COVID-19: IMF Notes on Fiscal Issues

The IMF has published a series of notes in its Special Series on COVID-19. The notes discuss PFM issues and other fiscal topics. The Special Series notes are produced by IMF experts to help member countries address the economic effects of COVID-19.

 In addition, you can find all of the PFM Blog articles covering the COVID-19 crisis  on our PFM Blog Coronavirus Articles page.

The Impact of COVID-19 on the Austrian PFM System

Posted by Johann Seiwald and Tobias Polzer^[1]

Like many other countries, the Austrian economy was substantially affected by the COVID-19 pandemic. A lockdown was put into effect in March 2020 and gradually relaxed at the end of April. To mitigate the negative consequences of the pandemic the government announced a “protective shield” of support measures costing some €38 billion (about 10% of GDP), including government guarantees and deferral of tax payments for businesses. In mid-June, the government announced another stimulus package to be implemented over the next few years, increasing the total support to €50 billion.

Performance Budgeting and the Myth of Sisyphus

Posted by Paulo Bijos^[1]

At least two changes should result from a performance budgeting approach. First, the adoption of more results-oriented language in the discussion of policy issues and, second, the use of performance information as an input to the process of allocating resources through the budget. The first objective is more feasible, since a reform of the budget framework can be required by regulation and implemented at a technical level. The second objective, however, may resemble utopia, since substantial modifications in policy-making patterns cannot be provided solely by formal statute.

How Better Management of Public Assets can Boost the Recovery

Posted by Dag Detter, Ian Ball, and Hanan Amin-Salem^[1]

Countries need cash – a lot of it and as soon as possible - to survive the grim fallout from COVID-19 and to be able to navigate toward recovery. The critical situation that they are facing compels more creative thinking about how best to manage public finances and to unlock new sources of funding. Those countries able to tap the hidden store of value in their balance sheets have a better chance to come out of the crisis faster, and more sustainably, than those that cannot. Generating value from the balance sheet is a well proven alternative, but one that requires considerable political will. It is an alternative fit for a crisis, when the politically impossible becomes the politically inevitable.

A Stacked Layer Model Approach to PFM Digitization

Posted by Ali Hashim and Moritz Piatti-Fünfkirchen^[1]

Digitization of processes in public financial management (PFM) holds a lot of promise. It can support efficiency, foster accountability and transparency, and ensure continuity of essential services during times of crisis. Countries are increasingly investing in aspects of digitization. However, how digitization relates to PFM is highly complex and requires an understanding of how a multitude of factors interact with one another. For this a “stacked layer model” can help.  

Balancing Uganda’s Fiscal Rules during the COVID-19 Pandemic

Posted by Enock Bulime and Ezra F. Munyambonera^[1]

A previous PFM blog suggested that Uganda’s existing fiscal rules might need modification to make them better guides to fiscal policy. In the present article, we explain how the government might better balance the flexibility and credibility of the fiscal rules during the COVID-19 pandemic.

Public Investment for the Recovery

By Vitor Gaspar, Paolo Mauro, Catherine Pattillo, and Raphael Espinoza

Governments around the world are taking extraordinary measures to respond to the COVID-19 crisis. While maintaining the focus on addressing the health emergency and providing lifelines for households and businesses, governments need to prepare economies for the transition to the post-COVID-19 world—including by helping people get back to work.

Accelerating Public Investment: An Impossible Mission, or Not Quite?

Posted by Rui Monteiro^[1]

Countries plagued with significant delays in infrastructure delivery often create taskforces aiming at accelerating public investment programs. Although staffed with competent people, and granted high-level, speedy access to the prime-minister or president to whom they usually report, the performance of these entities has typically been disappointing. Their results substantially lag their objectives and aspirations.

Fiscal Risks from Public Infrastructure

Posted by Eivind Tandberg, Rui Monteiro, Isabel Rial^[1]

Public infrastructure projects are typically large and complex, with long planning, implementation, and operational periods. They are inherently exposed to many different uncertainties and risks. However, project risks are often not well integrated in infrastructure governance frameworks and receive only moderate attention during major investment decisions. Governments’ decision-making is typically short-sighted, and the long-term costs and benefits are poorly reflected in most standard budget systems. Planning and monitoring systems may help decision-makers understand the long-term effects of infrastructure projects, but these systems are often limited in their scope and coverage. As a result, risk management of infrastructure projects remains underdeveloped and infrastructure project outcomes often deviate significantly from expectations or forecasts.

Integrated Infrastructure Planning and Budgeting

Posted by Richard Allen and Ashni Singh^[1]

Efficient and well-integrated planning and budgeting functions are key for building quality infrastructure. Planning functions establish a framework of national, sectoral and subnational government goals, policies, and targets. Budgeting puts these policies into a defined fiscal space and resource envelope, thus allowing policymakers to implement their plans. In many countries, however, strategic planning and budgeting systems are neither efficient nor well integrated. Planning systems are often poorly designed and largely aspirational, while decisions on major infrastructure projects can be dominated by short-term considerations. Budgeting is often separated administratively from the planning process, undermined by weak enforcement of fiscal and budgetary rules, and affected by poor control of budget execution, so that the annual budget lacks credibility.

From Hurricanes to COVID-19: PFM Tools in the Caribbean

Posted by Jean Luc Helis, Bruce Stacey and Bill Rafuse^[1]

As part of the UK Government’s Climate Change Support, the IMF’s Caribbean Regional Technical Assistance Centre (CARTAC) reviewed how governments prepared their PFM processes for natural disasters and how successful these measures were in mitigating the effects of Hurricanes Irma and Maria in September 2017.  Four of the six countries affected were reviewed: Anguilla, the British Virgin Islands, Dominica and the Turks and Caicos Islands. The reviews of Antigua and Barbuda and Saint Maarten had to be delayed until after the COVID-19 pandemic.