Fiscal Policy Response to External Crises the Case of Moldova 1998-2010

IMF Working Papers, March 1, 2012

Source details

Canonical URL: Fiscal Policy Response to External Crises the Case of Moldova 1998-2010

External shocks pose major challenges to fiscal policy makers through lower output and large fiscal imbalances.
The paper analyzes Moldova's experience with two parallel crises a decade apart: the Russian crisis of 1998 and the global financial crisis of 2008-2009.
Moldova underwent large fiscal adjustments during these crises and launched important fiscal reforms.
The paper aims to:
- explain the motivation for reforms;
- describe reform design and implementation;
- provide an understanding of their outcomes.
The paper also catalogues the form and size of international assistance for Moldova.

Russian crisis of 1998.
Global financial crisis of 2008-2009.
Both crises produced lower output and large fiscal imbalances that challenged fiscal policy.

Motivation:
- Address the fiscal imbalances and vulnerabilities exposed by the crises.
Design and implementation:
- The paper reviews the specific reform measures undertaken in response to the crises (details summarized in the full paper).
Outcomes:
- The paper provides an understanding of the outcomes of the reforms implemented after each crisis.

The paper catalogues the form and size of international assistance provided to Moldova (details are presented in the full paper).

Subject: Corporate income tax, Expenditure, Fiscal policy, Pension spending, Public sector wages, Revenue administration, Taxes
Keywords: authorities' reform, Central and Eastern Europe, Corporate income tax, Europe, excise tax, expenditure policy, Fiscal policy, Global, government intervention, government policy, government risk, government's expenditure policy, international assistance, Moldova, Pension spending, retirement age, structural fiscal balance, system reform, tax revenue, tax system, taxable income, wage bill, wage system, Western Europe, WP