## _072216a

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### Executive summary — structural reforms: rationale and priorities
- Structural reforms can provide a powerful lift to growth—both in the short and the long term—if they are well aligned with individual country conditions, including level of development, position in the economic cycle, and available macroeconomic policy space to support reforms.
- The larger a country’s output gap, the more it should prioritize structural reforms that support growth in the short term and the long term—such as product market deregulation and infrastructure investment.
- With nearly all G-20 economies operating at below-potential output, the IMF recommends measures that both boost near-term growth and raise long-term potential growth.

### Macroeconomic support and sequencing
- Macroeconomic support can make reforms more effective by bringing forward long-term gains or alleviating short-term costs.
  - Where monetary policy is becoming over-burdened, domestic policy coordination can help make macroeconomic support more effective.
  - Fiscal space, where it exists, should be used to offset short-term costs of reforms.
  - Where fiscal constraints are binding, budget-neutral reform packages with positive demand effects should take priority.
- Some structural reforms can themselves help generate fiscal space. Example: IMF research finds that by boosting output, product market deregulation can help lower the debt-to-GDP ratio over time.
- Formulating a medium-term plan that clarifies the long-term objectives of fiscal policy can also help increase near-term fiscal space.

### IMF guiding framework for prioritizing reforms
- Prioritization should start with an assessment of a country’s structural policy gaps and then take into account the macroeconomic context along three key dimensions:
  - Income level: prioritize reforms with high pay-offs for the economy’s stage of development (EMs: market functioning; advanced economies: technological progress).
  - Position in the economic cycle: larger output gaps favor reforms with short-term demand support (e.g., infrastructure investment, product market deregulation).
  - Policy space to support reform: sequencing depends on whether fiscal and monetary policy can support reforms; where budget constraints are binding, favor lower- or no-cost measures with positive demand effects or budget-neutral packages.

### Macroeconomic policies and structural reforms: interactions and fiscal space
- Demand support increases the effectiveness of structural reforms by advancing their gains or easing short-run costs; structural reforms can in turn make demand policies more effective and sometimes increase macroeconomic (particularly fiscal) policy space.
- Macroeconomic policy space differs across the G-20:
  - In most advanced economies, monetary policy has come close to the lower bound in terms of nominal interest rates.
  - In many emerging markets, currency pressures and financial stability considerations may limit monetary policy scope.
- Assessing fiscal space requires a forward-looking, multi-dimensional assessment including: public debt levels and trajectories, financing needs, fiscal track record, conjuncture, and market sentiment.
- IMF staff assesses fiscal space using a four-stage approach:
  1. Clarify cyclical conditions and gaps (infrastructure, balance sheet repair) affecting fiscal multipliers.
  2. Consider indicators of financing availability and market perception risks, and public debt trajectory under baseline and stress cases.
  3. Simulate discretionary fiscal policy experiments and map implications for macro outcomes and sustainability.
  4. Use judgment to draw on stages 1–3 and incorporate country-specific considerations and fiscal frameworks.

### Evidence on reform effects and policy implications
- New IMF staff analysis on advanced economies finds:
  - Major past episodes of product market deregulation boosted output sufficiently to reduce the debt-to-GDP ratio by about 4 percentage points on average, after five years.
  - Major episodes of job protection reforms were found, on average, not to have a significant effect on public debt ratios in the first five years; effects vary with economic conditions:
    - Job protection reforms increased the public debt-to-GDP ratio when carried out at times of major slack.
    - Job protection reforms decreased the public debt-to-GDP ratio during times of robust growth.
- Combining job protection reforms with fiscal stimulus eventually lowers the public debt-to-GDP ratio despite short-term fiscal cost; combining such reforms with fiscal contraction can be self-defeating.

