets (ex China): - Average primary deficit in 2024: 1.3 percent of GDP. - Overall deficit in 2024: 4.3 percent of GDP. - Projected primary deficit in 2025: 1.2 percent of GDP (decline of 0.1 percentage point). - Projected average primary deficit by 2030: 0.2 percent of GDP. - Projected public debt by 2030: 60 percent of GDP. - Projected public debt changes by 2030: Romania +18 percentage points of GDP; Gabon +25 percentage points of GDP. - Issuance and market activity: - External debt issuance: −20 percent year over year in Q1 2025. - Total issuance: +6 percent year over year in Q1 2025. *Italic: Sources: IMF, World Economic Outlook database; and IMF staff calculations (figures, tables, and textual estimates as presented in the chapter).* ### CHAPTER 1 FISCAL POLICy UNDER UNCERTAINTy ### CHAPTER 1 FISCAL POLICy UNDER UNCERTAINTy ### Fiscal outcomes and near-term projections - Revenue-to-GDP ratios increased because of higher economic growth, partially offset by rising primary expenditures on average; notable offsets include Nigeria and Somalia. - Effective interest rates have resulted in the highest net interest outlays in two decades, averaging 23 percent of tax revenues. - The average public-debt-to-GDP ratio decreased from 53.7 percent in 2023 to 52.7 percent in 2024, although it remains close to 10 percentage points higher than before the pandemic. - Many countries face challenges accessing external financing and have seen a recent decline in foreign aid, which is projected to continue decreasing in the medium term. - Example: annual grants as a percentage of GDP in the Republic of Tanzania have fallen to less than one-sixth of the average over the previous two decades. - Average primary deficits and public debt levels are expected to improve by 2025 and remain relatively stable in the medium term. - Public debt is expected to decline to 45.2 percent of GDP in the medium term. - About two-thirds of low-income developing countries are expected to consolidate their debt in 2025, with reductions in their public-debt-to-GDP ratio notably exceeding 15 percentage points in Zambia and Zimbabwe. - High net interest expenses are estimated to remain above 2 percent of GDP (20 percent of tax revenues) for all years until 2030. ### Grants and interest-growth differential in low-income developing countries - Figure 1.13 highlights: - Grants (Percent of GDP) and Interest-Growth Rates Differential (Percentage points) across regions and LIDC average. - Note: The spike in 2024 for the Latin American regional average in panel 1 reflects a sharp increase in foreign aid for Haiti, given the debt forgiveness granted by Venezuela of $1.7 billion in exchange for a lump-sum payment of $500 million. - Panel 2 excludes Sudan from the sample. ### Debt-at-risk: global outlook and drivers - The IMF’s debt-at-risk framework (using information up to December 2024) estimates the likelihood of all potential future trajectories of public debt, quantifying impacts and uncertainties. - Global debt-at-risk three years ahead is estimated at about 117 percent of GDP for 2027, about 2 percentage points of GDP higher than projected in the October 2024 Fiscal Monitor. - Distributional markers shown in Figure 1.14, panel 1: - Median = 97.5 - 95th percentile = 116.6 - 5th percentile (as plotted) - The upside risks to the global debt outlook (difference between the 95th percentile and the median) are estimated at 20 percentage points of GDP. - The downside risks (difference between the median and the 5th percentile) are estimated at 15 percentage points. - The increase in debt-at-risk is primarily driven by higher projected debt levels for 2027 and persistently elevated primary deficits in 2024. - Panel 2 of Figure 1.14 lists contributors to the change in global debt-at-risk between 2026 and 2027, including: - Initial debt, Primary deficit, Financial conditions, Economic and political uncertainty and risks, Growth, Inflation. ### Geoeconomic uncertainty: magnitude and fiscal channels - Recent months have seen escalating geoeconomic uncertainty, fueled by sharp increases in import tariffs, heightened trade and policy uncertainty, and higher military spending (notably in European economies). - New analyses indicate a significant rise in geoeconomic uncertainty is associated with a public debt increase of about 4.5 percent of GDP in the medium term (Figure 1.15). - Quantified medium-term effects of a one-standard-deviation increase in the Geopolitical Fragmentation Index: - Persistent increase in public spending of 0.9 percentage point of GDP in the medium term. - Initial decline in revenues of 0.1 percentage point of GDP. - Persistent reduction of 2.3 percent in GDP in the medium term. - Temporary 0.2 percentage point increase in long-term interest rates. - Geoeconomic uncertainty increases both the level of debt and the uncertainty surrounding it: the 95th percentile (debt-at-risk) is estimated to be about 3 percentage points larger than the 50th percentile. - The impact is slightly more pronounced in emerging market and developing economies: - Associated increase in public debt of 4 percentage points of GDP in advanced economies. - Associated increase in public debt of 6 percentage points of GDP in emerging market and developing economies (Figure 1.16). - Mechanisms differ by country group: - Advanced economies: debt rise primarily driven by a lasting increase in public spending, estimated at about 1 percentage point of GDP in the medium term (expenditure on other forms of fiscal support and heightened military spending). - Emerging market and developing economies: debt rise primarily driven by a significant decline in revenues, particularly pronounced in the near term. ### US financial volatility and global spillovers - US financial volatility is a key driver of common factors influencing sovereign bond yields across countries. - Common factors account for: - More than 50 percent of fluctuations in foreign-currency-denominated sovereign bond yields for emerging market and developing economies. - More than 30 percent in local currency-denominated bond yields for emerging market and developing economies, on average. - New analyses indicate a substantial (two standard deviations) increase in US financial volatility is associated with a rise in emerging market bond yield volatility of approximately 30 percent after four months (Figure 1.17, panel 1). - A two-standard-deviation increase in US financial volatility could lead to: - An approximate 8 percent decline in commodity prices. - A 20 percent increase in commodity price volatility (Figure 1.17, panels 2 and 3). - A 100-basis-point increase in the 10-year US nominal interest rate could trigger increases in long-term nominal interest rates peaking at: - 90 basis points in advanced economies. - 100 basis points in emerging markets. - Effects lasting over several months (April 2024 Fiscal Monitor). - Bond yields in emerging market and developing economies are becoming increasingly sensitive to domestic banks’ exposure to public debt and the growth of local currency bond markets; a stronger sovereign-bank nexus amplifies the effect of expected fiscal policies on bond yields. ### Risks from higher-than-expected interest rates and policy shifts - Effective yields on government debt are expected to stabilize at elevated levels (Figure 1.18). - Increased financial market volatility and larger-than-anticipated fiscal deficits heighten the risks of rising interest rates and expenses. - Fiscal deficits may exceed expectations due to escalating spending pressures, including increased defense spending, initiatives to mitigate the potential impact of tariffs, and a challenging landscape for foreign aid. - Recent empirical analysis (Nose and Menkulasi 2025) suggests that a 1 percentage point of GDP increase in primary deficits in emerging markets and developing economies could lead to a persistent rise in 10-year... - Major policy shifts since early 2025 have introduced new risks: - Soaring tariffs announced by the United States on April 2, 2025, and countermeasures by other countries escalate uncertainty and could significantly amplify debt risks. - The US administration’s April 9, 2025, announcement to pause some country-specific tariffs partially mitigates some risks, but geoeconomic uncertainty and risks of financial turbulence remain elevated. - Model-based forecasts indicate that a ratcheting up of trade wars between China and the United States is projected to result in lower growth outcomes for both countries, propagating through global supply chains and increasing global deficits and debt. *International Monetary Fund | April 2025* ### 1. Effect on Emerging Market Bond Yield Volatility ### 1. Effect on Emerging Market Bond Yield Volatility ### Emerging market bond yields and volatility - Emerging market economies face the highest real financing costs in a decade and may need to refinance debt and fund fiscal spending at even higher rates. - Sudden tightening of financing conditions could trigger capital outflows, sharp exchange rate adjustments, and balance of payments crises for countries with weak buffers and high foreign currency debt (2024 External Stability Report). - Global public debt is now projected to reach nearly 100 percent of GDP by the end of the decade, with gross financing needs set to rise significantly. ### Crowding-out effects of higher interest expenses - Empirical evidence from 75 advanced and developing economies indicates that a 1 percentage point of potential GDP increase in interest expenditures typically results in: - a permanent reduction of about 0.6 percentage point of potential GDP in non-interest expenditures in the medium term. - social benefits decline by an average of 0.5 percent of potential GDP. - public investments fall by an average of 0.1 percentage point of potential GDP. - For the average economy in the sample, this translates to a potential reduction in public investment of about 4 percent from its initial level of 2.5 percent of GDP following a 1 percentage point of potential GDP increase in interest expenses. ### Fiscal adjustment needs and debt-stabilizing primary balances - The primary deficit that advanced and emerging market economies could sustain while stabilizing debt decreased by 0.6 percentage point of GDP on average (from 2.9 percentage points of GDP in 2023 to 2.3 percentage points of GDP in 2024). - Share of economies with primary deficit above the debt-stabilizing level: - Advanced economies: 57 percent in 2024 compared to 22 percent in 2023. - Emerging market economies: 51 percent in 2024 compared to 33 percent in 2023. - Low-income developing countries: 36 percent in 2024 compared to 39 percent in 2023. - By 2030, more than a quarter of the countries, surpassing two-thirds of the global economy, are projected to have primary deficits above debt-stabilizing levels. - Average adjustments required to stabilize debt for economies with PD > DSPD in 2030: - Advanced economies excluding the United States: 1.8 percentage points of GDP. - Emerging markets excluding China: 1 percentage point of GDP. - Low-income developing countries: 0.4 percentage point of GDP. - Even under optimistic scenarios (primary deficits 20 percent above past performance), 12 percent of economies (or 15 countries in the sample) would still have primary deficits above debt-stabilizing primary deficits. ### Effects of fiscal adjustments on debt and debt-at-risk - Fiscal adjustments reduce both the level of debt and uncertainty surrounding it, lowering the future debt distribution and particularly impacting the right end of the debt forecast distribution. - Estimated effects of a 1 percent of GDP fiscal adjustment: - reduces the three-year-ahead debt-at-risk by about 0.3 percentage point of GDP in the short term. - reduces the three-year-ahead debt-at-risk by about 1.2 percentage points of GDP in the medium term. - Fiscal adjustments produce improvements via the primary balance and reductions in real interest rates, which more than offset the decline in output. - Fiscal adjustments lead to a greater decline in debt-at-risk in countries with fiscal rules, enhancing credibility and amplifying interest rate reductions. ### Policy conclusions and recommendations - Fiscal outlook has deteriorated since the October 2024 Fiscal Monitor due to major tariff announcements, heightened uncertainty, financial market volatility, and