Business and Economics > Public Finance
Abstract
Sub-Saharan African countries are implementing difficult and much needed reforms to restore macroeconomic stability, and while overall imbalances have started to narrow, the picture is varied. Policymakers face three main hurdles. First, regional growth, at a projected 3.6 percent in 2024, is generally subdued and uneven, although it is expected to recover modestly next year to 4.2 percent. Second, financing conditions continue to be tight. Third, the complex interplay of poverty, scarce opportunities, and weak governance--compounded by a higher cost of living and short-term hardships linked to macroeconomic adjustment--are fueling social frustration. Within this environment, policymakers face a difficult balancing act in striving for macroeconomic stability while also working to address development needs and ensure that reforms are socially and politically acceptable. Protecting the most vulnerable from the costs of adjustment and realizing reforms that create sufficient jobs will be critical to mobilize public support.
Abstract
After successfully weathering a series of shocks, most countries in the region are converging to their (tepid) potential. Growth is expected to moderate in late 2024 and 2025 while inflation is projected to continue easing, although gradually. With output and inflation gaps mostly closed but monetary policy still contractionary and public finances in need of strengthening, a further rebalancing of the policy mix is necessary. Fiscal consolidation should advance without delay to rebuild buffers while protecting priority public investment and social spending. This would support the normalization of monetary policy and strengthen credibility and resilience of policy frameworks. Most central banks are well placed to proceed with monetary easing, striking a balance between fending off the risk of reemerging price pressures and avoiding an undue economic contraction. Medium-term growth is expected to remain close to its low historical average, reflecting long-standing, unresolved challenges—including low investment and productivity growth—and shifting demographics. Worrisomely, the ongoing reform agenda is noticeably thin and could lead to a vicious circle of low growth, social discontent, and populist policies. Avoiding this requires pressing on with reforms. Improving governance—by strengthening the rule of law, enhancing government effectiveness, and tackling crime—is a priority that cuts across all areas of growth. Boosting capital accumulation requires improving the business environment, fostering competition, and increasing international trade. Greater and more effective public investment is also needed. Maintaining a dynamic labor force and increasing productivity requires tackling informality and making formal labor markets more flexible, including to adapt to new technologies. Increasing female labor participation can help boost the labor force and offset demographic shifts.
Abstract
Global public debt is elevated. It is projected to exceed US$100 trillion in 2024 and will rise over the medium term. This chapter shows that risks to the debt outlook are heavily tilted to the upside. In a severely adverse scenario, global debt is estimated to be nearly 20 percentage points of GDP higher three years ahead than the baseline projection, reaching 115 percent of GDP. Much larger fiscal adjustments than currently planned are required to stabilize (or reduce) debt with high probability. Now is an opportune time for rebuilding fiscal buffers and delaying is costly. Rebuilding fiscal buffers in a growth-friendly manner and strengthening fiscal governance is essential to ensure sustainable public finances and financial stability.
Abstract
Chapter 1 documents that near-term global financial stability risks have receded amid expectations that global disinflation is entering its last mile. However, along it, there are several salient risks and a build-up of medium-term vulnerabilities. Chapter 2 assesses vulnerabilities and potential risks to financial stability in corporate private credit, a rapidly growing asset class—traditionally focused on providing loans to midsize firms outside the realms of either commercial banks or public debt markets—that now rivals other major credit markets in size. Chapter 3 shows that while cyber incidents have thus far not been systemic, the probability of severe cyber incidents has increased, posing an acute threat to macrofinancial stability.
Abstract
Even as the global economic outlook is stabilizing, fiscal policy continues to struggle with legacies of high debt and deficits, while facing new challenges. Public finances risks are acute this year as over 80 economies and economic areas are holding elections, amid increased support for high government spending. Financing conditions remain challenging, while spending pressures to address structural challenges are becoming more pressing. Countries should boost long-term growth with a well-designed fiscal policy mix to promote innovation more broadly, including fundamental research, and facilitate technology diffusion. Durable fiscal consolidation efforts are needed to safeguard sustainable public finances and rebuild buffers.
