Promises, Promises. Better Measuring the Effect of Pension Reform

Posted on April 26, 2011 by iMFdirect

By Benedict Clements

We all hope to retire one day. Our pensions hold the promise of that.

But when that promise is a public pension, it’s also a lot like debt the government has to pay at some point in the future.

Good fiscal policy means thinking about how policy decisions—especially ones that involve long-term promises, such as pensions—affect government finances both today and in the future.

Problems, problems

The first problem is that good fiscal policy hasn’t always ruled the day, to put it mildly. Today, pension reform is a priority for the advanced economies as current trends are unsustainable—see Commandment V—and for many emerging and low-income economies that need “to improve coverage of health and pension systems in a fiscally sound manner.” (more…)

Filed under: Advanced Economies, Emerging Markets, Fiscal policy, International Monetary Fund, Public debt | Tagged: , , , , , , , , | 7 Comments »

Shifting Gears: Where the Rubber Meets the Fiscal Road

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: , , , , , , , , , , , , | 1 Comment »

New Policy Ideas for a New World: Interview with Robert Solow

Posted on April 2, 2011 by iMFdirect

By iMFdirect

There has been plenty of reflection, during the past few years, on the causes of the global financial crisis. But, last month’s conference at the IMF focused on taking what we’ve learned from the crisis and looking toward the future of economic policy.

Robert Solow—Professor Emeritus at Massachusetts Institute of Technology and Nobel Prize winning economist—was among those who brought interesting perspectives and a wealth of experience to the conference discussions.

Watch Professor Solow’s interview and hear more about what he has to say on… (more…)

Filed under: Economic Crisis, Economic research, International Monetary Fund | Tagged: , , , , , , , , , , | Leave a Comment »

Latin America: Making the Good Times Better

Posted on February 25, 2011 by iMFdirect

By Dominique Strauss-Kahn

(Version in Español, Português)

Latin America has enjoyed tremendous economic dynamism and a rising quality of life in recent years. But, faced with new challenges, the question is: how best to sustain this progress?

As I travel through the region this week—visiting Panama, Uruguay, and Brazil—I’m looking forward to hearing the views of government officials, parliamentarians, and university students on the key challenges facing their countries today. Here are three questions that I look forward to discussing during my trip. (more…)

Filed under: Economic Crisis, Emerging Markets, growth, International Monetary Fund, Latin America, Low-income countries | Tagged: , , , , , , , , , , , , , , , , , , , , , , | 7 Comments »

The Long and the Short of It—Government Debt Plans in 2011 and Beyond

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: , , , , , , , , , , , | 2 Comments »

Time Waits for No Man: How to Secure Financial Stability in 2011

Posted on January 25, 2011 by iMFdirect

By José Viñals

(Version in Español | 中文 | Français | 日本語 | Русский | عربي )

This morning, I presented our latest views on global financial stability in Johannesburg, South Africa.

So, where does the global financial system stand at the moment? Yes, we have witnessed improvements recently, but we are also observing a dichotomy between the economy and the financial system. While the global economic recovery has been continuing, financial stability is still at risk, because of a persistent lack of investor confidence in some advanced country sovereigns and their banking systems.

At this cross-roads, we see three key messages. (more…)

Filed under: Economic Crisis, Financial Crisis, Financial regulation, Financial sector supervision, International Monetary Fund | Tagged: , , , , , , , , , , , , , | 2 Comments »

Watch This (Fiscal) Space: Assessing Room for Fiscal Maneuver in Advanced Countries

Posted on September 1, 2010 by iMFdirect

By Jonathan D. Ostry

Public debt sustainability in most advanced economies used to be a non-issue, or at most a back-burner one. A couple years back, if the topic came up, most people associated it with developing or emerging market countries. Defaults, rising sovereign risk premia, getting shut out from capital markets were, let’s face it, not really imagined to be possibilities for advanced economies. Of course there were fiscal challenges, demographic pressures being the obvious one, but these were issues for the long term, not the here and now.

But today, fiscal problems are a key concern of policy makers in many industrial countries, and a reassessment of sovereign risk is a palpable threat to global recovery. While the financial crisis may be a convenient scapegoat for the debt blowout in the advanced countries, blame lies elsewhere, in how fiscal policy was managed before the great recession, not during it. And, more sobering still, taming public debt will require steadfast policy efforts over the medium term: quick fixes will not do the trick.

What is the worry? At the heart of the issue is the extent to which governments have room for fiscal maneuver—“fiscal space”—before markets force them to tighten policies sharply and, relatedly, the size of adjustments needed to restore or maintain public debt sustainability.

