The International Monetary Fund has just published its latest edition of the Fiscal Monitor, “Fiscal Exit: From Strategy to Implementation”. The report shows that fiscal policy is beginning a gradual shift from supporting demand to reducing deficits. Nevertheless, fiscal risks remain elevated in advanced economies where public debt ratios as a percentage of GDP are still rising rapidly.
The study sees fiscal tightening becoming broader and driven by discretionary measures in 2011, in both advanced and emerging economies, but underscores the need for more clarity on exit plans and reforms to address long-term fiscal costs.
The full report is available online.