IMF Fiscal Monitor: Capitalizing on Good Times, April 2018
Fiscal Monitor, April 2018
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Bibliographic details
- Authors: Stock Market Capitalization
- Published: April 6, 2018
Overview — Core Themes
- Two broad themes: the burden of high global debt and the opportunities and challenges of digital government.
- The Fiscal Monitor is driven by the Global Debt Database (GDD) and supported by FM Data (Excel) and FM Data on IMF DATAMAPPER.
- The report includes an extensive Methodological & Statistical Appendix, figures, boxes, tables, annexes, and country case studies.
Chapter 1: Saving for a Rainy Day — Findings and Key Statistics
- Global debt reached the record peak of US$164 trillion in 2016.
- Public debt is an important contributor to the surge in global debt, which is at historic highs among advanced and emerging market economies.
- Rapidly rising debt among low income developing countries is increasing the share of taxes and expenditure absorbed by interest payments.
- Countries with elevated government debt are vulnerable to a sudden tightening of global financing conditions, which could disrupt market access and jeopardize economic activity.
- Large debt and deficits reduce governments’ ability to implement strong fiscal policy responses in a downturn.
Key report sections and empirical content include:
- Recent Developments and Outlook
- Advanced Economies: Resting on Laurels
- Emerging Market and Middle-Income Economies: Progress, but Not Enough
- Low-Income Developing Countries: Vulnerabilities Drifting Upward
- Risks to the Fiscal Outlook
- Figures such as General Government Debt, General Government Primary Balance, and distributional and historical debt panels (e.g., 1.6 Distribution of Debt-to-GDP Ratios, 2000–17; 1.8 General Government Debt Including Implicit Liabilities from Pension and Health Care Spending, 2017)
- Boxes addressing topics such as Private Debt (1.1), Distributional Effects of US Income Tax Cuts (1.2), International Tax Policy Implications from US Corporate Tax Reform (1.3), and China’s fiscal risks (1.4)
Chapter 1: Policy Recommendations
- Put deficits and debt firmly on a downward path toward their medium-term targets.
- Calibrate the size and pace of adjustment to each country’s cyclical conditions and available fiscal space.
- Several low-income countries should:
- Mobilize revenues.
- Rationalize spending.
- Improve spending efficiency.
- Implement policies to support medium-term growth by:
- Promoting human and physical capital.
- Increasing productivity.
- Advanced economies should:
- Seek efficiency gains in spending.
- Rationalize entitlements.
- Broaden tax bases.
- Upgrade the design of their tax systems.
- Emerging market and developing economies need to raise revenue to finance critical spending on physical and human capital and social spending.
- Promote inclusive growth to avoid excessive inequality that can impede social mobility, erode social cohesion, and hurt growth.
Chapter 2: Digital Government — Findings and Key Points
- Digitalization presents both opportunities and risks for fiscal policy and public finances.
- Opportunities include improvements in:
- Tax policy and administration.
- Spending efficiency.
- Fiscal management and real-time fiscal data for macroeconomic surveillance.
- The rapid expansion of digital firms (sales with little physical presence and reliance on online-generated commercially valuable information) raises new questions about the allocation of international taxing rights.
- Risks and challenges include:
- Disproportionate burdens on small businesses and vulnerable households with limited access to technology.
- Opportunities for fraud, including cross-border VAT fraud such as missing trader and carousel fraud.
- Disruption of government functions and vulnerabilities in public digital systems, including massive data breaches and intrusions of privacy.
- Leakage and non–take-up issues in social income support programs that digital solutions can both exacerbate and help address.
- Empirical and analytical content includes case studies, estimates of revenue gains from digitalization (e.g., 2.8 Potential Revenue Gains from Closing Half the Distance to the Digitalization Frontier, 2016), indicators of intangibles and firm digital intensity (2.16 Global Top 20 Firms, By Stock Market Capitalization; 2.17 Indicators of Relative Intensity in the Use of Intangibles), and coverage of the digital divide (2.18 The Digital Divide).
Chapter 2: Policy Implications and Recommendations
- Digitalization calls for a proactive, forward-looking, and comprehensive reform agenda.
- Governments should:
- Embrace, foresee, and shape digitalization.
- Address multiple political, social, and institutional weaknesses.
- Manage digital risks, including cybersecurity, data privacy, and fraud.
- Improve implementation of existing policies using digital tools (same policies, better implementation).
- Design future tax and regulatory policy to address challenges posed by digital firms and cross-border economic activity.
- Policy design should account for distributional impacts and seek to mitigate burdens on small businesses and vulnerable households.
Data, Methodology, and Annexes
- Extensive methodological materials and data tables are provided, including:
- Methodological & Statistical Appendix with Data and Conventions, Fiscal Policy Assumptions, Definition and Coverage of Fiscal Data.
- Appendix tables A1–A25 covering Advanced Economies, Emerging Market and Middle-Income Economies, and Low-Income Developing Countries for balances, revenue, expenditure, debt, and structural fiscal indicators (2009–23 and related ranges).
- Annexes and auxiliary tables supporting digitalization analysis, trade gap regressions, revenue gain estimates, and offshore wealth and revenue potential.
IMF Fiscal Monitor: Capitalizing on Good Times, April 2018
Content in this bundle
- Fiscal Monitor Database — April 2018
- Global Debt Database
- Capitalizing on Good Times, IMF Fiscal Monitor, April 2018
- Assumptions and Conventions, IMF Fiscal Monitor, April 2018
- IMF Executive Board Discussion of the Outlook, IMF Fiscal Monitor, April 2018
- Chapter 1. Saving for a Rainy Day, IMF Fiscal Monitor, April 2018
- Chapter 2. Fiscal Government, IMF Fiscal Monitor, April 2018
- Country Abbreviations, IMF Fiscal Monitor, April 2018
- Executive Summary, IMF Fiscal Monitor, April 2018
- Further Information, IMF Fiscal Monitor, April 2018
- Glossary, IMF Fiscal Monitor, April 2018
- Preface, IMF Fiscal Monitor, April 2018
- Fiscal Monitor Selected Issues, IMF Fiscal Monitor, April 2018
- Methodological and Statistical Appendix, IMF Fiscal Monitor, April 2018
- Infographic: Global Debt Reaches Record Peak, IMF Fiscal Monitor, April 2018
- Infographic: Fiscal Monitor, April 2018
References
- Paper
- GDD Data (STATA)
- GDD Data (IMF DATAMAPPER
- )
- IMF Blog: Bringing Down High Debt
- IMF Blog: The Digital Gamble: New Technology Transforms Fiscal Policy
- Transcript of the Press Conference on the Release of the April 2018 Fiscal Monitor
- FM Data on IMF DATAMAPPER
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