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.

How African Civil Society can Promote Effective Use of COVID-19 Finance

Posted by Jason Harris and Concha Verdugo Yepes[1]

Big things are afoot in Africa. The economic and humanitarian impact of COVID-19 is devastating and governments are reacting. So is the international community, with debt relief being provided and the IMF providing financing support through emergency facilities. Civil society has an important role in ensuring government’s response and use of emergency financing is well managed.

Beyond Doctrine: Refocusing PFM for Vital Public Objectives

Posted by Edward Hedger, Nick Manning and Allen Schick[1]

Note by the PFM Blog Editors: This article summarizes a recently published Report by an International Working Group at the New York University’s Wagner School. A review of the Report by Richard Allen was published in the International Public Management Review (Vol. 1, No. 1, 2020) and can be downloaded at ipmr.net

Budgeting in the COVID-19 Crisis: Guidance on Preparing the 2021 Budget

Posted by Teresa Curristine, Bruno Imbert, Fazeer Sheik Rahim, Vincent Tang, Claude Wendling and Laura Doherty [1]

Since the COVID-19 pandemic erupted, governments have focused their efforts on short-term priorities and on designing and implementing immediate responses to the crisis. Most countries across the globe now need to turn their attention to the 2021 budget. A recently published IMF note discusses the challenges behind this difficult task, and offers general guidance on how to address these throughout the 2021 budget preparation cycle and beyond. In preparing the 2021 budget, countries will need to take stock of i) the impact of the COVID crisis including emergency measures on the economy and the government’s fiscal position; ii) evaluate the fiscal space available for continued priority spending and recovery measures; iii) assess the government’s financing needs; and iv) ensure transparent presentation and accounting for COVID-related fiscal measures. The general guidance in this note should be tailored to country-specific circumstances and existing PFM institutions and capacities. Table 1 summarizes the note’s main recommendations by the relevant phases of the budget preparation cycle.

From Lockdown to Recovery: The Design of Spending Measures to Support Firms and Households During COVID-19

Posted by Baoping Shang, Brooks Evans, and Zhiyong An¹

The COVID-19 outbreak is expected to take a substantial toll on nearly all economies across the world (June WEO). Reflecting this, many countries have swiftly introduced a diverse range of spending measures to provide income support for households and to keep firms alive during the lockdown phase. As economies start to open up, these spending measures need to be geared towards facilitating recovery and building resilience against future shocks. This highlights the importance of designing spending measures to achieve policy objectives during different phases of the pandemic.

Overpromising and Underperforming Budgets During COVID-19: Possible Solutions

Posted by Vivek Ramkumar[1]

Large discrepancies between what a government budgets for and what it actually spends, and between the revenue it forecasts and the revenue it ultimately collects, can be unsettling and potentially dangerous – especially during a global crisis. Clues on how to address this widespread phenomenon were presented in our recent study, “Exploring the determinants of budget credibility.” This report examined national government budget data in 94 countries from detailed reports issued by the Public Expenditure and Financial Accountability (PEFA) program.

Cutting Government Pay during a Crisis: Key Issues

Posted by Mercedes Garcia-Escribano and Chadi Abdallah[1]

Amidst the COVID-19 pandemic, some countries are considering nominal pay cuts for government employees to facilitate the financing of emergency spending. Spending needs in the health sector and in support of households and firms are at all-time high. Meanwhile, preexisting high public debt levels and large decreases in tax revenues due to the economic impact of COVID-19 are limiting the ability of many governments to finance the required increase in such expenditure.  Given this constraint, some governments—as IMF notes—are turning to cuts in government pay as an expenditure reshuffling to help finance the emergency spending response.

COVID-19, Fiscal Transparency and Public Participation

Posted by Juan Pablo Guerrero[1]

In a recent book, Khagram, de Renzio and Fung argue that four main factors have contributed to improvements in fiscal transparency and public participation in fiscal policies across countries:

The Role of Latin American Legislatures in Budget Control During Covid-19

Posted by María Baron^[1]

Governments in Latin America, as elsewhere, have assigned huge amounts of resources to tackling the health, economic and social impacts of the pandemic. While swift responses to mitigate the crisis are imperative, the transparency and oversight of these measures and governments’ accountability must not be neglected.

Government Support to State-Owned Enterprises: Options for Sub-Saharan Africa

Posted by Bruno Imbert, John Ralyea, and Ashni Singh[1]

The COVID-19 pandemic and economic fallout has created financial challenges for firms around the world, including many state-owned enterprises (SOEs) in Africa. A recently published IMF Note offers guidance on whether governments should provide temporary exceptional financial assistance and, if so, how. The Note discusses the circumstances under which support may be provided, key guiding principles on the measures that could be used, and the need for accompanying governance and oversight reforms. The Note’s focus is on African SOEs, but its principles and messages apply across other regions.

Developing Asia’s Social Protection Response to the COVID-19 Crisis

Posted by Bart W. Édes[1]

The COVID-19 pandemic, and government responses to contain spread of the virus, have led to economic contraction across developing Asia and the Pacific. The region is expected to record virtually no GDP growth for the year and, in fact, may experience its lowest growth rate since 1961. The pandemic has killed thousands, wiped out millions of jobs, and exacerbated deprivation in the world’s most populous region.