"Governments advised to make fiscal plans to tame pandemic debt"

" \n Governments advised to make fiscal plans to tame pandemic debt \n \n\n \n Governments should start planning a return to more sustainable budgets with policies that win the trust of investors, after unprecedented fiscal stimulus to fight the COVID-19 pandemic, the International Monetary Fund\u00a0 (IMF ) said on Thursday. \n \n\n \n But each country must determine the appropriate timing and pace of fiscal consolidation based on its own individual circumstances, the IMF said in its Fiscal Monitor report. \n \n\n \n The fiscal plans needed to consider the stage of the pandemic, existing fiscal vulnerabilities, the risk of economic scarring, pressures from aging populations, development needs and historical difficulties in collecting revenues. \n \n\n \n \u201cThere are countries where the pandemic is still raging and therefore the priority continues to be the health emergency,\u201d IMF deputy fiscal affairs director Paulo Mauro told Reuters in an interview. \n \n\n \n Other countries where economic activity is picking up \u201ccan start thinking about also gradually reducing the degree of fiscal support that they provide to the economy\u201d, he said. \n \n\n \n A Fiscal Monitor chapter titled \u201cStrengthening the Credibility of Public Finances\u201d said countries that commit to medium-term fiscal sustainability with credible budget frameworks are rewarded with lower borrowing costs and a greater ability to refinance debts. \n \n\n \n This Also: Absa Kenya defends $169.7m East African Breweries Ltd loan \n \n\n \n \u201cWhat we find in the report is, governments can commit credibly to fiscal sustainability, that buys them time, and it buys them flexibility in this very difficult period of the pandemic,\u201d Mauro said. \n \n\n \n The report said IMF research showed countries with credible fiscal framework plans could more quickly reverse big jumps in debt, with feasibility for a 15% increase in debt to be reversed in a decade, absent additional shocks. \n \n\n \n The Fund recommended that countries commit to broad fiscal targets with underlying tax and spending policies for the next three to five years, with specific policies, such as a tax increases or raising the age for securing retirement benefits. \n \n\n \n Fiscal rules, such as keeping budget deficits within a certain percentage of gross domestic product, or independent fiscal councils within governments could add credibility, it said, adding that goals that were easy to communicate helped. \n \n\n \n But the IMF said fiscal plans should be flexible to allow economies to stabilize and avoid cuts in key public investments. \n \n\n \n \u201cChanges to taxes or spending can be pre-legislated and can be made contingent on the recovery,\u201d the IMF said. \n \n\n \n It cited Britain\u2019s announcement that corporate rates would rise in April 2023, and Israel\u2019s passage of a sunset for extended unemployment benefits linked to achieving a lower jobless rate. \n "

"Governments advised to make fiscal plans to tame pandemic debt"

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