### IMF structural reform recommendations for G-20 countries (high-level)
- General approach:
  - Fund advice focuses on macro-critical structural reforms—those that affect domestic, external, or global stability—and takes into account development level, business cycle position, and policy space.
  - Given that nearly all G-20 economies have output below potential, recommendations emphasize measures that raise both near-term and long-term growth.
- Advanced economies (selected):
  - Shift public spending toward infrastructure investment (Australia, Canada, Germany, United States (US)).
  - Promote product market reforms (Australia, Canada, Germany, Japan, Korea, Italy).
  - Promote labor market reforms (Canada, Germany, Japan, Korea, United Kingdom (UK), US).
  - Fiscal structural reforms (France, UK, US).
  - Where there is fiscal space, lowering employment protection is also recommended (Korea).
- Emerging markets (selected):
  - Raise public investment efficiency (India, Saudi Arabia, South Africa).
  - Labor market reforms (Indonesia, Russia, Saudi Arabia, South Africa, Turkey).
  - Product market reforms (China, Saudi Arabia, South Africa) to boost investment and productivity, particularly effective if trade and FDI barriers are eased (Brazil, India, Indonesia).
  - Governance and institutional reforms (China, South Africa).
  - Where policy space is limited, adjust fiscal composition to create space to support reforms (Argentina, India, Mexico, Russia).
- Commodity-exporting EMs facing acute challenges (Brazil, Russia, Saudi Arabia, South Africa):
  - Output significantly below potential (about -2½ percent lower on average, excluding Saudi Arabia).
  - Urgent need to rebuild fiscal buffers.
  - Recommended: product market and legal reforms to improve the business climate and investment; trade and FDI liberalization to facilitate diversification; financial deepening to boost credit flows.

### Inclusiveness and macrofinancial resilience
- IMF recommendations to promote inclusiveness:
  - Targeted expansion of social spending toward vulnerable groups (Mexico).
  - Social spending for the elderly poor (Korea).
  - Upgrading social programs for the nonworking poor (US).
- Recommendations to bolster macrofinancial resilience:
  - Expand housing supply (UK).
  - Resolve corporate debt overhang (China, Korea).
  - Coordinate a national approach to regulating and supervising life insurers (US).
  - Reform monetary frameworks (Argentina, China, India).

### Infrastructure investment: capacity, fiscal space, and country priorities
- Scaling up infrastructure investment raises productive capacity, boosts short-term demand, and catalyzes private investment.
- Measures to create fiscal space for infrastructure:
  - Enhance efficiency of spending and/or taxation.
  - Tackle administrative and/or regulatory constraints.
- Country-specific notes:
  - Australia and Canada: positioned to benefit given a significant output gap, low interest rates, fiscal space allowing debt financing, and efficient investment processes; priority is a nation-wide plan coordinating between different levels of government.
  - Germany: focus on capacity upgrades at the subnational level.
  - United States: staff estimates that investment to close infrastructure gaps (particularly in surface transportation and telecommunications) could boost potential growth by ¼ percentage point.

### Competition, product markets, and services
- Facilitating entry of new suppliers and competition is expected to boost domestic demand and employment.
- IMF recommendations for product market competition:
  - Australia, Canada, Germany, Japan, and Italy: spur competition in services and network industries.
  - Korea: increase competition and deregulation in education services.
  - Korea and the US: increase competition and deregulation in healthcare.