diminishing foreign aid. - Fiscal policy faces a trade-off among four objectives: reducing debt, building and expanding buffers, meeting urgent spending needs, and enhancing growth prospects. - Recommended approaches: - Implement gradual fiscal adjustment within credible medium-term frameworks to bring debt down while building buffers against uncertainty. - Tailor adjustments to country-specific circumstances, pacing them to balance debt reduction with economic growth and existing fiscal space. - Countries with limited fiscal space should prioritize spending within planned budgets and allow automatic stabilizers to operate fully. - Nations with fiscal room facing spending pressures (including defense) should use available resources within well-defined medium-term frameworks and present credible financing plans. - Advanced economies with aging populations should reprioritize expenditures, advance pension and health care reforms, remove inefficient tax incentives, broaden the tax base, and pursue active labor policies. - Strengthen medium-term fiscal frameworks and public financial management systems, improve expenditure efficiency, procurement, multiyear planning, and macroeconomic forecasting. - Enhance fiscal and debt governance and debt transparency, identify and manage contingent liabilities, and provide clear information on creditor composition and exposure to risks such as interest rate and exchange rate risks. - Emerging market and developing economies should reform tax systems, broaden tax bases, improve revenue administration, phase out energy subsidies, rationalize public wage bills, safeguard public investment, and reform state-owned enterprises. - In cases of significant financial instability, fiscal policy can support central banks and financial supervisors through direct lending, guarantees, and equity injections; such measures should be timely, targeted, temporary, carefully costed, and transparently monitored. - For countries facing debt distress, timely and orderly debt restructuring alongside fiscal adjustments is essential; international cooperation and concessional financing for low-income developing countries are vital to avoid undue fiscal tightening and human suffering. - Permanent increases in defense or investment outlays must be coupled with enhanced spending efficiency and credible financing plans detailing planned tax and spending measures. *International Monetary Fund | April 2025* ### References ### References ### Selected bibliographic entries - Adrian, Tobias, Richard K. Crump, and Emanuel Moench. 2013. “Pricing the Term Structure with Linear Regressions.” Journal of Financial Economics 110 (1): 110–38. doi: 10.1016/j.jfineco.2013.04.009 - Agboola, Emmanuel, Rosen Chowdhury, and Bo Yang. 2024. “Oil Price Fluctuations and Their Impact on Oil-Exporting Emerging Economies.” Economic Modelling 132: 106665. - Ahir, Hites, Nicholas Bloom, and Davide Furceri. 2022. “The World Uncertainty Index.” NBER Working Paper 29763, National Bureau of Economic Research, Cambridge, MA. - Aiyar, Shekhar, Jiaqian Chen, Christian H. Ebeke, Roberto Garcia-Saltos, Tryggvi Gudmundsson, Anna Ilyina, Alvar Kangur, and others. 2023. “Geoeconomic Fragmentation and the Future of Multilateralism.” IMF Staff Discussion Note 2023/001, International Monetary Fund, Washington, DC, January. - Aslam, Aqib, Emine Boz, Eugenio Cerutti, Marcos Poplawski-Ribeiro, and Petia Topalova. 2018. “The Slowdown in Global Trade: A Symptom of a Weak Recovery?” IMF Economic Review 66: 440–79. - Black, Simon, Antung A. Liu, Ian Parry, and Nate Vernon. 2023. “IMF Fossil Fuel Subsidies Data: 2023 Update.” IMF Working Paper 23/169, International Monetary Fund, Washington, DC. - Ron Snipeliski. 2024. “The Legal Foundations of Public Debt Transparency: Aligning the Law with Good Practices.” IMF Working Paper 24/29, International Monetary Fund, Washington, DC. - Nose, Manabu, and Jeta Menkulasi. 2025. “Fiscal Determinants of Domestic Sovereign Bond Yields in Emerging Market and Developing Economies.” IMF Working Paper 25/59, International Monetary Fund, Washington, DC. ### Introduction: role of energy subsidies and pensions in fiscal adjustment - Many countries need a strategic pivot to reduce debt and create fiscal space (Chapter 1). - Two key budget programs examined: energy subsidies (particularly relevant for emerging markets and low-income countries) and public pensions (more pertinent to advanced and emerging market economies). - Energy subsidy context: - Explicit energy subsidies reflect undercharging for energy supply costs and “exceed 1½ percent of GDP in emerging markets and low-income countries.” - Implicit subsidies (undercharging for environmental costs and forgone consumption tax revenues) are larger than explicit subsidies. - Pension context: - Pension spending accounts for about 8 percent of GDP in advanced economies and 4 percent in emerging market economies, projected to rise by 2 to 4 percentage points of GDP by 2050. - Rising life expectancy at retirement is a key driver of higher pension spending. - Closing the gap between life expectancy and retirement ages is critical to avoid higher contribution rates or lower benefits. ### Political economy and public sentiment - Reforms are often contentious; they can provoke social unrest (examples cited: Nigeria for energy subsidies; France for pensions). - Costs of reform are immediate and visible; benefits (efficiency, employment, growth) are diffuse. - Public perceptions of fairness vary by region (resource-rich nations see energy subsidies as rightful benefits; Europe focuses on intergenerational equity in pensions). - The chapter focuses on how to design reforms to gain social and political acceptance. ### Key findings (exact statements and numeric facts preserved) - Energy subsidy and pension measures are common, but significant changes—such as major reductions in subsidies or raising retirement ages—are rare. - In emerging markets and low-income countries, energy subsidy reforms occur frequently because subsidies are higher and more burdensome on public finances; measures are often short-lived with minor price changes and reversals. - In advanced economies, pension measures are common in countries with older populations and more developed pension systems; major adjustments (changing statutory retirement age) are infrequent and typically follow systemic crises. - Changes in retirement ages tend to be gradual, with reversals occurring in about 15 percent of cases, often prolonging implementation. - Public sentiment is a crucial driver of energy and pension reforms; improving sentiment of households, civil society organizations (CSOs), unions, and opposition parties increases likelihood of reform success. - Reform design, timing, accompanying measures, and broader governance influence sentiment: - More gradual reforms result in less negative sentiment. - Measures announced and implemented during periods of higher growth tend to garner a more favorable response. - Redistribution policies and transfers can alleviate public apprehension, especially for energy subsidies. - Trust in public institutions and accountability can mitigate negative sentiment. - Strong governance and supportive measures can ease public concerns during major and front-loaded reforms in challenging economic conditions. - Effective communication and clear messaging build trust and keep stakeholders informed. ### Historical experience with energy subsidy and pension measures: databases and stylized facts - Databases constructed: - Energy Subsidy Reform Measures database: covers more than 170 countries from 1990 to 2023; details fuel and utility price changes, SOE measures, reform characteristics; supplemented with granular retail fuel price data and information from more than 1.4 million news articles. - Global Pension Reform database: spans 134 countries from 1960 to 2024; focuses on pension age measures with insights from 600,000 news articles. - Energy subsidy measures: - Countries implement an average of 0.6 measures per year. - Fuel price increases, especially for diesel, often spike during oil price peaks, averaging 0.3 measures per country in 2008 and 2022. - Approximately 23 percent of countries enact at least one diesel price measure annually. - 19 percent implement a utility tariff measure annually. - Low-income countries and emerging markets (notably Africa and Middle East and Central Asia) implement measures more frequently. - Most measures are price increases, but in 2022 many European economies implemented utility price decreases in response to electricity market shocks from Russia’s war on Ukraine. - Fuel price measures are typically ad hoc and minor, with median price changes of about 5 percent. - Measures occurring within 12 months of one another result in a median price increase of 23 percent when combined. - About 17 percent of energy subsidy measures are reversed, usually within eight months, offsetting most of the price increase. - Pension measures: - About 50 percent of countries implement pension measures annually. - Adjustments to statutory retirement ages represent about 1 out of 10 of overall pension measures in advanced economies. - Pension age measures are typically implemented gradually, taking an average of 10 years to increase retirement ages by 3.7 years. - About 64 percent of pension age measures begin to raise retirement ages within two years of legislation. - Full reversals of pension age measures are rare: about 15 percent of pension age measures are fully or partially reversed; one-third of reversals correspond to countries abolishing legislated increases in retirement ages fully, typically within four years of the legislation; the remainder are delays in implementation timelines or exceptions for early retirement. ### Factors driving reforms and conceptual framework - The chapter examines drivers of fuel price and retirement age measures across announcement, implementation, and sustainment/reversal stages. - Drivers include macroeconomic, fiscal, and political factors, as well as stakeholder sentiment. - The conceptual framework distinguishes between stages of the reform process and considers interactions between reform design, economic conditions, governance, and stakeholder reactions. *International Monetary Fund | April 2025* ### 2. Share of Countries with Pension Measures, by Income Group ### 2. Share of Countries with Pension Measures, by Income Group ### Data Coverage and Note - Sample: 134 countries. - Period averaged: 2000–23. - Pension age measures are reported only for advanced economies. - Sources: Global Pension Reform database; and IMF staff calculations. ### Stylized Findings on Pension and Energy Reform Measures - Pension measures typically require legislative changes, whereas energy price measures are usually administratively enacted. - Two-thirds of price increase announcements have occurred when crude oil prices have risen, with one-third happening during significant oil price surges. - Recessions are associated with a 4 percentage point increase in diesel prices. - A one-standard-deviation decrease in GDP growth is associated with a 2.9 percentage point increase in the probability of a pension age reform measure (close to 60 percent of the unconditional probability of the measure). - During the euro debt crises of 2010–12, pension age reforms occurred twice as often compared with the average from 2000 to 2023. - The volume of published articles on subsidies and pensions increases three to four times before and during the implementation of fuel price measures and the announcement and introduction of pension age legislation. ### Drivers of Reform (Macroeconomic, Institutional, Political, Sentiment) - Macroeconomic factors: - High oil prices, currency depreciation, and population aging create spending pressures likely to prompt reform announcements. - High inflation and weak economic growth may compel policymakers to implement reforms. - Strong growth, low inflation, and improved fiscal indicators can support reforms. - High levels of poverty and inequality can limit households’ ability to cope with reform costs. - Institutional and political environment: - Government accountability, governance, and transparency build trust and facilitate reforms. - Electoral cycles can influence timing; fuel price increases are less common during election years but tend to rise afterward. - Strong