International Monetary Fund. Communications Department
This issue focuses on recent experiences that holds lessons for when to tackle debt and when not to. Growth is picking up, and the IMF has been ratcheting up its forecasts. Government coffers are filling and, with more people at work, demand for public social support is receding. Research shows that the stimulatory effect of fiscal expansion is weak when the economy is close to capacity. Low-income economies may be at greatest risk. Traditionally, they borrowed from official creditors at below-market rates. Higher global rates could divert precious budget resources to debt servicing from crucial infrastructure projects and social services. Raising budget balances toward their medium-term targets can be achieved at little cost to economic activity. Growth-enhancing infrastructure investments and crucial social services such as health and education should be maintained. Well-designed fiscal policy can address inequality and stimulate growth.
The progress made by Moldova toward achieving the Millennium Development Goals (MDGs) has not been uniform since 2007. Domestic economic and political crises are likely to undermine the achievement of several MDG targets set for 2010 and 2015. The goals were to reduce extreme poverty and hunger, achieve universal access to general secondary education, promote gender equality and empower woman, and so on. After growing dramatically in 1998–1999, poverty in Moldova began to decline in 2000. Addressing the environmental challenges and risks is imperative for Moldova.
This paper assesses changes in the size and scope of government in 24 transition economies. Whereas these governments have retrenched in terms of public expenditures in relation to GDP, as well as public employment as a share of population, some indicators suggest that size remains high (e.g., rising indebtedness, a heavy regulatory burden, and prevalence of noncash transactions). At the same time, the scope of government activities-although evolving-has not necessarily become appropriate. This paper provides some recommendations for aligning the scope of government with the increasing market orientation of these economies.
'Global Governance: Who's in Charge?' examines the challenges—financial, health, environmental, and trade—facing the international community in the 21st century and asks whether today';s system of global governance is equipped to cope with them. The lead article asserts that the system that served as a model for much of the 20th century is out of date, and it explores what needs to be done to strengthen it. Other articles on this theme look at the recent U.S. subprime market crisis, the differences between financial crises of the 19th and 20th centuries and what future crises will look like, the need for a stronger system of multilateral trade, and how global health threats can be handled. 'People in Economics' profiles Michael Kremer; 'Picture This' describes the changing aid landscape; 'Country Focus' spotlights the United Arab Emirates; and 'Straight Talk' examines the impact of high food prices. Also in this issue, articles examine development in Africa, and 'backcasting' data in Latin America.