Fiscal Challenges after the Global Financial Crisis : A Survey of Key Issues
The global financial crisis and the response to it have contributed to a sharp increase in public indebtedness in a large number of countries. While there have been episodes of high debt in the past, there are a number of long-term challenges today...
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| Format: | Policy Research Working Paper |
| Language: | English en_US |
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World Bank, Washington, DC
2014
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| Online Access: | http://documents.worldbank.org/curated/en/2014/03/19254930/fiscal-challenges-after-global-financial-crisis-survey-key-issues http://hdl.handle.net/10986/17286 |
| Summary: | The global financial crisis and the
response to it have contributed to a sharp increase in
public indebtedness in a large number of countries. While
there have been episodes of high debt in the past, there are
a number of long-term challenges today that are likely to
complicate the implementation of sustainable fiscal policies
in the coming years. Population aging and climate change are
factors that are likely to contribute to rising fiscal
pressures and the crisis has highlighted the risks and
vulnerabilities stemming from reduced fiscal space. This
paper argues that heightened fiscal challenges can only be
dealt with successfully by adopting a long-term fiscal
planning horizon. The paper analyzes a range of available
policy tools that countries have used in the past to improve
fiscal management. Particular attention is paid to the role
of rules-based policies, improvements in the budget process,
better accounting of long-term liabilities in the government
budget, the deleterious effects of unproductive
expenditures, and the painful trade-offs created by the
crisis and the toolkit at hand to address them. |
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