Coming Soon
The upcoming fiscal monitor
will be published on September 20, 2011. The web version will be
available at http://www.imf.org/external/index.htm.
Data in the Fiscal Monitor will now be available online for easy
access.
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Paris Seminar on Health Care
Reform
Health care reform will be a key fiscal policy challenge for
Europe in coming years. To discuss this topic, FAD and the IMF
Office in Europe organized a conference in Paris on June 21, 2011,
“Public
Health Care Reforms: Challenges and Lessons for Advanced and
Emerging Europe.” The event brought together over 60
policymakers and leading academics from 26 countries in Europe. IMF
Deputy Managing Director, Mr. Naoyuki Shinohara delivered the
keynote address. There was consensus among the participants that to
slow the growth in health spending countries would have to tackle
inefficiencies in this sector, use tools such as budget caps and
market mechanisms to restrain cost growth and draw lessons
from success stories in Europe (e.g., Estonia, Germany) in
formulating reform strategies.
Promoting Fiscal Sustainability through Strengthening Fiscal
Institutions and Medium-Term Budget Frameworks (India)
FAD organized a conference, with the National Institute of Public
Finance and Policy, New Delhi, on Promoting Fiscal Sustainability,
Strengthening Budget Institutions and Medium-Term Budget Frameworks,
in New Delhi, India on April 21–22, 2011. It was attended by some 75
senior budget officials and policy makers from the central and state
governments of India, Bangladesh, Nepal, Sri Lanka, Bhutan,
Afghanistan, and Maldives and representatives of CSOs. The
conference was inaugurated by Dr. Rangarajan, Chairman of the
Economic Advisory Council to the Prime Minister of India.
Participants debated the role of key fiscal institutions, such as
fiscal responsibility frameworks and fiscal councils, in their
respective countries/states.
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FAD
In The News
Bloomberg
broadcast an interview
with Carlo Cottarelli on the U.S. budget and Europe’s
sovereign debt crisis, highlighting that “IMF’s Cottarelli
Urges ‘Targeted’ Cuts of U.S. Budget”
After appearing in IMFdirect, Ruud de
Mooij's blog post "To
Owe or Be Owned—Depends on How You Tax It" was picked up
by a wide variety of economics and financial news websites,
news aggregators, and blogs from around the world: The
Wall Street Journal online, Best Financial
News, The
Forex Trading System Blog, The
Huffington Post, EconoMonitor,
Seeking
Alpha, indiatimes.com,
al Ma’ahad
al Araby, Rsshog.com,
Niuzer,
tm,
and topnewstoday.org.
Ian Parry’s paper on environmental taxation “Reforming
the Tax System to Promote Environmental Objectives: An
Application to Mauritius” was picked up by the blogs of
the Economist
and Washington
Post.
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New
Book: "Chipping Away at Public Debt: Sources of Failure and Keys to
Success in Fiscal Adjustment,"
edited by Paolo Mauro, with a foreword by Carlo Cottarelli;
published by Wiley (available
in hardback and e-book).
This new FAD
book analyzes large fiscal adjustment plans in advanced
economies, comparing planned or projected reductions in debts and
deficits to actual outcomes, and explaining why objectives were met
in some cases but missed in others. The analysis is based upon case
studies for each of the G7 countries and panel regressions for the
European Union countries. An overview reveals pitfalls to avoid and
lessons learned for securing successful fiscal adjustment. Read
more at PFM
blog and watch the book's
video.
Fiscal
Monitor Update–Staying the Course on Fiscal Adjustment
The June 2011 Fiscal
Monitor Update noted that fiscal consolidation was proceeding in
many advanced economies. However, it underscored the need for the
United States to agree on a credible medium-term fiscal plan and for
Japan to adopt a more detailed medium-term adjustment strategy.