### Labor market reforms: participation, productivity, and skills
- Focus: boost participation and productivity, considering near-term demand support and fiscal space.
- General points:
  - Aging societies face falling labor force participation.
  - Measures needed to integrate women, refugees, and older workers; training is emphasized.
  - Labor supply increases from these measures are gradual; short-term growth impact is limited.
  - Lowering employment protection can help but works better with healthier growth and ideally paired with fiscal support.
- Country-specific recommendations:
  - Canada, Germany, Japan, Korea, the UK, and the US: broaden full-time employment opportunities for women by expanding child care provision and after school programs; in some cases lower the tax burden on secondary earners (example: Germany).
  - Germany priority: integrate low-skilled migrants via training, active labor market policies, and lowering the tax wedge; extend working lives by indexing the retirement age to life expectancy and removing financial disincentives to work beyond pensionable age.
  - Korea: where fiscal space is available, expand benefits for non-regular workers and reduce labor-market rigidities by introducing performance-based assessment and clear conditions for dismissal; short-term costs alleviated by a fiscal expansion.
  - France: reform unemployment and welfare benefits to strengthen work incentives and job search; support self-employment and new enterprise creation; further liberalize regulated professions.
  - Italy: complement the Jobs Act with a new decentralized wage bargaining system that aligns public wage setting with productivity growth at the firm level, reduces the wedge between public and private wages, and reduces regional wage disparities.
- Skills and immigration:
  - Bridging the skill divide: expand vocational training partnerships between industry and educational institutions in Canada, France, the UK, and the US.
  - United States: a comprehensive skills-based immigration reform with a targeted expansion of higher-skilled workers would help alleviate pressures on unskilled wages and raise demand.
  - Japan: relaxation of immigration restrictions in sectors with labor shortages is particularly relevant.

### Fiscal structural reforms: tax, pensions, subsidies, and social spending
- Fiscal structural reforms encompass:
  - (i) fiscal institutions and budgetary frameworks;
  - (ii) changes in the tax base and policy driven by longer-term considerations;
  - (iii) changes in pensions, health and social security systems driven by demographic developments, specifically where population aging is a long-term macro-critical issue.
- General objective: raise medium-term productive capacity and create policy space; boost productivity, employment, and growth.
- Country-specific recommendations and quantified impact:
  - United States: tax reform to broaden bases, remove exemptions, simplify the system, rebalance from direct to indirect taxes (e.g., on carbon and gas), and reduce statutory rates could raise real GDP by 1½ percent over ten years; expansion of R&D tax credits to support technology startups and promote innovation.
  - United Kingdom: scale back distortionary tax expenditures (e.g., nonstandard zero VAT rates) to improve efficiency and increase tax neutrality.
  - Australia: shift from income taxes toward a Goods and Services Tax.
  - Japan: gradually increase the consumption tax rate as part of a pre-commitment to a gradual pace of tax increases to ensure medium-term fiscal sustainability.
  - France: focus on overall social spending reforms and streamlining public employment to ensure a sustainable, growth-oriented fiscal policy.
  - UK and US (general): reform pension and health systems to contain future aging-related costs, e.g., by extending the retirement age and indexing benefits to the CPI.

### Other measures to ease frictions in resource allocation
- Canada: lower interprovincial barriers to trade.
- Italy: more ambitious reform of the financial sector and a more effective bank resolution framework to accelerate balance sheet repair, improve credit flow, and support economic recovery.
- United Kingdom: ease planning restrictions, mobilize unused public land for construction, and reform property taxes to encourage more efficient use of the housing stock.

### Emerging markets: public investment, labor, trade, and institutional reforms
- Public investment management:
  - Potential gains for India, Saudi Arabia, and South Africa from improving quality and efficiency of public investment via project oversight, reviews, and greater use of public-private partnerships.
  - Improving land acquisition laws (example: India) can stimulate private infrastructure spending at little to no fiscal cost.
- Labor market advice tailored by country:
  - Indonesia: ease complex wage setting restrictions and hiring and layoff procedures.
  - South Africa: increase labor flexibility by excluding small- and medium-sized enterprises from collective bargaining outcomes and introducing contracts where workers gradually accumulate benefits and job security.
  - Reduce skill mismatches via education and vocational training in Indonesia, Russia, Saudi Arabia, South Africa, and Turkey.
- Trade and FDI liberalization:
  - Brazil, India, and Indonesia: reduce tariffs, lift domestic content requirements, and pursue preferential trade agreements.
  - China, Saudi Arabia, South Africa: promote market entry and competition in services and network sectors.
- Institutional and regulatory reforms:
  - Argentina, China, India, Mexico, Russia: implement subsidy and social spending reforms (e.g., reduce spending rigidities related to indexation of benefits and pensions) to create policy space.
  - China and South Africa: strengthen governance in state-owned enterprises; China: harden budget constraints by removing implicit guarantees and subsidies.
  - Mexico, Turkey, Russia: improve security, the rule of law, and the judiciary.
  - India, Mexico, Saudi Arabia: strengthen frameworks for public-private sector dispute settlement and contract enforcement.
  - India and Saudi Arabia: enforce laws against gender discrimination and improve child care facilities to boost female labor force participation and demand without straining the budget.