political mandates enable ambitious reforms; weakened support can lead to reversals. - Sentiment regarding reforms: - Stakeholder input shapes reform characteristics (intensity and phasing), affecting acceptability and durability. - Sentiment is measured from print media using direct quotes attributed to households, unions, opposition parties, private sector groups, CSOs, oil companies, and others. - Sentiment scale: −5 (most opposed) to +5 (most supportive). ### Role of Sentiment (Patterns and Stakeholder Concerns) - After announcements: - Fuel price announcements lead to heightened negative sentiment lasting up to three months. - Pension reform announcements lead to negative sentiment persisting for at least six months. - Stakeholder patterns: - Households, unions, and opposition groups are vocal and typically negative about both fuel price and pension measures. - CSOs express strong opinions on fuel price measures. - Governments, oil companies, and international organizations generally maintain positive sentiment. - Private sector sentiment is mixed. - Primary concerns by stakeholder and reform type: - Fuel price measures: cost of living, distributional impacts, fiscal issues, energy shortages; government and international organizations show more positive sentiment. - Pension age measures: distributional impact and adequacy of benefits are central concerns for households, opposition parties, and unions; government, international organizations, and pension commissions express more positive sentiment. ### Empirical Analysis and Key Quantitative Results - Methodology: Machine learning to identify predictor importance across reform stages; instrumental variable approach to estimate causal effects of sentiment. - Predictor importance: - For energy subsidy reforms, sentiment ranks second to fuel price growth. - For pension age measures, sentiment is the primary predictor during announcement and legislation stages, but less relevant during implementation. - Causal effects of sentiment (using trading partners’ sentiment as instrument): - A substantial increase in sentiment (two standard deviations) raises the probability of an announcement by 30 percent and the probability of implementation by 10 percent. - Improved sentiment increases the probability of episodes with multiple measures by 13 percent. - Fuel price changes are, on average, 37 percent larger following significant improvements in sentiment. - Relevant covariates considered: IMF program indicator, GDP growth, inflation, fiscal deficits, fiscal rules and council’s strength, governance indicators, election cycles, political polarization, life expectancy (for pensions), international crude oil price (for fuel price measures). ### Implications for Reform Design and Policy - Communication and trust-building are critical: transparency and effective communication strategies foster public trust and understanding, improving acceptance and durability of reforms. - Stakeholder engagement matters: incorporating stakeholder inputs can shape reform phasing and intensity to increase acceptability. - Timing considerations: - Avoiding announcements close to elections may reduce political resistance; fuel price increases are less common during election years. - Strong macroeconomic conditions (growth, low inflation, improved fiscal balance) can make reforms more palatable and increase sustainability (sustainability of fuel reforms is approximately two months longer when there is a higher efficient fuel price gap, stronger economic growth, and improved fiscal balance). - Target concerns directly: address distributional impacts and benefit adequacy explicitly in pension reform designs; mitigate cost-of-living and energy-shortage concerns in fuel price reforms. *Source: IMF staff.* ### 1. Fuel Price Measures ### 1. Fuel Price Measures ### Effects on Stakeholder Sentiment - Announcements typically trigger negative sentiment among households, unions, civil society organizations, and opposition groups. - For fuel price measures, sentiment declines by more than one standard deviation one month after the announcement (Figure 2.12, panel 1). - Announcements of pension age increases generate sharper declines, with average sentiment deteriorating progressively over time (Figure 2.12, panel 2). - Gradual fuel price increases, on average, do not yield statistically significant negative effects, whereas abrupt changes amplify negative reactions by up to four times (Online Annex 2.4). - A modest fuel price hike (Colombia, 2022) has minimal impact on sentiment; a substantial price increase (Sri Lanka, 2012) triggered a sharp and sustained decline, with sentiment deteriorating by nearly fourfold compared with initial levels (Figure 2.13, panel 1a). ### Factors Influencing Sentiment — Reform Design - Magnitude and phasing: - Small changes in pension ages (Germany, 2007) lead to less negative sentiment. - Announcements to increase retirement ages lead to sharper sentiment declines than other pension measures (Figure 2.13, panel 2a). - Type of pension measure: - Pension age increases are more salient and provoke stronger negative reactions than technical measures (for example, changes in the indexation formula). ### Factors Influencing Sentiment — Macroeconomic Conditions and Structural Characteristics - Economic conditions at announcement: - Announcements during economic expansion reduce negative sentiment (Figure 2.13, panels 1b and 2b). - Reforms introduced during weak growth result in sentiment twice as negative. - Country type: - In advanced economies, the impact of fuel price changes on public sentiment is less negative and tends to improve over time. - In emerging markets and low-income countries, sentiment is more negative and deteriorates over time (Online Annex 2.4). - Demographics: - A higher old-age dependency ratio is associated with more negative sentiment toward pension age reforms (Online Annex 2.4). ### Factors Influencing Sentiment — Inequality and Accompanying Measures - Inequality: - Low inequality (low Gini coefficient after taxes and transfers, as in France in 2011) is associated with muted negative sentiment following fuel price announcements. - High inequality yields significant and persistent negative responses. - Government transfers and compensatory measures: - An increase in cash or in-kind transfers of about 10 percent (Norway, 2009) in the year preceding a fuel price change mitigates the decline in sentiment (Figure 2.13, panel 1c). - For pension measures, substantial changes in government transfers before announcements improve sentiment (Figure 2.13, panel 2c). - Expansions of pension coverage or improvements in adequacy (Australia, 2009) can boost sentiment. ### Factors Influencing Sentiment — Institutional Framework and Governance - Transparency, trust, and accountability: - For fuel price increases, sentiment improves within two months of announcements in settings of high transparency, high trust, and stronger accountability (Figure 2.13, panel 1d). - Countries with limited transparency, inefficiencies in public spending, and inadequate service delivery exhibit notably higher resistance to reforms. - Fiscal institutions: - For pension reforms, stronger fiscal councils and higher spending efficiency are associated with faster recovery in sentiment after announcements (Figure 2.13, panel 2d). - In contexts of weak governance, higher transfers and implementing reforms during periods of strong economic growth can mitigate negative sentiment (Figure 2.14, panels 1–3). ### Empirical Approach and Key Statistical Notes - Data sources: Energy Subsidy Reform Measures database; Factiva; Global Pension Reform database; and IMF staff estimates. - Estimation methods: - Average marginal effects of a two-standard-deviation shock to sentiment estimated using an instrumental variable approach with a probit model; domestic sentiment instrumented with sentiment in trading partners. - Impulse response functions illustrate cumulative impact of measure announcements on stakeholder sentiment; estimation accounts for baseline sentiment and includes stakeholder-by-country and stakeholder-by-year fixed effects (Online Annex 2.4). - Regression analysis conducted on a pooled stakeholder sample: 194 economies for fuel price measures and 31 advanced economies for pension measures. - Standard errors clustered at the country level; shaded bands represent 90 percent confidence intervals. - Panels depict local projections with a smooth transition function; some analyses use triple interaction terms (Online Annex 2.4). - Importance scores (for model predictive performance) normalized so that 1 is maximum importance and 0 means no importance; panels show simple averages of importance of individual regressors. ### Policy Implications and Recommendations - Timing: - When reforms must be enacted during low growth, increasing government transfers can significantly improve negative sentiment. - Implementing measures during periods of strong economic growth reduces negative sentiment, particularly in low-governance contexts (Figure 2.14, panel 1). - Design: - Gradual adjustments and modest changes (for both fuel prices and pension ages) reduce negative sentiment; structured, transparent mechanisms (for example, linking retirement ages to life expectancy) can ease implementation. - Front-loaded reforms: strong governance is crucial to eliminate negative sentiment and facilitate front-loaded adjustments; increasing cash or near-cash transfers helps reduce initial negative sentiment (Figure 2.14, panel 2). - Institutional strengthening: - Building trust in public institutions, enhancing transparency and accountability, improving spending efficiency, and strengthening fiscal councils can speed sentiment recovery and facilitate contentious reforms. - Targeted compensatory measures: - Identify and compensate specific groups affected by reforms; expand pension coverage or improve benefit adequacy when increasing retirement ages to boost support. *Italic: Sources: Energy Subsidy Reform Measures database; Factiva; Global Pension Reform database; and IMF staff estimates (text - 1. Fuel Price Measures).* ### Annex 2.5 provide detailed insights into the effective ### Annex 2.5 provide detailed insights into the effective ### Case studies and reform sequencing - Morocco: government rapidly increased fuel prices to alleviate mounting fiscal pressures and built confidence for a smooth liberalization of fuel prices from 2013 to 2015; an incremental approach afterward provided households and businesses time to adjust. - Colombia: incoming government in 2022 introduced a timeline for gasoline price adjustments over two years; adhering to the schedule strengthened public trust but diesel subsidy elimination was not advanced. - Uruguay: phased pension reform gradually raised the retirement age and was crucial for gaining public acceptance. - Germany: increase in the retirement age received support during a period of strong economic growth. - Greece: two-year increase in retirement age legislated in 2012 as an example of rapid adjustment during crisis conditions. - Australia: 2009 pension reform balanced phased increase in eligibility age for the Age Pension with a substantial boost to Age Pension benefits, particularly for low-income retirees. ### Role of macroeconomic conditions - Favorable conditions: phased reforms can alleviate public apprehension (example: retirement age increase in Germany; reform of the fuel stabilization fund in Peru in 2010). - Challenging conditions: reforms can still be implemented by integrating them into a broader reform agenda addressing low- and middle-income household concerns; in downturns or fiscal crises, large, front-loaded measures may be necessary to stabilize the economy and bolster reform credibility. - Credibility-building example: initial 20 percent increase in fuel prices in Morocco helped pave the way for recovery. ### Stakeholder engagement and communication - Framing: Uruguay presented the retirement age adjustment as a means to sustain pension benefit levels, aligning with survey findings indicating strong public support for benefit adequacy. - Bipartisan mechanisms: Germany and Uruguay illustrate the importance of bipartisan pension commissions for trust, transparency, and political consensus before legislation. - Outreach channels: Morocco used TV, radio, newspaper, and social media with