## IMF Paper Lays Out Framework to Assess Fiscal Space

_IMF News, December 15, 2016_

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**Canonical URL:** [IMF Paper Lays Out Framework to Assess Fiscal Space](https://www.imf.org/en/news/articles/2016/12/15/pr16560-imf-paper-lays-out-framework-to-assess-fiscal-space)

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## Bibliographic details
- Published: December 15, 2016

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### Purpose and scope of the framework
- The International Monetary Fund published a paper that lays out a framework for Fund staff to assess fiscal space.
- The framework puts forward a set of tools to assess available fiscal space in a way that is broadly comparable across countries.
- The framework provides IMF staff and policymakers with a consistent approach to assessing available space as an input to inform decisions about fiscal policy.
- The framework leverages existing tools for fiscal sustainability developed by staff, organizing them into a systematic and consistent set of considerations.
- The framework allows Fund staff to qualitatively assess the degree of fiscal space in a consistent manner across all member countries.

### Definition and analytical approach
- Fiscal space is defined as the ability of a government to raise spending or lower taxes without endangering market access and debt sustainability.
- Making a determination about fiscal space requires a comprehensive and multi-dimensional approach.
- The framework builds on fiscal sustainability tools and integrates multiple dimensions to assess risks to market access and debt sustainability.

### Policy context and intended use
- The use of fiscal space as a means to bolster demand and support long-term growth is central to IMF global policy advice in the context of the “new mediocre” affecting global economic recovery.
- The framework can be applied to assess the scope for fiscal support in individual countries, taking into account their macroeconomic situation and prevailing global policy challenges.
- Considerations include diminished gains from additional monetary policy support and the need to finance structural reform priorities.

### Implementation and evolution
- The framework was discussed by the IMF’s Executive Board earlier in the year of publication.
- Initial application: the framework will be applied in Article IV consultations of about 40 major economies.
- The framework will be updated over time based on further experience, research, and feedback.
- Expected evolution: adjustments in response to experience gained through implementation in bilateral surveillance and to new metrics and approaches to fiscal sustainability developed by Fund staff.

### Administrative and contact information
- Press Release No. 16/560
- Date: December 15, 2016
- IMF Communications Department, MEDIA RELATIONS
- PRESS OFFICER: Raphael Anspach
- Phone: +1 202 623-7100
- Email: MEDIA@IMF.org

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_Source: https://www.imf.org/en/news/articles/2016/12/15/pr16560-imf-paper-lays-out-framework-to-assess-fiscal-space_