### Conclusion and IMF support
- A broad-based policy effort is essential to lift growth and counter risks: combine better-balanced demand support where needed with structural reforms to raise productivity and employment.
- Policymakers should choose reform packages reflecting an economy’s structural policy gaps, level of development, position in the economic cycle, and policy space to maximize immediate impact on growth.
- Strong policy frameworks anchoring fiscal and monetary policy are important complements to structural reforms, enabling effective short-run demand management.
- The IMF will continue supporting members in adopting policy packages via surveillance, technical assistance, and financial arrangements; the Fund supports G-20 efforts to bolster structural reforms and explore combining them with macroeconomic policy management.

*Source: EXECUTIVE SUMMARY (July 21, 2016).*

### EXECUTIVE SUMMARY

### EXECUTIVE SUMMARY

### Structural reforms: rationale and priorities
- Structural reforms can provide a powerful lift to growth—both in the short and the long term—if they are well aligned with individual country conditions, including level of development, position in the economic cycle, and available macroeconomic policy space to support reforms.
- The larger a country’s output gap, the more it should prioritize structural reforms that support growth in the short term and the long term—such as product market deregulation and infrastructure investment.
- With nearly all G-20 economies operating at below-potential output, the IMF recommends measures that both boost near-term growth and raise long-term potential growth.

### Macroeconomic support and sequencing
- Macroeconomic support can make reforms more effective by bringing forward long-term gains or alleviating short-term costs.
  - Where monetary policy is becoming over-burdened, domestic policy coordination can help make macroeconomic support more effective.
  - Fiscal space, where it exists, should be used to offset short-term costs of reforms.
  - Where fiscal constraints are binding, budget-neutral reform packages with positive demand effects should take priority.
- Some structural reforms can themselves help generate fiscal space. Example: IMF research finds that by boosting output, product market deregulation can help lower the debt-to-GDP ratio over time.
- Formulating a medium-term plan that clarifies the long-term objectives of fiscal policy can also help increase near-term fiscal space.

### IMF guiding framework for prioritizing reforms
- Prioritization should start with an assessment of a country’s structural policy gaps and then take into account the macroeconomic context along three key dimensions:
  - Income level: prioritize reforms with high pay-offs for the economy’s stage of development (EMs: market functioning; advanced economies: technological progress).
  - Position in the economic cycle: larger output gaps favor reforms with short-term demand support (e.g., infrastructure investment, product market deregulation).
  - Policy space to support reform: sequencing depends on whether fiscal and monetary policy can support reforms; where budget constraints are binding, favor lower- or no-cost measures with positive demand effects or budget-neutral packages.

### Macroeconomic policies and structural reforms: interactions and fiscal space
- Demand support increases the effectiveness of structural reforms by advancing their gains or easing short-run costs; structural reforms can in turn make demand policies more effective and sometimes increase macroeconomic (particularly fiscal) policy space.
- Macroeconomic policy space differs across the G-20:
  - In most advanced economies, monetary policy has come close to the lower bound in terms of nominal interest rates.
  - In many emerging markets, currency pressures and financial stability considerations may limit monetary policy scope.
- Assessing fiscal space requires a forward-looking, multi-dimensional assessment including: public debt levels and trajectories, financing needs, fiscal track record, conjuncture, and market sentiment.
- IMF staff assesses fiscal space using a four-stage approach:
  1. Clarify cyclical conditions and gaps (infrastructure, balance sheet repair) affecting fiscal multipliers.
  2. Consider indicators of financing availability and market perception risks, and public debt trajectory under baseline and stress cases.
  3. Simulate discretionary fiscal policy experiments and map implications for macro outcomes and sustainability.
  4. Use judgment to draw on stages 1–3 and incorporate country-specific considerations and fiscal frameworks.