focus on youth and middle-class families; messaging emphasized that subsidies were a poor instrument for social support. - Communication priorities: - Emphasize how fiscal savings will be reinvested in social and infrastructure needs. - Present reforms within a broader structural agenda and explain effects on macroeconomic stability. - In low-trust environments, prioritize transparency and accountability to show how resources from reforms will be used. - For pension reforms, focus on financial literacy and provide regular statements of expected retirement income to increase acceptance. ### Accompanying measures and complementary reforms - Pension reforms: - Germany: included initiatives to increase employability of older individuals alongside retirement age increases. - Australia (2009): increased pension ages alongside increases in benefits for low-income retirees. - Uruguay: separating retirement age reform from other pension modifications (such as increased contribution rates) helped reduce opposition. - Allowing individuals close to retirement to keep current benefits provides adjustment time for younger cohorts. - Increasing benefits for low-income retirees can mitigate perceived unfairness. - Energy subsidy reforms: - Morocco: few direct measures for vulnerable households, but negotiations with the transportation sector helped contain higher living costs for poorer families. - Colombia: prioritized gasoline subsidy reforms to protect the most vulnerable and delayed diesel subsidy removal until gasoline subsidies were fully phased out. - Cash transfers (e.g., Brazil 2001) can cushion impacts; targeted transfers are more cost-effective but require administrative capacity and risk overlooking affected groups. - Cross-cutting complementary actions: - Consider governance reforms for state-owned enterprises in the energy sector. - Labor market reforms can complement pension reforms. - Strengthen social safety nets and consider higher tax progressivity to enhance redistribution. ### Design considerations under different conditions (from Table 2.2) - Negative macroeconomic conditions: - Pace and Intensity: Prioritize front-loaded efforts that set a clear path of adjustment. - Accompanying Measures: Compensatory measures essential to address needs of those most affected; articulate reforms within broader structural agendas. - Communication and Ownership: Stress effects on restoring macroeconomic stability and part of a wider reform agenda. - High inequality: - Pace and Intensity: Fast actions to counter inequities might be well received. - Accompanying Measures: Strengthen social safety nets; enhance redistribution and governance. - Communication: Illustrate unfairness of status quo and prioritize compensatory measures. - Low trust: - Pace and Intensity: Credibly demonstrating commitment may require some front-loading. - Accompanying Measures: Early, visible investment in social programs and infrastructure; improve governance and reduce corruption. - Communication: Actions speak louder than words; aim to show tangible results. ### Planning, targeting, and fiscal reinvestment - Targeting and delivery: - Targeted transfers are cost-effective but require administrative capacity; digitalization offers promise to enhance delivery effectiveness. - Targeting mechanisms should reflect country-specific contexts. - Reinvestment of fiscal savings: - Announcing reinvestment into public services and social programs can bolster support. - In weak-governance, low-trust environments, deploy compensatory measures early and visibly. - Increase public spending efficiency to bolster confidence that savings benefit the broader community. - Trade-offs: - Compensatory measures may claw back some fiscal savings but can boost reform acceptance and ultimately address market distortions and generate fiscal savings through output effects. ### Summary findings and policy implications - Public sentiment is a strong predictor of reforms; enhancing support among households, CSOs, unions, and opposition groups is crucial for advancing energy subsidy and pension reforms. - Energy subsidy reforms aim to align prices with market values and enhance efficiency; gradual phaseouts often associate with more positive public sentiment, but front-loaded approaches can gain support if paired with compensatory measures. - Pension reforms aim to ensure long-term viability; periodic parameter revisions are necessary as systems are not automatically adjusted for aging. Gradual reforms aid adaptation, but rapid adjustments may be needed during funding shortfalls or economic stress. - Successful reform design depends on macroeconomic context, fiscal space, and ability to compensate affected groups. - Strategic communication, stakeholder engagement, transparent governance improvements, and capacity development (especially in low-income countries) are key to building trust and securing political commitment. - Regularly published and institutionalized fiscal projections can facilitate necessary pension reforms; capacity development efforts by the IMF and other organizations can provide essential support. *Source: IMF staff, Annex 2.5 (excerpt).* ### CHAPTER 2 PublIc SentIMent MAtterS: the eSSence oF SucceSSFul energy SubSIdIeS And PenSIon reForMS ### CHAPTER 2 PublIc SentIMent MAtterS: the eSSence oF SucceSSFul energy SubSIdIeS And PenSIon reForMS ### Key references cited - Casamatta, Georges, and Loïc Batté. 2016. “The Political Economy of Population Aging.” In Handbook of the Economics of Population Aging, vol. 1, edited by John Piggott and Alan Woodland. 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Sheffield, UK: Greenleaf Publishing. - Zhang, Qingjie, and Xinbang Cao. 2024. “Delaying Retirement, Income Distribution and Economic Growth.” International Review of Economics and Finance 95 (2024): 1–19. ### Economy codeName mappings (selected entries as provided) - AFG Afghanistan - AGO Angola - ALB Albania - AND Andorra - ARE United Arab Emirates - ARG Argentina - ARM Armenia - ATG Antigua and Barbuda - AUS Australia - AUT Austria - AZE Azerbaijan - BDI Burundi - BEL Belgium - BEN Benin - BFA Burkina Faso - BGD Bangladesh - BGR Bulgaria - BHR Bahrain - BHS Bahamas, The - BIH Bosnia and Herzegovina - BLR Belarus - BLZ Belize - BOL Bolivia - BRA Brazil - BRB Barbados - BRN Brunei Darussalam - BTN Bhutan - BWA Botswana - CAF Central African Republic - CAN Canada - CHE Switzerland - CHL Chile - CHN China - CIV Côte d’Ivoire - CMR Cameroon - COD Congo, Democratic Republic of the - COG Congo, Republic of - COL Colombia - COM Comoros - CPV Cabo Verde - CRI Costa Rica - CYP Cyprus - CZE Czech Republic - DEU Germany - DJI Djibouti - DMA Dominica - DNK Denmark - DOM Dominican Republic - DZA Algeria - ECU Ecuador - EGY Egypt - ERI Eritrea - ESP Spain - EST Estonia - ETH Ethiopia - FIN Finland - FJI Fiji - FRA France - FSM Micronesia, Federated States of - GAB Gabon - GBR United Kingdom - GEO Georgia - GHA Ghana - GIN Guinea - GMB Gambia, The - GNB Guinea-Bissau - GNQ Equatorial Guinea - GRC Greece - GRD Grenada - GTM Guatemala - GUY Guyana - HKG Hong Kong Special Administrative Region - HND Honduras - HRV Croatia - HTI Haiti - HUN Hungary - IDN Indonesia - IND India - IRL Ireland - IRN Iran - IRQ Iraq - ISL Iceland - ISR Israel - ITA Italy - JAM Jamaica - JOR Jordan - JPN Japan - KAZ Kazakhstan - KEN Kenya - KGZ Kyrgyz Republic - KHM Cambodia - KIR Kiribati - KNA St. Kitts and Nevis - KOR Korea - KWT Kuwait - LAO Lao P.D.R. - LBN Lebanon - LBR Liberia - LBY Libya - LCA St. Lucia - LKA Sri Lanka - LSO Lesotho - LTU Lithuania - LUX Luxembourg - LVA Latvia - MAR Morocco - MDA Moldova - MDG Madagascar - MDV Maldives - MEX Mexico - MHL Marshall Islands - MKD North Macedonia - MLI Mali - MLT Malta - MMR Myanmar - MNE Montenegro - MNG Mongolia - MOZ Mozambique - MRT Mauritania - MUS Mauritius - MWI Malawi - MYS Malaysia - NAM Namibia - NER Niger - NGA Nigeria - NIC Nicaragua - NLD Netherlands, The - NOR Norway - NPL Nepal - NRU Nauru - NZL New Zealand - OMN Oman - PAK Pakistan - PAN Panama - PER Peru - PHL Philippines - PLW Palau - PNG Papua New Guinea - POL Poland - PRT Portugal - PRY Paraguay - QAT Qatar - ROU Romania - RUS Russian Federation - RWA Rwanda - SAU Saudi Arabia - SDN Sudan - SEN Senegal - SGP Singapore - SLB Solomon Islands - SLE Sierra Leone - SLV El Salvador - SMR San Marino - SOM Somalia - SRB Serbia - SSD South Sudan - STP São Tomé and Príncipe - SUR Suriname - SVK Slovak Republic - SVN Slovenia - SWE Sweden - SWZ Eswatini - SYC Seychelles - SYR Syria - TCD Chad - TGO Togo - THA Thailand - TJK Tajikistan - TKM Turkmenistan - TLS Timor-Leste - TON Tonga - TTO Trinidad and Tobago - TUN Tunisia - TUR Türkiye - TUV Tuvalu - TWN Taiwan Province of China - TZA Tanzania - UGA Uganda - UKR Ukraine - URY Uruguay - USA United States - UZB Uzbekistan - VCT St. Vincent and the Grenadines - VEN Venezuela - VNM Vietnam - VUT Vanuatu - WSM Samoa - YEM Yemen - ZAF South Africa - ZMB Zambia - ZWE Zimbabwe ### Glossary entries (selected definitions and fiscal terms) - Accelerated depreciation deductions: Tax measures that reduce the taxable income of a firm, by allowing for greater deductions for depreciation of an asset (for example, machinery) in its earlier years of use. - Arrears: Total outstanding obligations due for payment that the government has failed to discharge. - Automatic stabilizers: Revenue and some expenditure items built in the budget that adjust automatically to cyclical changes in the economy—for example, as output falls, revenue collections decline and unemployment benefits increase, which “automatically” provides demand support. - Balance sheet: Statement of the values of the stock positions of assets owned and liabilities owed by a unit, or group of units, drawn up in respect of a particular point in time. - Base erosion and profit shifting (BEPS): Refers to tax planning strategies used by multinational enterprises that exploit gaps and mismatches in tax rules to avoid paying tax. - Benefits/transfers: Government social assistance provided in cash or in-kind. - Broader economic costs: The costs of economywide reductions in employment and investment caused by higher energy prices which in turn exacerbate the economic costs of taxes on labor and capital income. - Burden or incidence: Refers to whose economic welfare is reduced by a policy and by how much. It is quite different from the formal or legal incidence—fuel suppliers, for example, may be responsible for remitting tax payments to the national tax authority, but they may bear little economic incidence if they can charge higher prices. - Common framework for debt restructuring: Multilateral initiative launched by the International Monetary Fund and the World Bank in November 2021 aiming to provide a coordinated and comprehensive approach to address the debt vulnerabilities and sustainability challenges faced by low-income countries (LICs). - Contingent liabilities: Obligations that are not explicitly recorded on government balance sheets and that arise only in the event of a particular discrete situation, such as a crisis. - Countercyclical fiscal policy: Discretionary changes in expenditure and tax policies to smooth the economic cycle (by contrast with the operation of automatic stabilizers); for instance, by cutting taxes or raising expenditures during an economic downturn. - Coverage of public benefits: Share of individuals or households of a particular socioeconomic group who receive a public benefit. - Crowding out effects on spending: A situation where increases in one category of public expenditure, say interest expenditures, leads to a reduction in another category of public expenditure, say public investment. - Cyclically adjusted balance (CAB): Difference between the overall balance and the automatic stabilizers; equivalently, an estimate of the fiscal balance that would apply under current policies if output were equal to potential. - Cyclically adjusted primary balance (CAPB): Cyclically adjusted balance excluding net interest payments (interest expenditure minus interest revenue). - Debt-at-risk: Debt-at-risk is defined as the 95th percentile of the predicted quantile of the debt-to-GDP ratio over a given forecast horizon based on a set of financial, economics, and political variables. - Debt distress: Situation in which a borrower, typically a country or an entity, faces significant challenges in meeting its debt