Rising risks in Greece, Ireland, and Portugal highlighted the need
to implement adjustment programs and develop a comprehensive and a
consistent approach to crisis management in the euro area. While in
many emerging economies fiscal consolidation was proceeding at an
appropriate pace, in others, fiscal policy needed to be tightened
faster than envisaged to reduce overheating risks.
Staff
Discussion Notes
“Raising
the Consumption Tax in Japan: Why, When, How?” by M. Keen, M.
Pradhan, K. Kang and R. de Mooij argues that a consumption tax
hike should play a part in preventing an exploding public debt
ratio. The current 5 percent VAT rate is low and its performance
relatively good. A VAT hike is also comparatively superior on equity
and efficiency grounds, although complementary measures may be
needed to address social concerns. The Japanese tax hike should
follow four S’s: it should be implemented Soon and
Stepwise, while it should be Sustained and
Simple.
“Tax
Biases to Debt Finance: Assessing the Problem, Financing Solutions,”
by R. de Mooij argues that most countries’ corporate tax
systems favor debt over equity finance, creating substantial
distortions and vulnerabilities—in fact, probably larger than
economists have always thought. New evidence suggests that firm
responses have grown over time; and externalities from excessive
leverage, especially in the financial sector, are important. The
note argues that introducing an allowance for corporate equity is
the best way to go, a reform that some countries have already
successfully implemented.
“What
Happens to Social Spending in IMF-Supported Programs?” by B.
Clements, S. Gupta, and M. Nozaki, discussed in the iMFdirect
Blog, finds that education and health spending have risen faster
during IMF-supported programs than in developing countries as a
whole. Controlling for other determinants of social spending, the
study finds that in low-income countries, a period of 5 consecutive
years with IMF-supported programs would boost education and health
spending by about ¾ and 1 percentage point of GDP
respectively.
Recent
Working Papers
“Taxing
Financial Transactions: An Assessment of Administrative
Feasibility”, by J. Brondolo considers taxes on financial
transactions on exchange-traded, over-the-counter, and forex
financial instruments. For each category, the paper examines the
underlying tax administration issues involved, collection options,
compliance risks that are likely to be encountered, and measures for
mitigating these risks.
"Democratic
Accountability, Deficit Bias and Independent Fiscal Agencies,"
by X. Debrun takes stock of the theoretical case for independent
fiscal institutions ("fiscal councils"), and argues that the usual
parallel with the theory of central bank independence is mistaken,
and that in a democratic system, these institutions can only
credibly reduce the deficit bias if they effectively enhance fiscal
transparency.
Two recent papers provide guidance on environmental taxes: “International
Fuel Tax Assessment: An Application to Chile” by I. Perry and J.
Strand estimates the appropriate level of gasoline and diesel fuel
taxes to address pollution, congestion, and accident externalities
of car and truck use. “Reforming
the Tax System to Promote Environmental Objectives: An Application
to Mauritius” by I. Perry also evaluates various environmental
tax options for Mauritius, with a focus on reforming vehicle taxes
in light of externalities, and revenue and equity
considerations.
Technical
Assistance Activities
A new video
posted on YouTube and IMF.org
shows how effective technical assistance can be in helping transform
governance and the management of public finances: Supported by
technical assistance from the Fiscal Affairs Department, Liberia has
had considerable success in improving revenue mobilization and
implementing public financial management reforms. In partnership
with several donors, FAD will continue to provide considerable
technical assistance to Liberia in the coming years.
During May - August 2011, FAD
provided 45 technical assistance missions to IMF member
countries and multi-country organizations.
Career
Opportunities
FAD seeks talented and dedicated professionals with a
background in different areas of public finance, to work on
macro-fiscal policy issues and to provide technical assistance
advice to IMF member countries on public financial management, tax
policy reform, revenue administration, and different expenditure
policy issues. Vacancies in FAD for staff and long-term expert
positions are posted on http://www.imf.org/jobs. FAD also
seeks experts who are interested in occasional short-term (2–3 week)
assignments; interested candidates may send their CVs to FADexperts@imf.org |
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