IMF Staff Position Note: Fiscal Implications of the Global Economic and Financial Crisis

Summary: The global financial crisis is having major implications for the public finances of most countries. Fiscal revenues are declining through the operation of automatic stabilizers because of lower asset and commodity prices. Direct fiscal support is being provided to financial sector, and many countries are undertaking discretionary fiscal stimulus. This cushioning the global economy from the effects of the crisis. But it implies a fiscal deterioration that is particularly strong for advanced countries, where the increase in both government and contingent liabilities is unprecedented in scale and pervasiveness since the end of Second World War. Moreover, these developments are taking place in the context of severe long-run fiscal challenges, especially for countries facing rapid population aging.


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