Abstract
Still emerging from the COVID-19 pandemic, countries in sub-Saharan Africa have been hit by a sluggish global economy, worldwide inflation, high borrowing costs, and a cost-of-living crisis. In many cases, inflation is still too high, borrowing costs are still elevated, exchange-rate pressures persist, and political instability is an ongoing concern. To ensure that the coming rebound is more than just a transitory glimpse of sunshine, it is important for authorities to guard against a premature relaxation of stabilization policies, while also focusing on reforms to both claw back lost ground from the four-year crisis and also to create new space to address the region’s pressing development needs.
Abstract
The report takes stock of mitigation policies across countries and presents the trilemma facing policymakers of balancing between achieving climate goals, debt sustainability, and political feasibility. New insights from the report shows that the only way to achieve these joint goals is through a carefully calibrated mix of revenue and spending-based policies. Carbon pricing is a necessary instrument and should be part of the policy mix. However, it is not sufficient and should be complemented by policies to address market failures and catalyze private financing and investment in low-carbon technologies. Robust fiscal transfers are needed to protect vulnerable households, workers, and communities during the green transition.
Abstract
En el informe se analiza cómo las finanzas públicas han fluctuado con los múltiples shocks desde la pandemia, unas fluctuaciones que se han caracterizado por una dinámica atípica del crecimiento y de la inflación, así como por el apoyo fiscal para mitigar los shocks. La reciente turbulencia financiera ha agravado las perspectivas ya inciertas y complejas, con condiciones de financiamiento restrictivas y crecientes preocupaciones por las vulnerabilidades de la deuda. En este entorno volátil, la política fiscal debe dar prioridad a la coherencia con la política monetaria para restablecer la estabilidad financiera y de precios, además de apoyar a los más vulnerables. Los bruscos cambios en las condiciones financieras también exigen disciplina fiscal para abordar las vulnerabilidades fiscales. Con ese fin, los gobiernos tendrán que dar mayor prioridad a recomponer los amortiguadores fiscales mediante el desarrollo de marcos fiscales creíbles basados en riesgos que promuevan políticas macroeconómicas coherentes, reduzcan las vulnerabilidades fiscales con el tiempo y generen el margen necesario para afrontar futuros shocks.
Abstract
Le rapport examine comment les finances publiques ont fluctué sous l’effet d’une série de chocs depuis la pandémie, notamment avec le profil atypique de la croissance, la dynamique de l’inflation et le soutien budgétaire mis en place pour atténuer les crises. Les récentes perturbations financières ont compliqué des perspectives déjà délicates et incertaines, marquées par un resserrement des conditions de financement et des inquiétudes croissantes entourant les vulnérabilités liées à la dette. Dans cet environnement volatil, la politique budgétaire doit avant tout rester cohérente avec la politique monétaire pour restaurer la stabilité des prix et la stabilité financière, tout en soutenant les plus vulnérables. Les brusques changements des conditions financières incitent également à faire preuve de discipline budgétaire pour remédier aux vulnérabilités des finances publiques. À cette fin, les États devront placer la reconstitution de marges de manœuvre budgétaires plus haut dans leur liste de priorités en élaborant des cadres budgétaires réalistes qui tiennent compte des risques, favorisent des politiques macroéconomiques cohérentes, réduisent les facteurs de vulnérabilité de la dette au fil du temps et dégagent des voies pour faire face aux chocs futurs.
Abstract
В докладе рассматриваются происходившие под влиянием ряда потрясений колебания государственных финансов с начала пандемии, связанные с нетипичной динамикой экономического роста и инфляции, а также бюджетной поддержкой в целях смягчения шоков. Финансовые потрясения в последний период ухудшили и без того неопределенные и сложные перспективы, связанные с жесткими условиями финансирования и ростом опасений в отношении факторов уязвимости, связанных с долгом. В этих изменчивых условиях налогово-бюджетной политике следует уделять первостепенное внимание согласованности с денежно-кредитной политикой в целях восстановления ценовой и финансовой стабильности, при этом оказывая поддержку наиболее уязвимым слоям населения. Внезапные изменения финансовой конъюнктуры также требуют ограничения бюджетных расходов для преодоления факторов уязвимости бюджета. С этой целью органам государственного управления необходимо будет уделять повышенное внимание восстановлению бюджетных резервов посредством разработки надежных бюджетных основ, базирующихся на оценке рисков, которые способствуют согласованности мер макроэкономической политики, постепенно снижают факторы уязвимости, связанные с долгом, и создают необходимое пространство для преодоления шоков в будущем.