Assessing Fiscal Sustainability in Theory and Practice

ByNigel A Chalk, Richard Hemming

April 1, 2000

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Disclaimer: This Working Paper should not be reported as representing the views of the IMF.The views expressed in this Working Paper are those of the author(s) and do not necessarily represent those of the IMF or IMF policy. Working Papers describe research in progress by the author(s) and are published to elicit comments and to further debate

Summary

The main purpose of this paper is to provide an overview of approaches to assessing fiscal sustainability. It summarizes the general analytical background, focusing on the present value budget constraint, which is the benchmark against which solvency is determined, tests of sustainability (including sustainability indicators), and sustainability and uncertainty. The paper then looks at the way in which fiscal sustainability has been assessed in different types of IMF work. Finally the link between fiscal and external sustainability is discussed.

Subject: External debt, Fiscal policy, Fiscal stance, Fiscal sustainability, Public debt

Keywords: debt ratio, debt stock, debt target, Fiscal stance, Fiscal sustainability, Government deficits and debt, net debt picture, pension debt, present value, present value budget constraint, sustainability calculation, sustainability indicators, tax ratio, WP

Pages:
27
Volume:
2000
DOI:
https://doi.org/10.5089/9781451850352.001
Issue:
081
Series:
Working Paper No. 2000/081
Stock No:
WPIEA0812000
ISBN:
9781451850352
ISSN:
1018-5941

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