### Evidence on reform effects and policy implications
- New IMF staff analysis on advanced economies finds:
  - Major past episodes of product market deregulation boosted output sufficiently to reduce the debt-to-GDP ratio by about 4 percentage points on average, after five years.
  - Major episodes of job protection reforms were found, on average, not to have a significant effect on public debt ratios in the first five years; effects vary with economic conditions:
    - Job protection reforms increased the public debt-to-GDP ratio when carried out at times of major slack.
    - Job protection reforms decreased the public debt-to-GDP ratio during times of robust growth.
- Combining job protection reforms with fiscal stimulus eventually lowers the public debt-to-GDP ratio despite short-term fiscal cost; combining such reforms with fiscal contraction can be self-defeating.

### IMF structural reform recommendations for G-20 countries (high-level)
- General approach:
  - Fund advice focuses on macro-critical structural reforms—those that affect domestic, external, or global stability—and takes into account development level, business cycle position, and policy space.
  - Given that nearly all G-20 economies have output below potential, recommendations emphasize measures that raise both near-term and long-term growth.
- Advanced economies:
  - Shift public spending toward infrastructure investment (Australia, Canada, Germany, United States (US)).
  - Promote product market reforms (Australia, Canada, Germany, Japan, Korea, Italy).
  - Promote labor market reforms (Canada, Germany, Japan, Korea, United Kingdom (UK), US).
  - Fiscal structural reforms (France, UK, US).
  - Where there is fiscal space, lowering employment protection is also recommended (Korea).
- Emerging markets (EMs):
  - Raise public investment efficiency (India, Saudi Arabia, South Africa).
  - Labor market reforms (Indonesia, Russia, Saudi Arabia, South Africa, Turkey).
  - Product market reforms (China, Saudi Arabia, South Africa) to boost investment and productivity, particularly effective if trade and FDI barriers are eased (Brazil, India, Indonesia).
  - Governance and institutional reforms (China, South Africa).
  - Where policy space is limited, adjust fiscal composition to create space to support reforms (Argentina, India, Mexico, Russia).
- Commodity-exporting EMs facing acute challenges (Brazil, Russia, Saudi Arabia, South Africa):
  - Output significantly below potential (about -2½ percent lower on average, excluding Saudi Arabia).
  - Urgent need to rebuild fiscal buffers.
  - Recommended: product market and legal reforms to improve the business climate and investment; trade and FDI liberalization to facilitate diversification; financial deepening to boost credit flows.

### Inclusiveness and macrofinancial resilience
- IMF recommendations to promote inclusiveness:
  - Targeted expansion of social spending toward vulnerable groups (Mexico).
  - Social spending for the elderly poor (Korea).
  - Upgrading social programs for the nonworking poor (US).
- Recommendations to bolster macrofinancial resilience:
  - Expand housing supply (UK).
  - Resolve corporate debt overhang (China, Korea).
  - Coordinate a national approach to regulating and supervising life insurers (US).
  - Reform monetary frameworks (Argentina, China).

*Source: EXECUTIVE SUMMARY (July 21, 2016).*

### 20.      In addition to boosting growth, IMF recommendations also aim to promote

### 20.      In addition to boosting growth, IMF recommendations also aim to promote

### Inclusiveness and macroeconomic resilience
- Recommendations aim to promote inclusiveness and macroeconomic resilience alongside boosting growth.
- Inclusiveness recommendations:
  - Carefully targeted expansion of social spending toward vulnerable groups in Mexico.
  - Social spending for the elderly poor in Korea.
  - Upgrading of social programs for the nonworking poor in the United States (US).
- Macrofiscal/macrofinancial resilience recommendations:
  - Expanding the housing supply in the United Kingdom (UK).
  - Resolving the corporate debt overhang in China and Korea.
  - Coordinating a national approach to regulating and supervising life insurers in the US.
  - Reforming monetary frameworks in Argentina, China, and India.

