Fiscal Monitor, April 2012: Balancing Fiscal Policy Risks
Fiscal Monitor, April 20, 2012
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- Fiscal Monitor, April 2012: Balancing Fiscal Policy Risks
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Bibliographic details
- Published: April 20, 2012
- Series: Fiscal Monitor
- DOI: https://doi.org/10.5089/9781616352486.089
Overview
- Publication date: April 20, 2012.
- Core judgment: Overall, fiscal risks remain elevated, although there are signs that in some key respects they are less acute than six months ago.
- Central policy challenge: Find the right balance between exploiting short-term space to support the fragile recovery and rebuilding longer-term space by advancing fiscal consolidation.
Fiscal space: concept and focus
- Definition emphasized: Fiscal space is the scope that policymakers have to calibrate the pace of fiscal adjustment without undermining fiscal sustainability.
- The issue examines in more detail how fiscal space varies across countries and over time, and the implications for policy sequencing.
Key findings and diagnostics
- Past fiscal consolidation efforts are beginning to bear fruit, particularly when buttressed by credible institutional commitments.
- Debt dynamics and market conditions:
- Debt ratios in many advanced economies are at historical levels and rising.
- Borrowing requirements remain very large.
- Financial markets continue to be in a state of alert.
- Economic environment: Downside risks to the global economy predominate.
- Vulnerabilities and measurement issues:
- Countries remain vulnerable to unexpected shocks.
- Fiscal adjustment can have substantial negative impacts on activity.
- In some countries, short-term pressures on the public finances may be overstated as general government gross debt ratios have risen.
- Some countries may have flexibility in the short term but not in the longer term.
- Second-generation fiscal rules raise monitoring and enforcement challenges.
Policy implications and recommendations
- Calibrate pace of adjustment based on country-specific fiscal space, balancing short-term support for recovery with longer-term consolidation needs.
- Strengthen institutional commitments to make consolidation efforts more credible and effective.
- Monitor and address measurement and reporting issues that can overstate or understate short-term fiscal pressures.
- Design fiscal rules and governance frameworks that improve monitoring and enforcement to manage medium- and long-term vulnerabilities.
Scope and subjects covered
- Main subjects: Fiscal consolidation, Fiscal policy, Fiscal stance, Macroeconomic and fiscal forecasts, Public debt, Public financial management (PFM).
- Keywords and regional scope include: Africa, Asia and Pacific, East Africa, Europe, Middle East, North Africa, Sub-Saharan Africa, Western Hemisphere, and thematic items such as expenditure elasticity and securities market program.
Fiscal Monitor, April 2012: Balancing Fiscal Policy Risks (April 20, 2012).
Content in this bundle
- Fiscal Monitor: Balancing Fiscal Policy Risks; April 2012
References
- https://www.imf.org/en/publications/fm
- United States and the IMF
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- Fiscal consolidation
- Fiscal policy
- Fiscal stance
- Macroeconomic and fiscal forecasts
- Public debt
- Public financial management (PFM)
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