IMF Fiscal Monitor April 2011


The IMF has just released its latest “Fiscal Monitor” report, subtitled “Shifting Gears Tackling Challenges on the Road to Fiscal Adjustment”. As the report makes clear, fiscal sustainability risks remain elevated, as progress in some regions has been offset by delays in fiscal consolidation in others.

Most advanced economies are reducing fiscal deficits this year, with the largest reductions in the Slovak Republic and Spain. Debt ratios are still rising in most advanced economies, though, and financing needs are at historical highs. The fiscal outlook for emerging economies, meanwhile, is more favorable, but this reflects the tailwinds of high asset and commodity prices, low interest rates and strong capital inflows. For advanced economies, steady annual progress, starting now, toward bringing debt ratios to prudent levels in medium term is essential.

With regard to Spain, Carlo Cottarelli, head of the IMF’s fiscal affairs department, said that the country “should be out of the woods from the point of view of attacks from markets. The country has adopted a needed pension reform and is taking care of its bank problems”.

Read the full report online.