Posted on April 12, 2011 by iMFdirect
By Carlo Cottarelli
Undertaking a sizable fiscal adjustment is a lot like driving up a tall mountain: it’s hard work, it can take a long time, and you don’t want to run out of fuel partway up the incline. Countries are starting the climb, cutting back government deficits and debt levels, but according to our analysis often current plans aren’t enough to get countries where they need and want to go.
The plans in place are large by historical standards, which brings with it difficult choices, and particular risks and uncertainties. Let me fill you in on what these are. (more…)
Filed under: Economic Crisis, Fiscal policy, International Monetary Fund, Public debt | Tagged: bank recapitalization, cyclically adjusted balance, debt sustainability, fiscal adjustment, fiscal consolidation, Fiscal Monitor, fiscal sustainability, government debt, interest rate-growth differential, medium-term fiscal consolidation, primary budget balance, public debt, sovereign risks | 1 Comment »
Posted on February 1, 2011 by iMFdirect
By Carlo Cottarelli
(Version in Español)
As we said in the just-published Fiscal Monitor update, fiscal policy this year in some leading advanced economies is shaping up to be quite different from what was expected just last November.
The United States and Japan are delaying their earlier plans to reduce their public deficits, choosing instead to provide further support to their economies. The change in plans is even more remarkable if you look at the cyclically adjusted balance. You can see this in the charts. Some of the change in the fiscal stance with respect to our earlier projections is attributable to the somewhat better than projected fiscal results in 2010, a point to which I will return in a moment. Most of it, however, is due to additional stimulus measures introduced during the last two months. These two countries need to strengthen their fiscal adjustment credentials by detailing the measures they will adopt to lower deficits and debt over the medium term. (more…)
Filed under: Advanced Economies, Emerging Markets, Fiscal policy, IMF, International Monetary Fund | Tagged: commodity prices, cyclically adjusted balance, fiscal consolidation, fiscal institutions, Fiscal Monitor, fiscal policy, Fiscal Stimulus, general government balance, government debt, medium-term fiscal consolidation, public debt, sovereign risk | 2 Comments »
Posted on January 28, 2011 by iMFdirect
Europe’s sovereign debt crisis, fiscal challenges in advanced economies, concerns about overheating in emerging market countries, and the impact of rising food prices. These are the hot topics at this year’s World Economic Forum in Davos, Switzerland, and a clear sign of the tensions and risks as the global economy recovers.
In a video interview from Davos, IMF First Deputy Managing Director John Lipsky tells us that, with the return of global growth, the mood is certainly more optimistic than it was a year or two ago. But there is also a clear sense among delegates that this has not solved some of the world’s important economic problems. (more…)
Filed under: Advanced Economies, Economic Crisis, Economic outlook, Emerging Markets, IMF, International Monetary Fund | Tagged: commodity prices, Europe, fiscal consolidation, Fiscal Monitor, fiscal policy, Global Financial Stability Report, global imbalances, global recovery, inflationary pressures, sovereign debt, World Economic Forum, World Economic Outlook | 3 Comments »
Posted on November 4, 2010 by iMFdirect
By Olivier Blanchard and Carlo Cottarelli
(Version in عربي | 中文 | Español | Français | Русский )
How can governments have their cake and eat it too? How can fiscal policy provide sufficient support to economic activity, and reassure markets that fiscal solvency is not at risk? The poor state of fiscal accounts of most advanced countries calls for austere fiscal policies, before the confidence crisis that is now hitting a few small advanced economies spreads to the larger ones. But not right now: a frontloaded adjustment—that is a tightening that is not gradual but falls disproportionately early in the adjustment phase—could destabilize the recovery.
But can countries limit frontloading and still achieve credibility? Yes, but baking the right fiscal pie is likely to require a number of ingredients. While the exact recipe depends on country circumstances, here are our suggested ingredients. (more…)
Filed under: Advanced Economies, Economic Crisis, Fiscal policy, IMF, International Monetary Fund, Public debt | Tagged: budget execution, budget preparation, deficit ceilings, economic recovery, Fiscal Monitor, fiscal policy, Fiscal rules, fiscal solvency, fiscal transparency, frontloaded adjustment, government spending ceilings | 9 Comments »