{
  "title": "Economic Preparedness: The Need for Fiscal Space",
  "publication": "IMF Blog, June 27, 2018",
  "sourceUrl": "https://www.imf.org/en/blogs/articles/2018/06/27/blog-economic-preparedness-the-need-for-fiscal-space",
  "canonical": "https://www.imf.org/en/blogs/articles/2018/06/27/blog-economic-preparedness-the-need-for-fiscal-space",
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  "summary": "Authors: Vikram Haksar, Marialuz Moreno-Badia, Catherine Pattillo, Murtaza Syed",
  "sections": [
    {
      "heading": "Overview",
      "content": "- Authors: Vikram Haksar, Marialuz Moreno-Badia, Catherine Pattillo, Murtaza Syed\n- Publication date: June 27, 2018\n- Context: IMF staff developed a new framework for measuring fiscal space and tested it during 2017-2018 across a number of Article IV consultations."
    },
    {
      "heading": "Measuring fiscal space",
      "content": "- Definition: Fiscal space is an estimate of “the amount of room countries have for temporarily increasing their budget deficits without jeopardizing their access to markets or the sustainability of their debt.”\n- Key considerations in the IMF framework:\n  - Composition and trajectory of public debt\n  - Financing needs and ease of borrowing\n  - Assets that can be drawn upon\n  - Future spending commitments\n  - Effectiveness of fiscal policy\n  - Strength of fiscal institutions\n  - Existence and design of fiscal rules, including the need for rules to be well designed and regularly reviewed\n- Characteristics:\n  - Fiscal space is not determined just by a country’s level of public debt.\n  - Fiscal space is not static; it can vary with market and economic conditions, sometimes quickly and substantially.\n  - A well-executed fiscal stimulus can produce a dynamic boost to economic activity that may improve the public debt-to-GDP ratio over time, thereby creating additional fiscal space.\n- Output: The framework yields an assessment of the degree of fiscal space for a country at a given time, built around four stages (illustrated in an accompanying video on the source page)."
    },
    {
      "heading": "Who has it and who doesn’t",
      "content": "- Countries cited as having substantial fiscal space:\n  - Australia\n  - Germany\n  - The Netherlands\n  - Sweden\n- Reasons cited for substantial fiscal space:\n  - Access to stable and cheap funding from financial markets\n  - Healthy public finances\n  - Strong institutions\n- Countries cited as having severely constrained fiscal space:\n  - Brazil\n  - Italy\n  - Pakistan\n- Reasons cited for constrained fiscal space:\n  - Elevated risks related to funding from financial markets\n  - Relatively high levels of debt, financing, or debt servicing needs\n  - Risk of loss of market access if attempting active fiscal policy\n- Countries with some but not extensive fiscal space:\n  - China\n  - The Philippines\n  - Thailand\n  - Russia\n  - Saudi Arabia\n  - The United States\n- Rationale for intermediate assessments: Risks to funding or debt sustainability are not severe, but space is limited."
    },
    {
      "heading": "Using fiscal space",
      "content": "- Distinction emphasized:\n  - Having fiscal space ≠ obligation to use it.\n  - Fiscal space is like “money in the bank”: it can be drawn upon in times of need but should not be used recklessly.\n- Decision criteria for using fiscal space (outside the framework):\n  - Separate cost-benefit analysis\n  - Whether there is a legitimate need best met through fiscal policy rather than other measures\n  - Adequacy of existing space given the risks the economy faces\n- IMF policy advice examples:\n  - Fiscal consolidation recommended in all countries with limited fiscal space.\n  - Fiscal consolidation also recommended in several countries with some or substantial fiscal space when economies were in relatively strong positions or needed to rebuild buffers.\n  - Use of fiscal space recommended where a strong case existed:\n    - Support of longer-term growth in Germany, the Netherlands, the Philippines, and Thailand\n    - To offset some potential costs from a needed phase of strong structural reforms in China\n    - To allow a slower pace of fiscal adjustment for some oil producers"
    },
    {
      "heading": "Forward look",
