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Can They Do It All? Fiscal Space in Low-Income Countries
Author:
Ms. Anja Baum null

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,
Andrew Hodge
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Ms. Aiko Mineshima
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,
Ms. Marialuz Moreno Badia
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Rene Tapsoba
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Series:
IMF Working Papers
Volume/Issue:
Volume 2017: Issue 110
Language:
English
Publication Date:
05 May 2017
DOI:
https://doi.org/10.5089/9781475599046.001
ISBN:
9781475599046
ISSN:
1018-5941
Pages:
40
Keywords:
WP; debt limit; exchange rate; debt ratio; debt dynamics; fiscal space; public debt; sustainability; SDGs; low-income countries; financing mix; LIC financing landscape; financing constraint; interest rate; financing condition; Fiscal stance; Public investment spending; Global
Legal-disclaimer:
IMF Working Papers describe research in progress by the author(s) and are published to elicit comments and to encourage debate. The views expressed in IMF Working Papers are those of the author(s) and do not necessarily represent the views of the IMF, its Executive Board, or IMF management.
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According to U.N. estimates, low-income countries will have to increase their annual public spending by up to 30 percent of GDP to achieve the Sustainable Development Goals (SDGs), raising the question of whether they can do it all. This paper develops a new metric of fiscal space in low-income countries that accounts for macroeconomic uncertainty, allowing us to assess whether those spending needs can be accommodated. Illustrative simulations based on this methodology imply that, even under benign conditions, the fiscal space available in lowincome countries is likely insufficient to undertake the spending needed to achieve the SDGs. Improving public investment efficiency and domestic revenue mobilization can somewhat narrow the gap but it will require major efforts relative to recent trends.
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Cover IMF Working Papers
IMF Working Papers
ISSN:
1018-5941
Publisher:
International Monetary Fund