{
  "title": "Transcript of the 2023 Fiscal Monitor Press Briefing",
  "publication": "IMF News, April 12, 2023",
  "sourceUrl": "https://www.imf.org/en/news/articles/2023/04/13/tr041223-fm-press-briefing-transcript",
  "canonical": "https://www.imf.org/en/news/articles/2023/04/13/tr041223-fm-press-briefing-transcript",
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  "summary": "Transcript of the 2023 Fiscal Monitor Press Briefing",
  "publishDate": "2023-04-12",
  "sections": [
    {
      "heading": "Opening remarks — “The Path to Policy Normalization”",
      "content": "- Fiscal policy has moved \"a long way towards normalization\" three years after the pandemic.\n- Debt and deficits fell rapidly in 2021 and 2022 from record levels reached in 2020, driven by the expiry of extraordinary pandemic support and fiscal corrections.\n- Despite the decline, global public debt remains elevated and is projected to resume rising:\n  - Projected to start going up again by \"about one and a fourth percentage point per year\" into the medium term.\n  - By the end of the projection horizon, \"2028, public debt in the world is expected to reach almost 100 percent of GDP.\""
    },
    {
      "heading": "Key global debt projections and country examples",
      "content": "- Primary deficits are predicted to \"stop declining, and to stay above pre-pandemic levels over the medium term.\"\n- Countries projected to see increases in public debt ratios in excess of five percentage points of GDP over 2023 to 2028: Brazil, China, Japan, South Africa, Turkey, the U.K., and the U.S.\n- United States:\n  - Public debt to GDP is projected to increase \"by three percentage points of GDP per year from 2023.\"\n  - By 2028, U.S. public debt to GDP ratio is expected to \"exceed 135 percent of GDP.\"\n- China:\n  - Debt to GDP ratio \"has increased continuously after the jump up in 2020\" with \"no decline in China in 2021 or 2022.\"\n  - In 2028, it \"will have almost doubled pre-pandemic levels and surpassed 100 percent of GDP.\"\n- Excluding China and the U.S., world public debt ratios would be \"slowly declining over the medium term.\"\n- Heterogeneity emphasized: \"one size does not fit all\" — policy recommendations must be country-specific."
    },
    {
      "heading": "Why fiscal tightening is advocated (four arguments)",
      "content": "- Fiscal policy can and should support monetary policy in bringing inflation back to target:\n  - Stronger fiscal balances slow aggregate demand and moderate required increases in monetary policy rates.\n- A more balanced policy mix moderates sharp increases in policy rates and contributes to financial stability.\n- Sound overall balances limit public finance risks and build fiscal space to respond to adverse macroeconomic or financial developments:\n  - Empirical evidence: countries with insufficient buffers that enter a financial crisis \"suffer deeper and longer recessions,\" particularly emerging markets.\n- Stronger balances contribute to long-term debt sustainability amid demographic trends, digitalization, and the green transformation."