      "content": "- The IMF’s road map for assessing fiscal space is intended to:\n  - Provide the Fund’s membership with a regular sense of their room for maneuver\n  - Assist countries in making appropriate policy choices tailored to their individual circumstances\n\nSource: Economic Preparedness: The Need for Fiscal Space (IMF blog, June 27, 2018).\n\n---\n\n Content in this bundle\n\n- 做好经济准备：对财政空间的需求; IMF blog; 2018年6月27日\n  - 做好经济准备：对财政空间的需求; IMF blog; 2018年6月27日 (Markdown version){rel=\"alternate\" type=\"text/markdown\"}\n  - 做好经济准备：对财政空间的需求; IMF blog; 2018年6月27日 (PDF){rel=\"external\" type=\"application/pdf\"}\n- 経済面での備え― 財政余力の必要性; ビクラム・ハクサー マリアルス・モレノ・バディア キャサリーン・パティロ ムルタザ・サイード; IMFブログ, 2018年6月27日掲載\n  - 経済面での備え― 財政余力の必要性; ビクラム・ハクサー マリアルス・モレノ・バディア キャサリーン・パティロ ムルタザ・サイード; IMFブログ, 2018年6月27日掲載 (Markdown version){rel=\"alternate\" type=\"text/markdown\"}\n  - 経済面での備え― 財政余力の必要性; ビクラム・ハクサー マリアルス・モレノ・バディア キャサリーン・パティロ ムルタザ・サイード; IMFブログ, 2018年6月27日掲載 (PDF){rel=\"external\" type=\"application/pdf\"}\n- Kesiapan Ekonomi: Kebutuhan Akan Ruang Fiskal; IMF blog, 27 Juni 2018\n  - Kesiapan Ekonomi: Kebutuhan Akan Ruang Fiskal; IMF blog, 27 Juni 2018 (Markdown version){rel=\"alternate\" type=\"text/markdown\"}\n  - Kesiapan Ekonomi: Kebutuhan Akan Ruang Fiskal; IMF blog, 27 Juni 2018 (PDF){rel=\"external\" type=\"application/pdf\"}\n\n---\n\n References\n\n- عربي\n- Português\n- https://www.imf.org/wp-content/uploads/2018/06/BLOG-1024x600-Fiscal-Space-Globe-on-Currency-Martin-Barraud-iStock-by-Getty-96502248.jpg\n- a new framework\n- tested it during 2017-2018\n- Article IV consultations\n- Assessing Fiscal Space - An Initial Consistent Set of Considerations\n\nSource: https://www.imf.org/en/blogs/articles/2018/06/27/blog-economic-preparedness-the-need-for-fiscal-space"
    }
  ],
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    "[Markdown version](/en/blogs/articles/2018/06/27/blog-economic-preparedness-the-need-for-fiscal-space/index.md)",
    "[Structured JSON version](/en/blogs/articles/2018/06/27/blog-economic-preparedness-the-need-for-fiscal-space/index.json)",
    "[Bundle manifest](/en/blogs/articles/2018/06/27/blog-economic-preparedness-the-need-for-fiscal-space/bundle-manifest.json)",
    "Authors: Vikram Haksar, Marialuz Moreno-Badia, Catherine Pattillo, Murtaza Syed",
    "Published: June 27, 2018",
    "Authors: Vikram Haksar, Marialuz Moreno-Badia, Catherine Pattillo, Murtaza Syed",
    "Publication date: June 27, 2018",
    "Context: IMF staff developed a new framework for measuring fiscal space and tested it during 2017-2018 across a number of Article IV consultations.",
    "Definition: Fiscal space is an estimate of “the amount of room countries have for temporarily increasing their budget deficits without jeopardizing their access to markets or the sustainability of their debt.”",
    "Key considerations in the IMF framework:",
    "Characteristics:",
    "Output: The framework yields an assessment of the degree of fiscal space for a country at a given time, built around four stages (illustrated in an accompanying video on the source page).",
    "Countries cited as having substantial fiscal space:",
    "Reasons cited for substantial fiscal space:",
    "Countries cited as having severely constrained fiscal space:",
    "Reasons cited for constrained fiscal space:",
    "Countries with some but not extensive fiscal space:",
    "Rationale for intermediate assessments: Risks to funding or debt sustainability are not severe, but space is limited.",
    "Distinction emphasized:",
    "Decision criteria for using fiscal space (outside the framework):",
    "IMF policy advice examples:",
    "The IMF’s road map for assessing fiscal space is intended to:",
    "**做好经济准备：对财政空间的需求; IMF blog; 2018年6月27日**",
    "**経済面での備え― 財政余力の必要性; ビクラム・ハクサー マリアルス・モレノ・バディア キャサリーン・パティロ ムルタザ・サイード; IMFブログ, 2018年6月27日掲載**",
    "**Kesiapan Ekonomi: Kebutuhan Akan Ruang Fiskal; IMF blog, 27 Juni 2018**",
    "[عربي](http://www.imf.org/ar/News/Articles/2018/06/27/blog-economic-preparedness-the-need-for-fiscal-space)",
    "[Português](https://www.imf.org/pt/News/Articles/2018/06/27/blog-economic-preparedness-the-need-for-fiscal-space)",
    "[https://www.imf.org/wp-content/uploads/2018/06/BLOG-1024x600-Fiscal-Space-Globe-on-Currency-Martin-Barraud-iStock-by-Getty-96502248.jpg](https://www.imf.org/wp-content/uploads/2018/06/BLOG-1024x600-Fiscal-Space-Globe-on-Currency-Martin-Barraud-iStock-by-Getty-96502248.jpg)",
    "[a new framework](http://www.imf.org/en/Publications/Policy-Papers/Issues/2018/06/15/pp041118assessing-fiscal-space)",
    "[tested it during 2017-2018](http://www.imf.org/en/News/Articles/2018/06/26/pr18260imf-board-takes-stock-of-work-on-fiscal-space)",
    "[Article IV consultations](https://www.imf.org/external/about/econsurv.htm)",
    "[Assessing Fiscal Space - An Initial Consistent Set of Considerations](http://www.imf.org/en/Publications/Policy-Papers/Issues/2017/01/13/pp5080-Assessing-Fiscal-Space-An-Initial-Consistent-Set-of-Considerations)"
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