International Monetary Fund. Fiscal Affairs Dept.
Published Date:
April 2015
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Automatic stabilizers

Budgetary measures that dampen fluctuation in real GDP, automatically triggered by the tax code and by spending rules.

Break-even fiscal oil price

Price of oil that is sufficient to ensure that total revenues are equal to or greater than government spending.

Contingent liabilities

Obligations of a government, whose timing and magnitude depend on the occurrence of some uncertain future event outside the government’s control. Can be explicit (obligations based on contracts, laws, or clear policy commitments) or implicit (political or moral obligations) and sometimes arise from expectations that government will intervene in the event of a crisis or a disaster, or when the opportunity cost of not intervening is considered to be unacceptable.

Cyclical balance

Cyclical component of the overall fiscal balance, computed as the difference between cyclical revenues and cyclical expenditures. The latter are typically computed using country-specific elasticities of aggregate revenue and expenditure series with respect to the output gap. Where unavailable, standard elasticities (0,1) are assumed for expenditure and revenue, respectively.

Cyclically adjusted balance (CAB)

Difference between the overall balance and the automatic stabilizers; equivalently, an estimate of the fiscal balance that would apply under current policies if output were equal to potential.

Cyclically adjusted (CA) expenditure and revenue

Revenue and expenditure adjusted for temporary effects associated with the deviation of actual from potential output (that is, net of automatic stabilizers).

Cyclically adjusted primary balance (CAPB)

Cyclically adjusted balance excluding net interest payments.

Fiscal buffer

Fiscal space created by saving budgetary resources and reducing public debt in good times.

Fiscal coefficient

Sensitivity of the overall budget balance to a change in economic activity.

Fiscal devaluation

A revenue-neutral shift from employers’ social contributions toward value-added tax.

Expenditure elasticity

Elasticity of expenditure with respect to the output gap.

Fiscal multiplier

The ratio of a change in output to an exogenous and temporary change in the fiscal deficit with respect to their respective baselines.

Fiscal space

Extent to which a government can allocate resources for a given purpose without prejudice of liquidity or long-term public debt sustainability.

Fiscal stabilization

Contribution of fiscal policy to output stability through its impact on aggregate demand.

Fiscal stimulus

Discretionary fiscal policy actions (including revenue reductions and spending increases) adopted in response to a financial crisis.

General government

All government units and all nonmarket, nonprofit institutions that are controlled and mainly financed by government units comprising the central, state, and local governments; includes social security funds, and does not include public corporations or quasicorporations.

Gross debt

All liabilities that require future payment of interest and/or principal by the debtor to the creditor. This includes debt liabilities in the form of special drawing rights, currency, and deposits; debt securities; loans; insurance, pension, and standardized guarantee programs; and other accounts payable. (See the IMF’s 2001 Government Finance Statistics Manual and Public Sector Debt Statistics Manual.) The term “public debt” is used in the Fiscal Monitor, for simplicity, as synonymous with gross debt of the general government, unless specified otherwise. (Strictly speaking, public debt refers to the debt of the public sector as a whole, which includes financial and nonfinancial public enterprises and the central bank.)

Gross financing needs (also gross financing requirements)

Overall new borrowing requirement plus debt maturing during the year.

Interest rate–growth differential

Effective interest rate (r), defined as the ratio of interest payments to the debt of the preceding period) minus nominal GDP growth (g), divided by 1 plus nominal GDP growth: (rg)/(1 + g).

Net debt

Gross debt minus financial assets corresponding to debt instruments. These financial assets are monetary gold and special drawing rights; currency and deposits; debt securities; loans, insurance, pensions, and standardized guarantee programs; and other accounts receivable. In some countries, the reported net debt can deviate from this definition based on available information and national fiscal accounting practices.

Nonfinancial public sector

General government plus nonfinancial public corporations.

Output gap

Deviation of actual from potential GDP, in percent of potential GDP.

Overall fiscal balance (also “headline” fiscal balance)

Net lending and borrowing, defined as the difference between revenue and total expenditure, using the IMF’s 2001 Government Finance Statistics Manual (GFSM 2001). Does not include policy lending. For some countries, the overall balance is still based on the GFSM 1986, which defines it as total revenue and grants minus total expenditure and net lending.

Policy lending

Transactions in financial assets that are deemed to be for public policy purposes but are not part of the overall balance.

Potential output

Estimate of the level of GDP that can be reached if the economy’s resources are fully employed.

Primary balance

Overall balance excluding net interest payment (interest expenditure minus interest revenue).

Public debt

See gross debt.

Public sector

The general government sector plus government-controlled entities, known as public corporations, whose primary activity is to engage in commercial activities.

Revenue elasticity

Elasticity of revenue with respect to the output gap.

Stock-flow adjustment

Change in the gross debt explained by factors other than the overall fiscal balance (for example, valuation changes).

Structural fiscal balance

Difference between the cyclically adjusted balance and other nonrecurrent effects that go beyond the cycle, such as one-off operations and other factors whose cyclical fluctuations do not coincide with the output cycle (for instance, asset and commodity prices and output composition effects).

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