WEO

Despite progress in addressing key fiscal weaknesses in many countries, significant policy challenges remain in advanced, emerging, and low-income economies, and must be faced in an environment where downside risks to growth have increased. Many advanced economies face very large adjustment needs to reduce risks related to high debt ratios. The appropriate pace of adjustment in the short run will depend, for each country, on the intensity of the market pressure it confronts, the magnitude of the risks to growth it faces, and the credibility of its medium-term program. The euro area needs to sustain fiscal consolidation, minimize its growth fallout, and address concerns about the adequacy of crisis resolution mechanisms. In Japan and the United States, sufficiently detailed and ambitious plans to reduce deficits and debts are needed to prevent credibility from weakening. Meanwhile, many emerging economies need to make faster progress in strengthening fiscal fundamentals before cyclical factors or spillovers from advanced economies turn against them. Low-income countries also need to rebuild fiscal buffers, while addressing spending needs.

Contents

Preface
Executive Summary
1.	Introduction
2.	Restoring Order: Reassuring Markets about Fiscal Sustainability in the Euro Area
3.	The Dog That Didn't Bark (So Far): Low Interest Rates in the United States and Japan
4.	Too Good to Be True? Fiscal Developments in Emerging Economies
5.	The Legacy of the Crisis: How Long Will It Take to Lower Public Debt?
6.	Confronting Trade-Offs: Accommodating Spending Pressures in Low-Income Countries
7.	Conclusion
Appendixes
1.	"Fiscal Devaluation": What Is It—and Does It Work?
2.	Insights for Privatization Plans from Previous Large Episodes
3.	The Importance of Monitoring Both Gross and Net Debt
4.	Stock-Flow Adjustments and Their Determinants
Methodological and Statistical Appendix
Glossary
Abbreviations
References

Boxes
1.	United States: Government-Sponsored Enterprises and Contingent Liabilities
2.	Risks to the Baseline
3.	Fiscal Developments in Oil-Producing Economies
4.	Determinants of Domestic Bond Yields in Emerging Economies
5.	The Fiscal Indicators Index
6.	Factors Underlying the Debt Increase Precrisis versus End-2015
7.	Financial Sector Support and Recovery to Date
8.	Global Fuel and Food Price Shocks and Fiscal Performance in Low-Income Countries
9.	Adjusting Public Capital Stock for Investment Inefficiency

Figures
1.	G-7 Sovereign Bond Yields
2.	Sovereign Bond Yield Spreads over German Bunds
3.	Sovereign Bond Yield Spreads, General Government Gross Debt, and Projected Real GDP Growth
4.	Fiscal Fundamentals in the G-7 Economies plus Spain, 2011
5.	Advanced Economies: Average Bond Maturity
6.	Holders of Government Debt
7.	Emerging Economies: Median 5-Year CDS Spreads
8.	Emerging Economies: Differences in Cyclically Adjusted Primary Balances, 2011, Compared with the Precrisis Period
9.	Components of the Fiscal Indicators Index, 1996–2011
10.	Fiscal Indicators Index by Region, 2001–11
11.	Emerging Economies: Change in Cyclically Adjusted Primary Balance and in Output Gap, 2011
12.	Comparing Fiscal Fundamentals across Emerging Economies, 2011
13.	Selected Advanced Economies: General Government Gross Debt
14.	Advanced Economies: Change in Overall Balance and General Government Gross Debt, 2010–11
15.	Advanced Economies: Decomposition of 2011 Debt Accumulation
16.	Cyclically Adjusted Primary Balance That Needs to Be Maintained in 2020–30 to Achieve Debt Target by 2030
17.	Largest Average Primary Surplus over a 10-Year Period

Tables
1.	Fiscal Balances, 2008–12
2.	Fiscal Balances in 2011–12: Medium-Term Plans and IMF Staff Projections
3.	Selected Advanced Economies: Gross Financing Needs, 2011–13
4.	Selected Emerging Economies: Gross Financing Needs, 2011–12
5a.	Advanced Economies: General Government Debt and Primary Balance
5b.	Emerging Economies: General Government Debt and Primary Balance
6.	Assessment of Fiscal Sustainability Risks, 2011

Statistical Tables
1.	General Government Balance
2.	General Government Primary Balance
3.	General Government Cyclically Adjusted Overall Balance
4.	General Government Cyclically Adjusted Primary Balance
5.	General Government Expenditure
6.	General Government Revenue
7.	General Government Gross Debt
8.	General Government Net Debt
9.	Structural Fiscal Indicators

Fiscal Monitor Database
Data \| Application