    },
    {
      "heading": "Fiscal policy, inflation, and distributional impacts",
      "content": "- Analytical chapter findings:\n  - When monetary policy acts alone, low-income households \"bear the brunt cost of this inflation.\"\n  - Fiscal tightening accompanied by targeted transfers:\n    - Moderates interest rate increases required to achieve inflation targets.\n    - Limits the decline in consumption for most households.\n    - By construction, yields \"no fall at all in the consumption levels for the poorest households.\""
    },
    {
      "heading": "Low-income countries, tax capacity, and debt distress",
      "content": "- Low-income countries have insufficient fiscal space; tax-to-GDP ratios are \"too low to support the state’s economic policy roll.\"\n- Improving tax capacity is crucial for:\n  - Public credit,\n  - Financial development,\n  - Safe integration in world capital markets,\n  - Creating room to respond to shocks (e.g., food price surge, extreme weather).\n- Debt and funding squeeze concerns:\n  - Some low-income countries are \"in debt distress already, or at high risk of debt distress.\"\n  - The IMF calls for timely debt resolution and more expeditious use of the G20 common framework.\n  - IMF priority: replenish the financial capacity of the PRGT, with the aim \"to be completed in the next six months or so.\"\n- Statistic: \"more than 130 million people in Africa alone are living under extreme food insecurity.\""
    },
    {
      "heading": "Policy recommendations and practical measures",
      "content": "- Fiscal tightening should be implemented in ways that protect the vulnerable:\n  - Make widespread energy-price support more targeted to those who truly need it—\"one quick way of reducing the overall fiscal deficit.\"\n  - Restructure untargeted subsidies (e.g., energy) to increase efficiency and free resources for priority spending.\n- Design of fiscal rules and governance when returning to rules:\n  - Pillar 1: Solid medium-term fiscal frameworks with flexibility to shocks and a medium-term anchor to build buffers.\n  - Pillar 2: Stronger assessment of fiscal risks so calibration of rules is commensurate with country vulnerabilities.\n  - Pillar 3: Strengthen fiscal institutions—transparency and fiscal councils to increase accountability and governance.\n- For commodity exporters (e.g., some African countries): pursue countercyclical fiscal policies by saving part of commodity windfalls to reduce inflationary pressures and build buffers.\n- For China: fiscal policy should support structural rebalancing (investment to consumption; exports to domestic demand; goods to services); expand social safety nets to reduce high household saving; fiscal support has been used to accelerate renewable energy deployment and emission trading."
    },
    {
      "heading": "Risk assessment and scenarios",
      "content": "- WEO adverse scenario probability: \"about 15 percent\" — a severe scenario but not a generalized sovereign-debt-crisis outcome.\n- Higher real interest rates and tighter global financing conditions:\n  - Increase borrowing costs and borrowing pressures for countries dependent on foreign-currency debt and prone to exchange rate depreciation.\n  - May complicate financial stability, as illustrated by recent financial turbulence in the U.S. and Europe.\n- No \"magical numbers\" for safe debt levels; context and country-specific capacity matter."
    },
    {
      "heading": "Selected country-specific highlights from Q&A",
      "content": "- India:\n  - Debt ratio reported as \"83 percent.\"\n  - Positives: largely in domestic currency, held domestically, and \"at fairly long maturity.\"\n  - Projected stable debt ratio in medium term due to strong economic growth.\n  - Recent budget reduced the deficit partly by eliminating certain subsidies.\n- United Kingdom:\n  - IMF notes differences between national and IMF accounting (public sector vs. general government; fiscal year vs. calendar year).\n  - U.K. budget includes two fiscal rules applied with a \"5-year delay\": a limit on the deficit of \"3 percent of GDP\" and that public debt to GDP has to be falling by the end of the projection period.\n- Egypt:\n  - Debt forecast: expected to be highest among developing countries in 2023 and 2024 before cooling and \"reaching a level under the 18 percent, 80 percent in 2028\" (note: source text associates Egypt's projected path with a medium-term decline).\n  - Path to debt reduction: achieve and maintain \"primary surpluses above 2-1/2 percent of GDP\" via more revenues and spending reductions that \"preserve support for the vulnerable.\"\n- South Africa:\n  - Electricity sector problems (\"load shedding\") affect the budget and debt both indirectly (slower growth and tax revenues) and directly (government support to the electricity company).\n  - Addressing structural problems in the sector is required to increase growth and reduce future government support needs.\n- Russia:\n  - Russia-specific dynamics discussed; IMF regional teams to provide further details in subsequent releases."
