A Framework for Assessing Fiscal Vulnerability
IMF Working Papers, March 1, 2000
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- A Framework for Assessing Fiscal Vulnerability
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Bibliographic details
- Authors: Murray Petrie, Richard Hemming
- Published: March 1, 2000
- Series: IMF Working Papers
- DOI: https://doi.org/10.5089/9781451847246.001
Definition and scope
- Fiscal vulnerability describes a situation where a government is exposed to the possibility of failure to meet its aggregate fiscal policy objectives.
- The framework is oriented to an aggregate fiscal policy approach and highlights macro-fiscal sources of vulnerability affecting the government's ability to achieve deficit and revenue targets.
Core framework: four macro-fiscal aspects of vulnerability
- Incorrect specification of the initial fiscal position.
- Sensitivity of short-term fiscal outcomes to risk.
- Threats to longer-term fiscal sustainability.
- Structural or institutional weaknesses affecting the design and implementation of fiscal policy.
Findings and analytical focus
- The suggested framework emphasizes assessing both near-term risks (short-term fiscal outcome sensitivity) and medium- to long-term threats (longer-term fiscal sustainability).
- Structural and institutional factors are treated as distinct channels that can impair the effectiveness of fiscal policy design and implementation.
- Fiscal vulnerability indicators are suggested to operationalize assessment across the four macro-fiscal aspects.
Content in this bundle
- A Framework for Assessing Fiscal Vulnerability - WP/00/52