ENP Newswire -
Release date- 09062014 - IMF Must Contribute to Global Fiscal Policy Debate.
Technical assistance, capacity building a priority for department
Fiscal challenges differ across groups of countries
The IMF must provide high-quality fiscal services to its members, especially through continued technical assistance and capacity building work, says
It must also contribute to the global policy debate on fiscal issues. Speaking to
Gaspar: Since I completed my Ph.D. about 25 years ago I have been involved in policymaking. My first job, out of academia, was at the
A few years later I joined the central bank of
I have also worked in
I am looking forward to my next challenge at the Fund. It is thrilling to take the lead of an internationally well-known center of excellence in public finance. It broadens my international experience to the global level.
Gaspar: In the late 1980s I was offered the opportunity to come to the Fund as a young economist. My perception was that the Fund offered an excellent environment for professional economists to flourish. I perceived the Fund as a global leader in policy-relevant economic thinking. That has not changed.
I interacted with Fund staff both when I was Head of Economic Studies at the
The interaction with the
Gaspar: There are different types of challenges. Some challenges have to do with strong evolutionary dynamics that affect many countries. The most salient example is demographics. The world is making a transition to a situation of stable or even declining population. Such transition has substantial effects on public finances. Given that these dynamics are slow but the implications are far-reaching this is an area for research work.
Other challenges have to do with areas where there are strong spillovers across countries. These include environment; natural resources, including water; and international taxation.
Gaspar: Absolutely. For advanced economies high debt ratios are a cause for concern. The challenge here is to combine debt reduction with growth and employment creation. Unemployment, in particular, is a grave cause for concern. The Department is already undertaking considerable work in this area looking at the interlinkages between fiscal policy and unemployment.
In emerging economies there are potential adverse effects on debt dynamics coming from tightening external financial conditions and slower growth. There are further contingent risks to consider, in particular in countries that experienced strong growth in bank credit. Another risk, in commodity exporting countries, comes from the reduction in tax revenues that would follow lower commodity prices. The critical challenge is to manage these head winds and risks so as to ensure that debt dynamics remain under control.
Low-income countries face a distinct structural challenge. They face increasing demand for high-quality public services and infrastructure. In order to face these demands it is necessary to improve the ability to mobilize domestic revenues. A successful transition is necessary for stability and sustainable (and inclusive) growth.
Gaspar: I am just starting. I will have a better answer in a few months.
At a very general level the priority of
It is also crucial to continue technical assistance and capacity building work. At this point more than 100 countries benefit from the department's technical assistance work.
In addition, the Department must contribute to the policy debate at the global level.
Gaspar: Being with other people especially my family is very important. I enjoy reading, listening to music and practicing sports. I play tennis regularly and go to the gym.
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