obligations, leading to concerns about its ability to service or repay its debts without experiencing severe financial difficulties or defaulting on its obligations. - Debt restructuring: Process by which the terms and conditions of existing debt obligations are modified or renegotiated between borrowers and creditors to address financial difficulties and improve the borrower’s ability to meet its debt obligations. It can take various forms and may involve changes to the repayment schedule, interest rates, principal amount, or other terms of the debt agreement. - Debt-servicing costs: Interest payments on outstanding debt. - Debt-stabilizing primary balance: Level of primary balance that would stabilize the ratio of debt to GDP in the previous year given the values of the nominal effective interest rate and growth rate in the contemporaneous year. - Disposable income: Household disposable income is the sum of household final consumption expenditure and savings. Income includes wages and salaries, and mixed income. - Distribution-neutral policy: A policy that imposes approximately the same burden as a proportion of consumption (or some other measure of household well-being) on all different income groups. - Economic scarring: Long-lasting economic damage. - Energy subsidies: Reflect measures that keep prices for end users below supply costs, including transport and distribution costs, and for producers above this level. - Entitlement: Any spending program where expenditure is open-ended (usually transfer/grant payments) and where recipients must be paid or given transfers/grants if they meet certain criteria. Some common examples are found in social security programs, unemployment programs, and poverty programs. - Equity injections by the public sector: Purchase of shares (ownership) of a firm by governments or public corporations to provide it with the required capital to continue operations. - Expenditure control functions: Reflect a managerial process that includes the political and administrative levels and horizontal and vertical relationships within government organizations with the aim to contain public expenditure within the authorized limits and spent as intended. - Externality: A cost imposed by the actions of individuals or firms on other individuals or firms (possibly in the future, as in the case of climate change) that the former does not consider. - Extrabudgetary funds: Accounts held by government bodies but not included in the governmental budget; expenditures from such accounts are often financed by earmarked revenues or user fees and charges. - Extreme heat: Weather event that occurs when temperatures are considerably higher than normal for a given location and time of year. - Financial conditions index: Gauges how easily money and credit flow through the economy via financial markets by examining indicators such as borrowing costs, risk spreads, asset price volatility, exchange rates, inflation rates, and commodity prices. - Financial repression: Direct government intervention that alters the equilibrium reached in the financial sector with the aim of providing cheap loans to companies and governments, reducing their burden of repayments by lowering returns to savers below the rate that otherwise would prevail. Examples include ceilings on interest rates, directed credits to certain industries, or constraints on the composition of bank portfolios. - Financial stress: Periods of impaired financial intermediation. - Fiscal adjustment: Fiscal policy that aims to reduce government deficits and government debt. It usually involves a cut in government expenditures or a rise in government taxation revenues. - Fiscal buffer: Fiscal space created by saving budgetary resources and reducing public debt in good times. - Fiscal consolidation: See Fiscal adjustment. - Fiscal council: A permanent agency with a statutory or executive mandate to assess publicly and independently fiscal policy, fiscal plans, and fiscal performance against official objectives, such as long-term sustainability of public finances and macroeconomic stability. - Fiscal framework: The set of rules, procedures, and institutions that guide fiscal policy. - Fiscal governance: Includes a set of rules, regulations, and procedures that influence the fiscal policy preparation, approval, implementation, reporting/disclosures, and monitoring. - Fiscal multiplier: Measures the short-term impact of discretionary fiscal policy on output. Usually defined as the ratio of a change in output to an exogenous change in the fiscal deficit with respect to their respective baselines. - Fiscal policy uncertainty: Ambiguity in government spending and tax plans, as well as in public debt valuation. - Fiscal restraint: See Fiscal adjustment. - Fiscal rules: Lasting constraints on fiscal policy through predetermined numerical limits on aggregate fiscal indicators (such as the budget balance, government expenditure, debt). - Fiscal slippage: A situation where a government’s actual fiscal performance deviates from its planned or targeted fiscal targets, usually resulting in higher-than-expected budget deficits, increased public debt, or a combination of both. - Fiscal space: The room for undertaking discretionary fiscal policy (increasing spending or reducing taxes) relative to existing plans without endangering market access and debt sustainability. - Fiscal stabilization: Contribution of fiscal policy to output stability through its impact on aggregate demand. - Fiscal stabilization coefficient (FISCO): FISCO measures how much a country’s overall budget balance changes in response to a change in economic slack (as measured by the output gap). If FISCO is equal to 1, it means that when output falls below potential by 1 percent of GDP, the overall balance worsens by the same percentage of GDP. The higher the FISCO, the more countercyclical the conduct of fiscal policy. Technical details on FISCO estimation are in Annex. *International Monetary Fund | April 2025 — CHAPTER 2, Fiscal Monitor: Fiscal Policy Under Uncertainty* ### 2.1 of the April 2015 Fiscal Monitor and Furceri and ### 2.1 of the April 2015 Fiscal Monitor and Furceri and ### Glossary (selected definitions and measures) - Fiscal tightening: See Fiscal adjustment. - Foreign grants: Transfers receivable by government units, from nonresident government units or international organizations, that do not meet the definition of a tax, subsidy, or social contribution. - Forward interest rates: Expected short-term rate to be prevailing five years from the present. - General government: All government units and all nonmarket, nonprofit institutions that are controlled and mainly financed by government units comprising the central, state, and local governments; includes social security funds and does not include public corporations or quasi corporations. - Geoeconomic uncertainty: Unpredictability in the global economic landscape caused by geopolitical events, policies, and strategic competition between nations. It encompasses risks arising from trade wars, economic sanctions, supply chain disruptions, and shifts in global alliances that impact economic decisions. - Gini / Gini index: Statistical measure of dispersion used to measure inequality in incomes, consumption, and wealth. Values fall between 0 and 1; 0 = perfect equality, 1 = perfect inequality. - Global factors: Unobserved variables that capture common movements or shared dynamics across multiple macroeconomic or financial time series. - Government guarantees: Government undertaking payment of a debt or liabilities in the event of a default by the primary creditor; create contingent liabilities often not recognized in the budget without upfront cost. - Gross debt / Public debt: All liabilities that require future payment of interest and/or principal by the debtor to the creditor; the Fiscal Monitor uses “public debt” as synonymous with gross debt of the general government unless specified otherwise. - Gross financing needs: Overall new borrowing requirement plus debt maturing during the year. - Income insurance: Publicly provided income-support mechanisms and individual schemes to insure oneself against negative income shocks. - Indirect taxes: Taxes levied on goods and services, not individual payers; examples include sales and value-added taxes. - Inflation: A general increase in the price level of goods and services leading to a fall in the purchasing value of money. - Interest-growth differential (r – g): Difference between the real interest rate on government debt (r) and the real GDP growth rate (g). - Interest rate-at-risk: The 95th percentile of the interest rate probability distribution function. - Labor force participation: Share of population of working age that is either looking for a job or working. - Leakage in public income-support programs: Individuals who receive public income-support programs for which they are not eligible. - Liquid assets: Assets that can be readily converted to cash. - Medium-term fiscal framework (MTFF): Systematic approach outlining fiscal objectives, policies, and strategies over a medium-term horizon, typically three to five years. - Military spending: All expenditures by a government related to the maintenance and development of armed forces and military capabilities. - Net bond financing: Gross bond issuance minus bond redemptions over a given period. - Net debt: Gross debt minus financial assets corresponding to debt instruments. - Net (financial) worth: Assets minus liabilities; net financial worth = financial assets minus liabilities. - Nonfinancial public sector: General government plus nonfinancial public corporations. - Output gap: Deviation of actual from potential GDP, in percent of potential GDP. - Overall fiscal balance (headline fiscal balance): Net lending and borrowing, defined as the difference between revenue and total expenditure, using the IMF’s 2001 Government Finance Statistics Manual (GFSM 2001). - Permanent establishment: A fixed place of business where the business of an enterprise is wholly or partly carried out. - Potential output: Estimate of the level of GDP if the economy’s resources are fully employed. - Price subsidies: Measures that keep prices for end users below market levels or for suppliers above market levels; can include tax exemptions, price controls, rebates, or direct transfers. - Primary balance: Overall balance excluding net interest payments (interest expenditure minus interest revenue). - Procyclical fiscal policy: Fiscal policy that amplifies the economic cycle (e.g., raising taxes or cutting expenditures during a downturn). - Progressive (or regressive) taxes: Taxes with average tax rates that rise (or fall) with income. - Public debt management: Process of establishing and executing a strategy for managing government debt to meet funding, risk, and cost objectives. - Public perception of public debt: Survey response to “Do you think the current level of government debt in your country is high or low?” on a five-point ordinal scale (very high, somewhat high, neither high nor low, somewhat low, very low). - Public sector: All resident institutional units deemed controlled by the government, including general government and resident public corporations. - Quasi-fiscal activities: Noncommercial activities undertaken by public corporations on behalf of the government, outside their regular mandate. - Regressive policy: Imposes a larger burden as a share of consumption on lower-income households than on higher-income households. - Research and development: Innovative activities by corporations or governments to develop new products or technologies. - Risk premium: Extra expected return on an asset that investors demand for accepting higher risk. - Scale economies: Cost advantages from larger scale of operation; cost per unit decreases with increasing scale. - Semi-automatic stabilizers: Fiscal measures combining automatic stabilizers and pre-specified discretionary measures; examples include pre-legislated increases in unemployment benefits when declines in employment exceed thresholds. - Social insurance: Programs protecting households from shocks, typically financed by contributions or payroll taxes. - Social protection: System of policies to reduce exposures to risks and enhance capacity to manage negative shocks; includes social safety nets, social insurance, and labor market programs. - Social