### Infrastructure investment: capacity, fiscal space, and country priorities
- Scaling up infrastructure investment raises productive capacity, boosts short-term demand, and catalyzes private investment.
- Measures to create fiscal space for infrastructure:
  - Enhance efficiency of spending and/or taxation.
  - Tackle administrative and/or regulatory constraints.
- Country-specific notes:
  - Australia and Canada: positioned to benefit given a significant output gap, low interest rates, fiscal space allowing debt financing, and efficient investment processes; priority is a nation-wide plan coordinating between different levels of government.
  - Germany: focus on capacity upgrades at the subnational level.
  - United States: staff estimates that investment to close infrastructure gaps (particularly in surface transportation and telecommunications) could boost potential growth by ¼ percentage point.

### Competition, product markets, and services
- Facilitating entry of new suppliers and competition is expected to boost domestic demand and employment.
- IMF recommendations for product market competition:
  - Australia, Canada, Germany, Japan, and Italy: spur competition in services and network industries.
  - Korea: increase competition and deregulation in education services.
  - Korea and the US: increase competition and deregulation in healthcare.

### Labor market reforms: participation, productivity, and skills
- Focus: boost participation and productivity, considering near-term demand support and fiscal space.
- General points:
  - Aging societies face falling labor force participation.
  - Measures needed to integrate women, refugees, and older workers; training is emphasized.
  - Labor supply increases from these measures are gradual; short-term growth impact is limited.
  - Lowering employment protection can help but works better with healthier growth and ideally paired with fiscal support.
- Country-specific recommendations:
  - Canada, Germany, Japan, Korea, the UK, and the US: broaden full-time employment opportunities for women by expanding child care provision and after school programs; in some cases lower the tax burden on secondary earners (example: Germany).
  - Germany priority: integrate low-skilled migrants via training, active labor market policies, and lowering the tax wedge; extend working lives by indexing the retirement age to life expectancy and removing financial disincentives to work beyond pensionable age.
  - Korea: where fiscal space is available, expand benefits for non-regular workers and reduce labor-market rigidities by introducing performance-based assessment and clear conditions for dismissal; short-term costs alleviated by a fiscal expansion.
  - France: reform unemployment and welfare benefits to strengthen work incentives and job search; support self-employment and new enterprise creation; further liberalize regulated professions.
  - Italy: complement the Jobs Act with a new decentralized wage bargaining system that aligns public wage setting with productivity growth at the firm level, reduces the wedge between public and private wages, and reduces regional wage disparities.
- Skills and immigration:
  - Bridging the skill divide: expand vocational training partnerships between industry and educational institutions in Canada, France, the UK, and the US.
  - United States: a comprehensive skills-based immigration reform with a targeted expansion of higher-skilled workers would help alleviate pressures on unskilled wages and raise demand.
  - Japan: relaxation of immigration restrictions in sectors with labor shortages is particularly relevant.

### Fiscal structural reforms: tax, pensions, subsidies, and social spending
- Fiscal structural reforms encompass:
  - (i) fiscal institutions and budgetary frameworks;
  - (ii) changes in the tax base and policy driven by longer-term considerations;
  - (iii) changes in pensions, health and social security systems driven by demographic developments, specifically where population aging is a long-term macro-critical issue.
- General objective: raise medium-term productive capacity and create policy space; boost productivity, employment, and growth.
- Country-specific recommendations and quantified impact:
  - United States: tax reform to broaden bases, remove exemptions, simplify the system, rebalance from direct to indirect taxes (e.g., on carbon and gas), and reduce statutory rates could raise real GDP by 1½ percent over ten years; expansion of R&D tax credits to support technology startups and promote innovation.
  - United Kingdom: scale back distortionary tax expenditures (e.g., nonstandard zero VAT rates) to improve efficiency and increase tax neutrality.
  - Australia: shift from income taxes toward a Goods and Services Tax.
  - Japan: gradually increase the consumption tax rate as part of a pre-commitment to a gradual pace of tax increases to ensure medium-term fiscal sustainability.
  - France: focus on overall social spending reforms and streamlining public employment to ensure a sustainable, growth-oriented fiscal policy.
  - UK and US (general): reform pension and health systems to contain future aging-related costs, e.g., by extending the retirement age and indexing benefits to the CPI.

