Fiscal Monitor, October 2020: Policies for the Recovery

Fiscal Monitor, October 14, 2020

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Governments’ measures to cushion the blow from the pandemic total a staggering $12 trillion globally.
These lifelines and the worldwide recession have pushed global public debt to an all-time high.
Governments should not withdraw lifelines too rapidly.
Government support should shift gradually from protecting old jobs to:
- getting people back to work, and
- helping viable but still-vulnerable firms safely reopen.
The fiscal measures for the recovery are an opportunity to make the economy more inclusive and greener.

Low interest rates make borrowing to invest desirable.
Countries that cannot access finance will need to do more with less.
The chapter explains how investment can be scaled up while preserving quality.
Increasing public investment by 1 percent of GDP in advanced and emerging economies could:
- create 7 million jobs directly, and
- create more than 20 million jobs indirectly.
Priority investment areas identified:
- healthcare,
- housing,
- digitalization, and
- the environment.
Investments in these areas would lay the foundations for a more resilient and inclusive economy.

Preserve emergency lifelines until recovery is sufficiently established; avoid premature withdrawal.
Reorient fiscal support from job preservation toward job creation and firm reopening as conditions allow.
Use the recovery phase to pursue inclusive and green fiscal measures.
Where feasible, use low interest rates to finance productive public investment.
For countries facing financing constraints, prioritize high-quality, high-impact investments and efficiency in investment delivery.

Source: Fiscal Monitor, October 2020: Policies for the Recovery (October 14, 2020).