    },
    {
      "heading": "Press-conference operational notes and outreach",
      "content": "- IMF emphasized forthcoming and related events:\n  - Managing Director press conference scheduled \"tomorrow morning at 8:30 a.m.\"\n  - Regional press briefings to cover country-specific IMF program questions.\n- Contact and media coordination handled by the IMF Communications Department.\n\nTranscript of the 2023 Fiscal Monitor Press Briefing, April 12, 2023 — IMF Communications Department\n\n---\n\n\n References\n\n- Arab Republic of Egypt and the IMF\n- India and the IMF\n- Nigeria and the IMF\n- Russian Federation and the IMF\n- South Africa and the IMF\n- United States and the IMF\n- Transcripts\n- PRESS CENTER\n- https://www.imf.org/en/home\n\nSource: https://www.imf.org/en/news/articles/2023/04/13/tr041223-fm-press-briefing-transcript"
    }
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    "Published: April 12, 2023",
    "Fiscal policy has moved \"a long way towards normalization\" three years after the pandemic.",
    "Debt and deficits fell rapidly in 2021 and 2022 from record levels reached in 2020, driven by the expiry of extraordinary pandemic support and fiscal corrections.",
    "Despite the decline, global public debt remains elevated and is projected to resume rising:",
    "Primary deficits are predicted to \"stop declining, and to stay above pre-pandemic levels over the medium term.\"",
    "Countries projected to see increases in public debt ratios in excess of five percentage points of GDP over 2023 to 2028: Brazil, China, Japan, South Africa, Turkey, the U.K., and the U.S.",
    "United States:",
    "China:",
    "Excluding China and the U.S., world public debt ratios would be \"slowly declining over the medium term.\"",
    "Heterogeneity emphasized: \"one size does not fit all\" — policy recommendations must be country-specific.",
    "Fiscal policy can and should support monetary policy in bringing inflation back to target:",
    "A more balanced policy mix moderates sharp increases in policy rates and contributes to financial stability.",
    "Sound overall balances limit public finance risks and build fiscal space to respond to adverse macroeconomic or financial developments:",
    "Stronger balances contribute to long-term debt sustainability amid demographic trends, digitalization, and the green transformation.",
    "Analytical chapter findings:",
    "Low-income countries have insufficient fiscal space; tax-to-GDP ratios are \"too low to support the state’s economic policy roll.\"",
    "Improving tax capacity is crucial for:",
    "Debt and funding squeeze concerns:",
    "Statistic: \"more than 130 million people in Africa alone are living under extreme food insecurity.\"",
    "Fiscal tightening should be implemented in ways that protect the vulnerable:",
    "Design of fiscal rules and governance when returning to rules:",
    "For commodity exporters (e.g., some African countries): pursue countercyclical fiscal policies by saving part of commodity windfalls to reduce inflationary pressures and build buffers.",
    "For China: fiscal policy should support structural rebalancing (investment to consumption; exports to domestic demand; goods to services); expand social safety nets to reduce high household saving; fiscal support has been used to accelerate renewable energy deployment and emission trading.",
    "WEO adverse scenario probability: \"about 15 percent\" — a severe scenario but not a generalized sovereign-debt-crisis outcome.",
    "Higher real interest rates and tighter global financing conditions:",
    "No \"magical numbers\" for safe debt levels; context and country-specific capacity matter.",
    "India:",
    "United Kingdom:",
    "Egypt:",
    "South Africa:",
    "Russia:",
    "IMF emphasized forthcoming and related events:",
    "Contact and media coordination handled by the IMF Communications Department.",
    "[Arab Republic of Egypt and the IMF](http://www.imf.org/external/country/EGY/index.htm)",
    "[India and the IMF](http://www.imf.org/external/country/IND/index.htm)",
    "[Nigeria and the IMF](http://www.imf.org/external/country/NGA/index.htm)",
    "[Russian Federation and the IMF](http://www.imf.org/external/country/RUS/index.htm)",
    "[South Africa and the IMF](http://www.imf.org/external/country/ZAF/index.htm)",
    "[United States and the IMF](http://www.imf.org/external/country/USA/index.htm)",
    "[Transcripts](https://www.imf.org/en/news/searchnews)",
    "[PRESS CENTER](http://presscenter.imf.org/)",
    "[https://www.imf.org/en/home](https://www.imf.org/en/home)"
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