safety nets: Noncontributory transfer programs financed by general government revenue. - Sovereign bond spreads: Difference in yields between government bonds of different countries, typically measured against a benchmark such as Germany or the United States. - Sovereign bond yields: Interest rate a national government pays to service its outstanding bonds. - Special drawing rights (SDRs): International reserve asset created by the IMF; not a currency but a potential claim on freely usable currencies of IMF members. - Stock-flow adjustments: Change in gross debt explained by factors other than the overall fiscal balance (for example, valuation changes). - Structural primary balance: Extension of the cyclically adjusted primary balance that also corrects for nonrecurrent effects beyond the cycle (one-off operations, asset and commodity price effects). - Take-up of public income-support programs: Eligible population of individuals who receive public income-support programs. - Term premium: Extra yield to compensate investors for risks associated with holding longer-term securities. - Term spread: Difference in yield between long-term (10-year) and short-term (2-year) government bonds. - Trade policy uncertainty: Index derived from automated text searches of seven major newspapers; measures monthly frequency of articles related to trade policy uncertainty as a percentage of total articles; normalized to a base value of 100 for a 1 percent article share and starts in 1960. - Unidentified debt: Change in debt not explained by interest-growth differentials, primary balance, or exchange rate movements; components of stock-flow adjustments that do not reflect valuation changes. - Upside risk to debt projection: Difference between the predicted 95th percentile of the combined distribution and the predicted 50th percentile (median) of the distribution conditional on initial debt for the three-year-ahead debt-to-GDP ratio. - Valuation effects: Changes in net external assets arising from movements in exchange rates or asset returns. - Yield to maturity (YTM) of government bonds: Total return anticipated on a bond if held until its maturity date. ### Methodological and statistical appendix — Data and conventions (high-level points) - Appendix structure: Four sections — “Data and Conventions”; “Fiscal Policy Assumptions”; “Definition and Coverage of Fiscal Data”; and statistical tables on key fiscal variables. - Data cutoff: Data in the appendix compiled on the basis of information available through April 14, 2025; may not reflect the latest published data in all cases. - Primary data source for country-specific data and projections: April 2025 World Economic Outlook database, unless indicated otherwise; compiled by IMF staff. - Historical data and projections: Based on information gathered by IMF country desk officers through missions and ongoing analysis; structural breaks may be adjusted via splicing and other techniques. - IMF staff estimates: Used as proxies when complete information is unavailable; Fiscal Monitor data may differ from other official sources including IMF’s International Financial Statistics and GFSM 2014. - Sources for fiscal data and projections not covered by WEO: Listed in respective tables and figures (not reproduced here). ### Country classification, coverage, accounting practices - Country groups: 41 advanced economies, 96 emerging market and middle-income economies, and 58 low-income developing countries. - Fiscal Monitor tables: Display 37 advanced economies, 41 emerging market and middle-income economies, and 39 low-income developing countries; tables generally represent the largest countries within each group by GDP in current US dollars. - Data for full list of economies: Available at the Fiscal Monitor datamapper (URL noted in source text). - Subgroups: The seven largest advanced economies by GDP (Canada, France, Germany, Italy, Japan, the United Kingdom, the United States) constitute the Group of Seven; the euro area members are distinguished as a subgroup with composite data covering current members for all years. - Low-income developing countries definition: Per capita income below $2,700 (as of 2016, World Bank Atlas method), structural features of limited development, and external financial relationships insufficiently open to be classified as emerging market economies. - Fiscal year vs calendar year reporting: Most fiscal data refer to calendar years, except for listed economies (The Bahamas, Bangladesh, Barbados, Bhutan, Botswana, Dominica, Egypt, Eswatini, Ethiopia, Fiji, Haiti, Hong Kong Special Administrative Region, India, the Islamic Republic of Iran, Jamaica, Lesotho, Malawi, the Marshall Islands, Mauritius, Micronesia, Myanmar, Namibia, Nauru, Nepal, Pakistan, Palau, Puerto Rico, Rwanda, Samoa, Singapore, St. Lucia, Thailand, Tonga, and Trinidad and Tobago) for which data refer to the fiscal year. - For fiscal years ending before June 30, data are recorded in the previous calendar year. - For fiscal years ending on or after June 30, data are recorded in the current calendar year. - Composite data construction: Weighted averages of individual-country data, weighted by annual nominal GDP converted to US dollars at average market exchange rates as a share of group GDP. - G-20 aggregate convention: For Fiscal Monitor reporting, the Group of Twenty aggregate refers to the 19 country members and does not include the European Union. ### Fiscal accounting standards and debt data notes - Accounting standards: Most advanced economies and some large emerging market economies follow GFSM 2014 or national accounts methodology consistent with 2008 SNA or ESA 2010; most other countries follow GFSM 2001; some use GFSM 1986. - Definition of overall fiscal balance: Refers to net lending and borrowing by general government under GFSM 2001; in some cases still based on GFSM 1986 definition (total revenue and grants minus total expenditure and net lending). - Debt data sources: Fiscal gross and net debt data are drawn from official data sources and IMF staff estimates; attempts are made to align with GFSM definitions but data limitations or country circumstances can cause deviations. - Comparability caveat: Differences in sectoral and instrument coverage mean debt data are not universally comparable; revisions can be substantial as new information becomes available. - Country usage note: Term “country” may cover territorial entities that are not states but whose statistical data are maintained separately. - Australia specific adjustment: For cross-economy comparability, gross and net debt levels reported by national statistical agencies for economies that have adopted the 2008 SNA (Australia, Canada, Hong Kong Special Administrative Region, the United States) are adjusted to exclude the unfunded pension liabilities of government employees’ defined-benefit pension plans. - Bahrain fiscal balance convention: Estimates based on total financing flows (including changes in central bank claims on the government); estimates usually lower than balance derived by subtracting budget expenditures from budget revenues; data on a calendar year basis. - Bangladesh: Data are on a fiscal year basis. - Brazil: General government data broadly follow GFSM (text truncated at this point). *Source: 2.1 of the April 2015 Fiscal Monitor and Furceri and Jalles (excerpt as provided).* ### 2014. Municipalities’ primary balances follow ### 2014. Municipalities’ primary balances follow ### Data definitions and scope - Municipalities’ primary balances follow below-the-line borrowing requirements. - Accrual data for non-interest revenues are not available. - Gross public debt includes the Treasury bills on the central bank’s balance sheet, including those not used under repurchase agreements. - Net public debt consolidates nonfinancial public sector and central bank debt. - The authorities’ definition of general government gross debt excludes government securities held by the central bank, except the stock of Treasury securities the central bank uses for monetary policy (those pledged as security reverse repurchase agreement operations). - According to the authorities’ definition, gross debt amounted to 76.1 percent of GDP at the end of 2024. ### Country-specific coverage and methodological notes (selected) - Canada: - For cross-economy comparability, gross and net debt levels reported by national statistical agencies for economies that have adopted the 2008 SNA (Australia, Canada, Hong Kong Special Administrative Region, the United States) are adjusted to exclude unfunded pension liabilities of government employees, defined-benefit pension plans. - Canada’s net debt corresponds to net financial liabilities as reported by Statistics Canada and includes equity and investment fund shares, which Canada has built up substantially. - Statistics Canada has made a recent methodological change to value assets at market value instead of book value, which has decreased net debt. - Chile: - Cyclically adjusted balances refer to the structural balance, which includes adjustments for output and commodity price developments. - China: - Deficit and public debt numbers cover a narrower perimeter of the general government than IMF staff estimates in China Article IV reports. - Public debt data include central government debt as reported by the Ministry of Finance, explicit local government debt, and shares of contingent liabilities the government may incur, based on estimates from the National Audit Office estimate. - IMF staff estimates exclude central government debt issued for China Railway. - Consolidated general government net borrowing excludes transfers to and from stabilization funds but includes state-administered funds, state-owned enterprise funds, and social security contributions and expenses, as well as some off-budget spending by local governments. - Deficit numbers do not include some expenditure items, mostly infrastructure investment financed off budget through land sales and local government financing vehicles. - Fiscal balances are not consistent with reported debt, because no time series of data in line with the National Audit Office debt definition is published officially. - Colombia: - Gross public debt refers to the combined public sector, including Ecopetrol and excluding Banco de la República’s outstanding external debt. - Dominican Republic: - Public debt, debt service, and cyclically adjusted or structural balances are for the consolidated public sector (central government, rest of nonfinancial public sector, and the central bank). Remaining fiscal series are for the central government. - Egypt, Ethiopia, Fiji, Hong Kong Special Administrative Region, India, Iran, Myanmar, Nepal, Pakistan, Singapore, Thailand, and other listed economies: - Specified data are on a fiscal year basis where indicated. - Greece: - General government gross debt follows the GFSM 2014 definition and includes the stock of deferred interest. - Ireland: - For 2015, if conversion of the government’s remaining preference shares to ordinary shares in one bank is excluded, fiscal balance is −1.1 percent of GDP. - Cyclically adjusted balances in Tables A3 and A4 exclude financial sector support measures. - Ireland’s 2015 national accounts were revised as a result of restructuring and relocation of multinational companies, resulting in a level shift of nominal and real GDP. - Japan: - Gross debt is on an unconsolidated basis. - Mexico: - General government refers to the central government, social security funds, public enterprises, development banks, the national insurance corporation, and the National Infrastructure Fund, but excludes subnational governments. - Norway: - Cyclically adjusted balances correspond to the cyclically adjusted non-oil overall or primary balance. These variables are a percentage of non-oil potential GDP. - Spain: - Overall and primary balances include financial sector support measures estimated to be 0.3 percent of GDP for 2013, 0.1 percent of GDP for 2014, 0.1 percent of GDP for 2015, and 0.2 percent of GDP for 2016. - Sweden: - Cyclically adjusted balances account for output gap. - Switzerland: - Data submissions at the cantonal and commune levels may be subject to sizable revisions. Cyclically adjusted balances include adjustments for extraordinary operations related to the banking sector. - Türkiye: - Projections in the Fiscal Monitor are