Yet, surprisingly, much of the talk about fiscal space—how to measure it and the policy implications—has so far been rather fuzzy. A new staff position note, which I co-authored with several IMF colleagues, aims to remedy this, providing an operational definition of the fiscal space concept as well as empirical estimates of available fiscal space for 23 advanced economies.

(more…)

Filed under: Advanced Economies, Economic Crisis, Fiscal policy, IMF, International Monetary Fund, Public debt | Tagged: , , , , , , , , , , , , , , , | 4 Comments »

A Problem Shared Is a Problem Halved: The G-20’s “Mutual Assessment Process”

Posted on August 26, 2010 by iMFdirect

By Olivier Blanchard 1

The Group of Twenty industrialized and emerging market economies (G-20) has broken new ground over the past year or two. It has embraced the type of collaborative approach to policy design and review that is well suited to today’s interdependent world, where policies in one country can often have far-reaching effects on others.

Collective action by the G-20 in response to the recent crisis was critical in avoiding a catastrophic financial meltdown and a potential second Great Depression. Exceptional policy responses around the globe—including macroeconomic stimulus and financial sector intervention—indeed helped avoid the worst. These actions were notable, both for their scale and force, but also for their consistency and coherence.

Keen to build on this success, G-20 Leaders pledged at their 2009 Pittsburgh Summit to adopt policies that would ensure a lasting recovery and a brighter economic future. To meet this goal, they launched the “Framework for Strong, Sustainable, and Balanced Growth.” The backbone of this framework is a multilateral process, where G-20 countries together set out objectives and the policies needed to get there. And, most importantly, they undertake a “mutual assessment” of their progress toward meeting those shared objectives. With this, the G-20 Mutual Assessment Process or the “MAP” was born.

(more…)

Filed under: Advanced Economies, Economic Crisis, Emerging Markets, Financial Crisis, G-20, Globalization, IMF, International Monetary Fund, Multilateral Cooperation | Tagged: , , , , , , , , , , , , , , , , , , , , , , , , , | 18 Comments »

IMF Sees Financial Risks Still Elevated

Posted on April 20, 2010 by iMFdirect

By José Viñals

Let me begin  with our overall assessment of global financial stability. The IMF has just released its new Global Financial Stability Report. We find that risks to stability have eased somewhat. The policy stimulus enacted at the height of the crisis has provided substantial support to financial institutions and markets, and has underpinned the global recovery. This has helped to improve a broad range of risk indicators and financial conditions.

And yet risks remain elevated: global financial stability has not been secured, as the recovery is still fragile, and the  repair of consumer and financial balance sheets is still ongoing. Furthermore, there are concerns over rising sovereign risks related to the buildup of public debt that need to be carefully monitored and addressed.

(more…)

Filed under: Advanced Economies, Economic research, Emerging Markets, Financial Crisis, Financial regulation, Fiscal Stimulus, growth, International Monetary Fund, recession | Tagged: , , , , | 1 Comment »

Sharing in the Global Upturn—Better Prospects for Africa

Posted on September 8, 2009 by iMFdirect

By Antoinette Sayeh

The shape of the global recovery is on everybody’s mind. But how will it affect sub-Saharan Africa? A key lesson from the past is that global cycles matter for Africa.

For sure, there have been definite idiosyncrasies in sub-Saharan African cycles–as will be discussed more fully in the forthcoming October issue of our Regional Economic Outlook—but the global dimension remains paramount.

Previous global cycles—and I’m talking here about the regular fluctuations in global economic growth that bottomed out in 1975, 1982, and 1991—followed some clear patterns. Typically, the end of an unsustainably high period of global growth coincided with the emergence of production bottlenecks and a burst of inflation triggered by accelerating commodity prices (particularly oil), prompting a tightening of monetary policy. The subsequent downturns were relatively short and growth rates typically bounced back fairly
quickly to previous levels.

By and large, Africa followed this pattern too. But the timing and the strength of the recovery were a bit different. Growth rates stayed high during the first year of the global slowdown, and they tended to bottom out later. The rebound was slower, lagging global growth by a year or two. Critically, when growth did recover, it was generally hesitant and low.

chart

What can the past tell us about the present? It is clear that the initial shock to sub-Saharan Africa has been greater than in the past. This reflects both the magnitude of the global crisis and the deeper integration between the region and the world, both in trade and in financial markets.

(more…)

Filed under: Africa, concessional lending, Economic Crisis, growth, IMF, LICs, Low-income countries, Multilateral Cooperation, recession | Tagged: , , , , , | Leave a Comment »

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