### Other measures to ease frictions in resource allocation
- Canada: lower interprovincial barriers to trade.
- Italy: more ambitious reform of the financial sector and a more effective bank resolution framework to accelerate balance sheet repair, improve credit flow, and support economic recovery.
- United Kingdom: ease planning restrictions, mobilize unused public land for construction, and reform property taxes to encourage more efficient use of the housing stock.

### IMF recommended reform priorities (tables summarized)
- Advanced economies: cross-country priorities highlighted across Innovation, Product Market, Labor Market, Infrastructure, Banking System, Legal System/Property Rights, Capital Market Development, Fiscal Structural, Trade/FDI Liberalization (country-specific ticks reported in Table 1).
- Emerging markets: emphasis on reforms delivering near-term payoffs given weak economic conditions and limited fiscal space; focus areas include public investment management, product and labor market reforms, trade and investment liberalization, governance, and institutional/regulatory reforms (country-specific ticks reported in Table 2).

### Emerging markets: public investment, labor, trade, and institutional reforms
- Public investment management:
  - Potential gains for India, Saudi Arabia, and South Africa from improving quality and efficiency of public investment via project oversight, reviews, and greater use of public-private partnerships.
  - Improving land acquisition laws (example: India) can stimulate private infrastructure spending at little to no fiscal cost.
- Labor market advice tailored by country:
  - Indonesia: ease complex wage setting restrictions and hiring and layoff procedures.
  - South Africa: increase labor flexibility by excluding small- and medium-sized enterprises from collective bargaining outcomes and introducing contracts where workers gradually accumulate benefits and job security.
  - Reduce skill mismatches via education and vocational training in Indonesia, Russia, Saudi Arabia, South Africa, and Turkey.
- Trade and FDI liberalization:
  - Brazil, India, and Indonesia: reduce tariffs, lift domestic content requirements, and pursue preferential trade agreements.
  - China, Saudi Arabia, South Africa: promote market entry and competition in services and network sectors.
- Institutional and regulatory reforms:
  - Argentina, China, India, Mexico, Russia: implement subsidy and social spending reforms (e.g., reduce spending rigidities related to indexation of benefits and pensions) to create policy space.
  - China and South Africa: strengthen governance in state-owned enterprises; China: harden budget constraints by removing implicit guarantees and subsidies.
  - Mexico, Turkey, Russia: improve security, the rule of law, and the judiciary.
  - India, Mexico, Saudi Arabia: strengthen frameworks for public-private sector dispute settlement and contract enforcement.
  - India and Saudi Arabia: enforce laws against gender discrimination and improve child care facilities to boost female labor force participation and demand without straining the budget.

### Conclusion and IMF support
- A broad-based policy effort is essential to lift growth and counter risks: combine better-balanced demand support where needed with structural reforms to raise productivity and employment.
- Policymakers should choose reform packages reflecting an economy’s structural policy gaps, level of development, position in the economic cycle, and policy space to maximize immediate impact on growth.
- Strong policy frameworks anchoring fiscal and monetary policy are important complements to structural reforms, enabling effective short-run demand management.
- The IMF will continue supporting members in adopting policy packages via surveillance, technical assistance, and financial arrangements; the Fund supports G-20 efforts to bolster structural reforms and explore combining them with macroeconomic policy management.

*Source: _072216a - 20.      In addition to boosting growth, IMF recommendations also aim to promote*

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_Source: https://www.imf.org/-/media/websites/imf/imported-full-text-pdf/external/np/pp/eng/2016/_072216a.pdf_