based on the IMF-defined fiscal balance, which excludes some revenue and expenditure items included in the authorities’ headline balance. - Turkmenistan: - IMF staff estimates and projections of the fiscal balance exclude receipts from domestic bond issuances as well as privatization operations, in line with GFSM 2014. The authorities’ official estimates include bond issuance and privatization proceeds as part of government revenues. - Uruguay: - Starting in October 2018, Uruguay’s public pension system has been receiving transfers in the context of a new law compensating persons affected by the creation of the mixed pension system. These funds are recorded as revenues, consistent with the IMF’s methodology. - Transfers amounted to: - 1.2 percent of GDP in 2018, - 1.0 percent of GDP in 2019, - 0.6 percent of GDP in 2020, - 0.3 percent of GDP in 2021, - 0.1 percent of GDP in 2022, - zero percent thereafter. - Coverage of fiscal data for Uruguay was changed from consolidated public sector to nonfinancial public sector with the October 2019 World Economic Outlook. Under the nonfinancial public sector perimeter, assets and liabilities held by the nonfinancial public sector where the counterpart is the central bank are not netted out in debt figures; capitalization bonds issued in the past by the government to the central bank are now part of the nonfinancial public sector debt. - Venezuela: - Fiscal accounts include the budgetary central government, social security funds, FOGADE, and a sample of public enterprises, including Petróleos de Venezuela, S.A. (PDVSA). Data for 2018–22 are IMF staff estimates. ### Fiscal policy assumptions and projection methods - Historical data and projections of key fiscal aggregates are in line with those of the April 2025 World Economic Outlook, unless noted otherwise. - Short-term fiscal policy assumptions: - Based on officially announced budgets, adjusted for differences between national authorities and IMF staff regarding macroeconomic assumptions and projected fiscal outturns. - Medium-term fiscal projections: - Incorporate policy measures judged likely to be implemented. - When IMF staff has insufficient information to assess authorities’ budget intentions and prospects for implementation, an unchanged structural primary balance is assumed, unless indicated otherwise. - Country-specific projection bases (selected examples): - Afghanistan: Data for 2021–23 reported for selected indicators with estimates for fiscal data; estimates and projections for 2024–30 omitted because of unusually high uncertainty due to paused IMF engagement. - Algeria: Projections for 2025–30 based on IMF staff estimates, 2024 intra-year budget outturns and the authorities’ 2025 budget law and medium-term budget plans. - Argentina: Projections based on available budget outturn, budget plans, IMF-supported program targets for the federal government, announced fiscal measures, and IMF staff macro projections. - Australia: Projections based on Australian Bureau of Statistics data, FY2025/26 Commonwealth Government budgets, FY2024/25 state/territory budgets, and IMF staff estimates and projections. - Canada: Projections use baseline forecasts from the Government of Canada’s 2024 Fall Economic Statement and latest provincial budget updates, with IMF staff adjustments and incorporation of recent Statistics Canada National Economic Accounts releases. - China: IMF staff fiscal projections incorporate the 2025 budget as well as estimates of off-budget financing. - Colombia: Projections based on authorities’ policies and projections in the 2025 Financing Plan and 2024–2035 Medium-Term Fiscal Framework, adjusted to reflect IMF staff macro assumptions; the 2025 central government overall balance reflects the Financing Plan published in February. - Germany: Projections based on IMF staff macro framework and assume a gradual increase in infrastructure and defense spending over the medium term; projections also assume additional fiscal room from reforms to Germany’s fiscal rule (the “debt brake”) in March 2025 is used. - Ireland: Fiscal projections based on the country’s Budget 2025. - Israel: Projections subject to significant risks given the unpredictability of the conflict and its impact on the economy; based on General Government and draft 2025 budget. - Mexico: 2020 public sector borrowing requirements estimated by IMF staff adjust for some statistical discrepancies between above-the-line and below-the-line numbers. Fiscal projections for 2025 informed by Pre-Criterios 2025; projections for 2025 onward assume continued compliance with rules in the Federal Budget and Fiscal Responsibility Law. - New Zealand: Projections based on Half Year Economic and Fiscal Update 2024 and Budget Policy Statement 2025. - Other countries: Projections are based on a combination of authorities’ budgets and medium-term plans, IMF staff macroeconomic assumptions, and judgment where noted. _International Monetary Fund | April 2025_ ### 2023. Fiscal sector projections are based on the ### 2023. Fiscal sector projections are based on the ### Country-specific fiscal projection assumptions and notable policy details - Nigeria: Fiscal projections are based on macro framework, reflecting the authorities’ recent reforms, as well as the 2025 budget. - Norway: The fiscal projections are based on the 2025 budget and subsequent ad hoc updates. - Philippines: Revenue projections reflect IMF staff ’s macroeconomic assumptions and incorporate the updated data. Expenditure projections are based on budgeted figures, institutional arrangements, and current data in each year. - Poland: Data are based on ESA95 2004 and prior. Data are based on ESA 2010 beginning in 2005 (accrual basis). Projections begin in 2025, based on the 2025 budgets and subsequently announced fiscal measures. - Portugal: Projections for the current year are based on the authorities’ approved budget, adjusted to reflect the IMF staff ’s macroeconomic forecast. Projections thereafter are based on the assumption of unchanged policies. Projections for 2025 reflect information available in the 2025 budget proposal. - Romania: Fiscal projections reflect legislated changes up to the end of 2024 and measures announced in 2025. Medium-term projections include assumptions about gradual implementation of measures and disbursement in the framework of the European Union’s Recovery and Resilience Facility. - Russian Federation: - The fiscal rule was suspended in March 2022 allowing for windfall oil and gas revenues above benchmark to be used to finance a larger deficit in 2022 as well as savings accumulated in the National Welfare Fund. - The 2023–25 budget was based on a modified rule with a two-year transition period which set the benchmark oil and gas revenues fixed in rubles at Rub 8 trillion, compared with a fixed benchmark oil price at $40 a barrel under the 2019 fiscal rule. - In late September 2023, the Ministry of Finance proposed reverting to the earlier version of the fiscal rule from 2024 onward to determine the price of oil and gas revenues but sets the benchmark oil price at $60 a barrel. - The new rule, effective in the 2025 budget, allows for higher oil and gas revenues to be spent, but it simultaneously targets a smaller primary structural deficit. - Saudi Arabia: IMF staff ’s reference fiscal projections are based primarily on the understanding of government policies as outlined in the 2025 budget and recent official announcements. Export oil revenues are based on World Economic Outlook database reference oil price assumptions and IMF staff ’s understanding of oil production adjustments under the OPEC+ agreement. - Singapore: FY2024 projections are based on revised figures based on budget execution through the end of 2024. FY2025 projections are based on the initial budget of February 18, 2025. - South Africa: Fiscal assumptions are informed by the 2024 budget—complemented by the 2024 Medium-Term Budget Policy Statement, and information from the 2025 budget proposal. Nontax revenue excludes transactions in financial assets and liabilities. The Eskom debt relief is treated as a capital transfer above-the-line item. - Spain: Figures for 2021–28 reflect disbursements of grants and loans under the EU Recovery and Resilience Facility. - Sri Lanka: Fiscal projections are based on IMF staff ’s judgment. - Sudan: Projections assume that the conflict will end by end 2025 and re-engagement and reconstruction commence shortly thereafter. - Sweden: Fiscal estimates for 2024 are based on the authorities’ budget bill and have been updated with the authorities’ latest interim forecast. The impact of cyclical developments on the fiscal accounts is calculated using the 2014 OECD study to take into account output gap. - Switzerland: The projections assume that fiscal policy is adjusted as necessary to keep fiscal balances in line with the requirements of Switzerland’s fiscal rules. - Türkiye: The basis for the projections is the IMF-defined fiscal balance, which excludes some revenue and expenditure items that are included in the authorities’ headline balance. - United Kingdom: Fiscal projections are based on the October 2024 forecast from the Office for Budget Responsibility (OBR) and the January 2025 release on public sector finances from the Office for National Statistics. IMF staff projections take the OBR forecast as a reference and overlay adjustments for differences in assumptions. IMF staff’s forecasts do not necessarily assume that the UK fiscal rules will be met at the end of the forecast period. Data are presented on a calendar year basis. - United States: Fiscal projections are based on the January 2025 Congressional Budget Office baseline, adjusted for the IMF staff ’s policy and macroeconomic assumptions. Projections incorporate the effects of the Fiscal Responsibility Act. - Uruguay: Historical fiscal and monetary data are from the Uruguayan authorities. Projections are based on the authorities’ policies and projections, adjusted to reflect IMF staff ’s macroeconomic assumptions and assessment of policy plans. - Venezuela: Projections for 2025–30 are omitted due to an unusual high degree of uncertainty. - Vietnam: Projections starting in 2025 use authorities’ 2024 budget numbers and IMF staff ’s own projections. - Yemen: Hydrocarbon revenue projections are based on World Economic Outlook database assumptions for hydrocarbon prices and authorities’ projections for oil and gas production. Non-hydrocarbon revenues largely reflect authorities’ projection and the evolution of other key indicators. Over the medium term, assume conflict resolution, a recovery in economic activity, and additional expenditures associated with reconstruction costs. - Zambia: Government net and gross debt projections for 2025–30 are omitted due to debt restructuring. ### Economy groupings, coverage, and data conventions - Economy groupings used in the Fiscal Monitor include: Advanced Economies; Emerging Market Economies; Low-Income Developing Countries; G7; G20; Advanced G20; Emerging G20. A note: "Does not include European Union aggregate." - Coverage codes and meanings (as used across tables): - CG = central government - GG = general government - LG = local governments - SG = state governments - SS = social security funds - TG = territorial governments - BCG = budgetary central government - NFPC = nonfinancial public corporations - NFPS = nonfinancial public sector - NMPC = nonmonetary financial public corporations - PS = public sector - NFPC/NFPS/NMPC/NFPS/BCG used where country data specify alternate coverage. - Accounting practice codes: - A = accrual - C = cash - CB = commitments based - Mixed = combination of accrual and cash accounting - Debt valuation definitions: - "Nominal" refers to debt securities valued at their nominal values. - "Face" refers to undiscounted amount of principal to be repaid at (or before) maturity. - "Current market" refers to debt securities valued at market prices; insurance, pension, and standardized guarantee schemes valued according to principles equivalent to market valuation; all other debt instruments valued at nominal prices. - Special coverage notes (selected examples): - Poland: Data based on ESA95 2004 and, beginning in 2005, ESA 2010 (accrual). - South Africa: Coverage is consolidated government; local governments only partly covered; subnational government debt estimated to be limited. - Thailand: Gross debt data include debt of the financial public corporations guaranteed by the government. - Uruguay: Fiscal data from the nonfinancial public sector starting October 2019; historical data revised accordingly. ### Key aggregate fiscal statistics and projections (selected aggregates preserved verbatim) - Advanced Economies: General Government Overall Balance, 2016–30 — Average: - –2.6–2.5–2.4–3.0–10.3–7.2–2.9–4.6–4.7–4.3–3.9–3.8–3.9–3.9–4.0 - Advanced Economies: General Government Gross Debt, 2016–30 — Average: - 105.4 103.0 102.5 103.6 122.0 115.5 109.3 108.2 108.5 110.1 110.9 111.5 112.0 112.6 113.3 - Emerging Market and Middle-Income Economies: General Government Overall Balance, 2016–30 — Average: - –4.4–3.8–3.4–4.4–8.6–5.0–4.9–5.3–5.6–6.3–6.1–5.6–5.5–5.4–5.4 - Low-Income Developing Countries: General Government Overall Balance, 2016–30 — Average: - –3.7–3.9–3.6–4.1–5.4–4.6–4.5–3.9–3.4–3.5–3.3–3.1–3.1–3.2–3.2 - Advanced Economies: Selected fiscal ratios, 2016–30 (tables provide full country series): - Revenue (Average across advanced economies): 35.9 35.8 35.9 35.6 36.0 37.0 37.4 35.7 36.0 36.6 37.1 37.2 37.0 36.9 36.9 - Expenditure (Average across advanced economies): 38.6 38.2 38.3 38.6 46.3 44.2 40.3 40.3 40.7 40.9 40.9 40.9 40.9 40.8 40.9 - Structural fiscal indicators (Advanced economies averages from Table A23): - Pension Spending Change, 2024–30: 0.4 - Net Present Value of Pension Spending Change, 2024–50: 14.2 - Health Care Spending Change, 2024–30: 1.5 - Net Present Value of Health Care Spending Change, 2024–50: 72.7 - Gross Financing Need, 2025 (percent of GDP): 22.3 - Average Term to Maturity, 2025 (years): 7.2 - Projected Interest Rate–Growth Differential, 2025–30 (percent): –0.6 - Prepandemic Overall Balance, 2012–19: –3.1 - Projected Overall Balance, 2025–30: –4.0 - Nonresident Holding of General Government Debt, 2024 (percent of total): 31.2 - Net Financial Worth of General Government, 2021 (percent of GDP): (table reports country-specific values) - Structural fiscal indicators (Emerging market and low-income country averages are reported in Tables A24 and A25; select averages preserved verbatim): - Emerging market average Pension Spending Change, 2024–30: 0.9; Net Present Value of Pension Spending Change, 2024–50: 55.8; Health Care Spending Change, 2024–30: 0.4; Net Present Value of Health Care Spending Change, 2024–50: 22.8. - Low-Income Developing Countries average Pension Spending Change, 2024–30: 0.2; Net Present Value of Pension Spending Change, 2024–50: 10.3; Health Care Spending Change, 2024–30: 0.1; Net Present Value of Health Care Spending Change, 2024–50: 6.5. ### Methodological notes and definitions emphasized in the appendix - Projections are generally based on staff assessments of current policies and, where specified, on authorities’ approved budgets and announced measures (examples include multiple 2024 and 2025 budget references). - “Overall fiscal balance” generally refers to net lending and borrowing of the general government; in some cases it refers to total revenue and grants minus total expenditure and net lending (see table notes). - “Primary balance” is defined as the overall balance excluding net interest payments. - Cyclically adjusted balances and cyclically adjusted primary balances are presented in percent of potential GDP (World Economic Outlook conventions applied); in many cases adjustments beyond the output cycle are incorporated. - Gross and net debt series differ in coverage across economies; tables specify coverage (central government vs. general government vs. nonfinancial public sector) and valuation method (Nominal, Face, Current market). - For net present value calculations of long-run pension and health spending changes, a discount rate of 1 percent a year in excess of GDP growth is used for each economy. - Health expenditure projections: driven by demographics and other factors; excess cost growth assumptions and underlying data have been updated; projections exclude COVID-19 pandemic–period expenditure growth from the underlying trend estimate. - Gross financing need is defined as the projected overall deficit plus maturing government debt; maturing debt data generally refer to central government securities. - Average-term-to-maturity data primarily refer to central government securities and are sourced from Bloomberg Finance L.P. Nonresident holdings data through end-2024 are from the Joint External Debt Hub, Quarterly External Debt Statistics. - Multiple country-specific methodological footnotes are included in tables (e.g., coverage changes for Ecuador, Uruguay; treatment of off-balance items; debt restructurings). *Italic: Source — IMF staff, "METHODOLOGICAL AND STATISTICAL APPENDIX", Fiscal Monitor: Fiscal Policy Under Uncertainty, April 2025 (text excerpt provided).* ### Annex 1.2 ### Annex 1.2 ### Overview - Title: Global Spillovers from the Fiscal Packages in the European Union and the United States - Date: October 2021 - Format indicator as given in source: Online Annex 1.1 *International Monetary Fund | April 2025* ### Conclusion and Risk Assessment April 2012, Chapter 7 ### Conclusion and Risk Assessment April 2012, Chapter 7 ### Executive Directors’ Overall Assessment - Executive Directors broadly agreed with staff’s assessment of the global economic outlook, risks, and policy priorities. - They concurred that the global economy is at a critical juncture, with significant internal and external imbalances and vulnerabilities. - Directors recognized that major policy shifts are underway, generating a new wave of uncertainties with potentially significant implications for the functioning of the global economy. - The following remarks were made by the Chair at the conclusion of the Executive Board’s discussion of the Fiscal Monitor, Global Financial Stability Report, and World Economic Outlook on April 11, 2025. ### Financial Conditions and Near-Term Risks - Financial market landscape marked by increased uncertainty and market volatility, against the backdrop of stretched valuations within many segments of financial markets. - Global financial conditions have tightened, with near-term financial stability risks (as gauged by IMF’s Growth-at-Risk metric) rising. - Key vulnerabilities keeping risks to financial stability elevated: - Further correction of asset prices (with geopolitical risks being a potential trigger). - Ongoing increase in leverage and interconnectedness in the financial system, especially among certain non-bank financial intermediaries (NBFIs) receiving strong investment flows in recent years. - Still-rising sovereign debt levels. ### Risks to the Economic Outlook - Risks to the outlook are firmly tilted to the downside. - Directors noted that escalating protectionism and elevated policy uncertainty could further reduce near- and long-term growth in a low-growth, high-debt environment. - Divergent and rapidly shifting policy stances or deteriorating sentiment could trigger: - More abrupt repricing of assets. - Sharp adjustments in foreign exchange rates and capital flows, especially for emerging market and developing economies. - Fiscal side risks: - Escalating uncertainty and unexpectedly high interest rates may lead to a significant increase in global public debt, particularly due to rising expenditures on defense and declining revenues linked to output uncertainty from tariffs. - Higher interest rates could limit key development spending and exacerbate financing risks in low-income developing countries, including against the background of declining official development assistance. - More limited international cooperation on common challenges could hinder progress toward building a more resilient global economy and addressing development needs. ### Monetary Policy Guidance - Elevated uncertainty intensifies growth-inflation trade-offs. - Directors called on central banks to carefully fine-tune monetary policy to achieve their mandates and ensure price stability. - Monetary policy recommendations: - Remain data-dependent and clearly communicated to anchor expectations. - Where near-term inflation risks are tilted to the upside or inflation expectations are rising, future cuts to the policy rate should remain contingent on evidence that inflation is heading decisively back toward target, while ensuring financial stability is not compromised. - Central banks should stand ready to act forcefully if inflation risks materialize. - Emerging market considerations: - Abrupt sell-offs in global markets, potential divergence in monetary policy paths, and high trade/economic policy uncertainty could tighten financial conditions and raise currency volatility. - Emerging markets may require measures to mitigate disruptive capital outflows; IMF’s Integrated Policy Framework provides a toolkit for responses tailored to country-specific circumstances. ### Financial Regulation, Macroprudential Policy, and Crisis Preparedness - Full, timely and consistent implementation of Basel III and other internationally agreed bank regulatory standards would ensure a level playing field across jurisdictions and guarantee ample and adequate capital and liquidity. - Growing nexus between banks and NBFIs calls for supervisors to enhance risk assessment of such linkages. - Need to strengthen the macroprudential policy framework to contain excessive risk taking in the NBFI sector, and to ensure capital and liquidity buffers in banking systems are adequate to support credit provision through periods of stress. - Emphasis on macroprudential buffers and strong crisis preparedness and resolution frameworks to mitigate shocks. ### Fiscal Policy Recommendations - Directors called for gradual and growth-friendly fiscal adjustment within a credible medium-term framework to: - Reduce debt. - Rebuild fiscal buffers. - Accommodate priority spending while protecting the vulnerable. - Guidance by country circumstances: - Economies with limited fiscal space should reprioritize public spending within their planned budgets. - Economies with room for fiscal maneuver could use some of the available space, if appropriate, within well-defined medium-term fiscal frameworks. - Advanced economies should: - Prioritize expenditure reforms. - Advance pension and healthcare reforms. - Eliminate ineffective tax incentives. - Expand tax bases by removing exemptions to improve tax expenditure efficiency. - Countries facing new spending needs (for example, in defense) should demonstrate a strong commitment to upholding the integrity of existing fiscal rules while ensuring transparency. - Emerging market and developing economies should: - Enhance revenues through tax system reforms and improved revenue administration. - Phase out energy subsidies. - Streamline public wage bills while safeguarding public investment and upgrading social safety nets. ### Structural Policies and International Cooperation - Directors emphasized the need for fiscal and structural reforms to enhance growth potential and the criticality of international cooperation to respond to global challenges and bolster resilience. - Given significant demographic shifts, policy priorities include: - Comprehensive policies to increase labor force participation among women and older workers. - Implement pension reforms. - Effectively address migration challenges. - Directors recognized that renewable energy sources and innovative production paradigms could help countries reap benefits of advancements in artificial intelligence without escalating electricity prices. - Highlighted importance of clear and transparent trade policies to stabilize expectations and minimize volatility. - Continued cooperation across policy areas—including trade, industrial policy, international taxation, climate, and development and humanitarian assistance—can help mitigate global spillovers and protect vulnerable populations. *IMF EXECUTIVE BOARD DISCUSSION OF THE OUTLOOK, APRIL 2025* ### CHAPTER 1 ### CHAPTER 1 Fiscal Policy under Uncertainty ### Primary heading - CHAPTER 1 - Fiscal Policy under Uncertainty ### Adjacent chapter title (as presented in the source) - CHAPTER 2 - Public Sentiment Matters: The Essence of Successful Energy Subsidies and Pension Reforms *Source: text - CHAPTER 1, https://www.imf.org/-/media/files/publications/fiscal-monitor/2025/english/text.pdf* --- _Source: https://www.imf.org/-/media/files/publications/fiscal-monitor/2025/english/text.pdf_