Governments should start planning a return to more sustainable budgets with policies that win the trust of investors, after unprecedented fiscal stimulus to fight the Covid-19 pandemic, the International Monetary Fund said on Thursday.
But each country must determine the appropriate timing and pace of fiscal consolidation based on its own individual circumstances, the IMF said in its Fiscal Monitor report.
The fiscal plans needed to consider the stage of the pandemic, existing fiscal vulnerabilities, the risk of economic scarring, pressures from aging populations, development needs and historical difficulties in collecting revenues.
Read IMF sees global GDP slightly below 6% in 2021
“There are countries where the pandemic is still raging and therefore the priority continues to be the health emergency,” IMF Deputy Fiscal Affairs Director Paulo Mauro told Reuters in an interview.
Other countries where economic activity is picking up “can start thinking about also gradually reducing the degree of fiscal support that they provide to the economy”, he said.
Published in The Express Tribune, October 8th, 2021.
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