Russia's budget reflects caution on future spending

2016 ◽  
Keyword(s):  
Budget Deficit ◽  
Public Spending ◽  
Oil Price ◽  
Economic Recovery ◽  
Education Spending ◽  
Monetary Policies ◽  
Content Type ◽  
Low Levels ◽  
Spending Cuts

Significance A three-year budget cycle is intended to create predictability after a year in which the initial budget had to be revised as the oil price outlook grew gloomier. Spending cuts are envisaged to continue beyond 2017 as revenue predictions are modest amid low rates of economic growth, and the objective is to cut the budget deficit progressively. Impacts The diversion of reserve money to sustain public spending will undermine economic modernisation programmes. Low levels of health and education spending will harm human capital in the medium-to-long term. The Central Bank is unlikely to relax monetary policies significantly prior to 2018, and then only if inflation recedes to the targeted 4%. Tight monetary policy will restrict credit growth and thus economic recovery.

Earthquake may add to fiscal woes in Ecuador

2016 ◽  
Keyword(s):  
Budget Deficit ◽  
Aggregate Demand ◽  
Public Spending ◽  
State Funding ◽  
Oil Price ◽  
Right Wing ◽  
External Financing ◽  
Content Type ◽  
Downward Pressure ◽  
Spending Cuts

Significance Thousands protested in early April against government plans to increase tax, the latest sign of rising tensions following the collapse of oil prices, the widening of the budget deficit and cuts in public spending. The move to austerity, which began in early 2015, has improved public finances. However, spending cuts have created problems for sectors reliant on state funding and efforts to raise taxes to balance the books have been opposed. Impacts Austerity will drain aggregate demand and place downward pressure on growth. Right-wing opposition will use the fallout from the oil price collapse to make the case for a smaller state and less regulated economy. Tax increases will be unpopular with voters, but may help to secure external financing.

Mexican fiscal orthodoxy to be maintained amid crisis

2020 ◽  
Keyword(s):  
Capital Markets ◽  
Public Debt ◽  
Public Spending ◽  
Country Risk ◽  
Economic Recovery ◽  
International Capital ◽  
Content Type ◽  
International Capital Markets ◽  
The Cost ◽  
Spending Cuts

Significance Public finances have not so far deteriorated as dramatically as they might have done, considering the economic contraction caused by the COVID-19 pandemic. This is explained partly by public spending cuts and one-off revenues that will not be repeated next year. Impacts Fiscal orthodoxy will not be rewarded by international capital markets, as anti-investment moves have hit confidence. Perceptions of country risk will continue to worsen, pushing up the cost of refinancing public debt. A slow post-pandemic economic recovery and lingering unemployment could weigh on the government’s popularity.

Laos’s fiscal improvement efforts will face headwinds

2017 ◽  
Keyword(s):  
Budget Deficit ◽  
Public Spending ◽  
Fiscal Year ◽  
National Audit ◽  
State Spending ◽  
Content Type ◽  
National Assembly ◽  
Sovereign Bond ◽  
Bond Issues

Significance Amid continuing concerns about public spending and debt levels, Laos’s finance ministry in mid-October enacted its largest foreign bond issue yet. An October report by the national audit office to the National Assembly found that over 1 trillion kip (120 million dollars) of state spending was unaccounted for in the fiscal year 2015/16 (October 1, 2015-September 30, 2016). Impacts Corruption within the LPRP and government will hinder the reduction of Laos’s budget deficit. Sovereign bond issues and Chinese loans will help underwrite some of Laos’s deficit but are unsustainable long-term solutions. Relying on Chinese loans will further bind Laos to China politically.

The new Zambian president faces long-term challenges

2021 ◽  
Keyword(s):  
National Development ◽  
Social Costs ◽  
Debt Restructuring ◽  
Content Type ◽  
Fiscal Constraints ◽  
Reform Programme ◽  
The Social ◽  
Voter Suppression ◽  
Spending Cuts

Significance Hichilema's surprise win came despite extensive voter suppression and intimidation attributed to former President Edgar Lungu and the ruling Patriotic Front (PF) against supporters of Hichilema’s United Party for National Development (UPND). Impacts The broad scope of Hichilema’s reform programme will pose difficulties of prioritisation, particularly within current fiscal constraints. Higher copper prices may mitigate some of the social costs associated with debt restructuring and spending cuts. The cancellation of a meeting between President Joe Biden and Hichilema over LGBT rights concerns may complicate relations with Washington.

