The slow global recovery is making fiscal adjustment more difficult around the world, but this doesn’t mean that little has been accomplished.
In fact, significant progress in many countries has been made during the past two years in strengthening their fiscal accounts after the 2008–09 deterioration. The IMF’s latest Fiscal Monitor takes stock of this progress.
Deficits are lower, and in many cases debt is too
Let me first say something about advanced economies, which is where the most urgent fiscal problems exist.
Most advanced economies have made good progress lowering their fiscal deficits (the imbalance between spending and revenues). Deficits, adjusted for the economic cycle, fell by about ¾ of a percentage point of GDP in 2011 and 2012, and are projected to do so by about 1 percentage point of GDP in 2013.
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