This paper discusses the role of fiscal policy and demographics. By the end of this century, about two-thirds of all countries are expected to have declining populations. This will have profound implications for economics, financial markets, social stability, and geopolitics. Fiscal policy responses and technological innovation are especially important parts of the solution. Without action, public pension and health systems will not be sustainable over the long term. The increase in life expectancy and economic welfare that came with the industrial revolution brought with it the seeds of demographic change. This is a demographic double whammy that will have major implications for economic growth, financial stability, and the public purse. With declining fertility rates, populations in some advanced economies did not just grow more slowly; they stagnated or began to shrink. IMF analysis suggests that, if everyone lived three years longer than expected, pension related costs could increase by 50 percent in both advanced and emerging economies. This would heavily affect private and public sector balance sheets and could also undermine financial stability.



United Nations estimates.


United Nations estimates.


World Bank estimates.


April 2015 World Economic Outlook. Chapter 3: “Where Are We Headed? Perspectives on Potential Output.”


April 2012 Global Financial Stability Report. Chapter 4: “The Financial Impact of Longevity Risk.”


IMF Staff Discussion Note: “The Fiscal Consequences of Shrinking Populations.”


April 2016 Fiscal Monitor (forthcoming).

Born in Paris in 1956, Christine Lagarde completed high school in Le Havre and attended Holton-Arms School in Bethesda, Maryland (USA). She then graduated from law school at University Paris X and obtained a master’s degree from the Political Science Institute in Aix-en-Provence.

After being admitted as a lawyer to the Paris bar, Lagarde joined the international law firm of Baker & McKenzie as an associate, specializing in labor, antitrust, and mergers and acquisitions. A member of the Executive Committee of the firm in 1995, Lagarde became the Chairman of the Global Executive Committee of Baker & McKenzie in 1999, and subsequently Chairman of the Global Strategic Committee in 2004.

Lagarde joined the French government in June 2005 as Minister for Foreign Trade. After a brief stint as Minister for Agriculture and Fisheries, in June 2007 she became the first woman to hold the post of Finance and Economy Minister of a G7 country. From July to December 2008, she also chaired the ECOFIN Council, which brings together economics and finance ministers of the European Union.

As a member of the G20, Lagarde was involved in the group’s management of the financial crisis, helping to foster international policies related to financial supervision and regulation and to strengthen global economic governance. As Chairman of the G20 when France took over its presidency in 2011, she launched a wide-ranging work agenda on the reform of the international monetary system.

In July 2011, Lagarde became the eleventh Managing Director of the IMF and the first woman to hold that position.

Lagarde was named Officier in the Légion d’honneur in April 2012.

A former member of the French national team for synchronized swimming, Christine Lagarde is the mother of two sons.