Fiscal policy affects macroeconomic stability, growth, and income distribution. Citizens expect their governments to ensure value for money from public spending, a fair and efficient tax system, and transparent and accountable management of public sector resources.
Since 1964, the Fiscal Affairs Department (FAD) of the International Monetary Fund has been a leading source of fiscal policy and management expertise worldwide. FAD monitors and analyzes global fiscal trends; advises IMF member countries on fiscal issues directly or in close cooperation with the IMF area departments; and contributes to the design and implementation of IMF-supported programs. FAD’s analysis and research is at the forefront of fiscal policy debates. Its recent work has contributed to the discussion on fiscal policy options to address fiscal challenges in the aftermath of the global financial crisis. Each year, FAD staff and experts provide advisory services to about 130 IMF member countries covering advanced, emerging, and low income economies.
FAD receives welcome financial support from donors such as Belgium, Canada, the European Commission, Japan, the Netherlands, Norway, Sweden, Switzerland, the United Kingdom, the United States, and other donors supporting the IMF’s Regional Technical Assistance Centers (RTACs).
FAD supports the IMF’s interactions with member countries by assigning some 50 fiscal economists to IMF surveillance and program teams. More countries are covered through ad hoc participation in area department missions. In addition to analyzing broad fiscal developments, these economists conduct in-depth analysis of macrofiscal and structural fiscal issues in the countries to which they are assigned. In carrying out their tasks, FAD economists draw on the extensive fiscal expertise of FAD as a whole. Their analysis forms part of the IMF staff’s reporting on the member countries concerned.
FAD provides capacity development (CD) to member countries to enhance their fiscal performance and strengthen their fiscal institutions. The bulk of FAD CD is provided in four areas:
- Public financial management: legal and regulatory framework, budget management, cash management, accounting, reporting, and debt management.
- Tax policy: general tax policy reviews and specific tax policy advice, particularly in the areas of income tax, value-added tax, and taxation of natural resources, including oil and gas.
- Revenue administration: tax and customs administration, social security contribution collection, and implementation of major tax policy changes.
- Expenditure policy: short-term expenditure rationalization, social security reform and administration, and incorporating cost-effective social safety nets into IMF-supported programs.
In addition, assistance is provided in areas such as macrofiscal management, public-private partnerships, fiscal risks, fiscal rules, fiscal transparency, and fiscal decentralization.