Alberta's economic woes have political consequences

2021 ◽  
Keyword(s):  
Federal Government ◽  
Oil Sands ◽  
Public Spending ◽  
Provincial Government ◽  
Economic Recovery ◽  
Structural Unemployment ◽  
Content Type ◽  
Political Consequences ◽  
Remaining Oil ◽  
Keystone Xl

Significance With steep reductions in public spending affecting education and social programmes, the budget signals an era of austerity in what had been Canada’s wealthiest province. One consequence is likely to be greater tension between the provincial government and the federal government in Ottawa. Impacts Major international funds will continue to divest from the oil sands sector, further depressing output as subsidies are cut. Remaining oil sands production will be increasingly automated, meaning that structural unemployment will persist. Ottawa’s refusal to contest US cancellation of the Keystone XL pipeline has raised tensions with the UCP government in Edmonton. The national broad-based economic recovery expected this year will largely bypass Alberta.

Financing shortfall will push Oman to uneasy austerity

2021 ◽  
Keyword(s):  
Public Sector ◽  
Oil Production ◽  
Oil Price ◽  
Project Financing ◽  
Wage Bill ◽  
Content Type ◽  
One Year ◽  
Gas Fields

Significance A fiscal crunch exacerbated by the pandemic and associated oil-price crash has forced the authorities to step up long-term ‘Omanisation’ efforts, ultimately taking pressure off the bloated public sector wage bill. This comes as Sultan Haitham bin Tariq Al Said, one year into his reign, launches a raft of new political, military and economic initiatives. Impacts Oman will remain compliant with OPEC+ oil production cuts. The sultanate will boost output at its competitive giant Ghazeer and Khazzan gas fields in Block 61 to benefit from high prices. Muscat will prioritise agriculture, fisheries and logistics for non-oil growth but struggle to secure project financing post-pandemic.

Russia's Armata tank will be formidable but expensive

2015 ◽  
Keyword(s):  
Content Type ◽  
Modern Equipment ◽  
New Family ◽  
Reform Plan ◽  
Defence Spending ◽  
Low Levels ◽  
Will Force ◽  
Ukraine Crisis ◽  
The Military ◽  
Spending Cuts

Subject Russia's Armata tank programme. Significance Russia's military is currently undergoing a 700 billion dollar rearmament programme, with Moscow aiming to supply the military with 70% modern equipment by 2020. The reform plan is looking to upgrade Russia's armoured formations with a new family of vehicles collectively called Armata. The Armata tank variant will be far superior to any tank operating in Russia's neighbours as well as many NATO armies. However, it is costly and the Defence Ministry is actively trying to force down the price. Impacts Defence spending has been largely protected from 10% spending cuts but budgetary pressures will remain. It will take time to bring defence and procurement spending in many NATO members up from current low levels below 2% of GDP. The Ukraine crisis will force Russia's defence industry to produce weaponry domestically with less reliance on foreign supplies.

Portuguese coalition parties may clash over austerity

2016 ◽  
Keyword(s):  
Economic Growth ◽  
European Commission ◽  
Budget Deficit ◽  
Banking Sector ◽  
Content Type ◽  
Rating Agencies ◽  
Structural Funds ◽  
The Government

Significance This reflects the significant risks lying ahead for the government despite the European Council's decision on August 9 to waive fines for Portugal over its excessive budget deficit in 2015. Impacts The European Commission retains the possibility of suspending structural funds for Portugal. The decision to waive the fine could undermine the credibility of EU rules in the long term. Slower economic growth and the weak banking sector could lead to Portugal being downgraded by rating agencies.

Italy's Renzi will face critical tests before year-end

2016 ◽  
Keyword(s):  
Political System ◽  
Turning Point ◽  
Political Leadership ◽  
Economic Recovery ◽  
The Political ◽  
Deep Uncertainty ◽  
Content Type ◽  
The Government

Significance This is a crucial step for the government before year-end, together with long-term banking issues and slowing economic recovery. The European Commission has allowed Italy considerable fiscal flexibility; the government promises to start reducing its debt-to-GDP ratio this year. However, the slowdown could delay achieving this goal. Under this scenario, the government has to campaign for the referendum on its Senate reform. A 'yes' vote is key not only for reforming the political system, but the government's survival. Impacts A 'no' outcome would pull Italy into deep uncertainty concerning its political leadership. It would also end Renzi's premiership; a new majority could follow up to the 2018 general election. However, since Renzi is the PD leader, he is unlikely to support a new government; early elections are likely. In case of a 'yes' outcome, Renzi's premiership will be reinforced, marking a turning point to his declining popularity.

Oreskovic government in Croatia may prove short-lived

2016 ◽  
Keyword(s):  
Political Instability ◽  
Public Spending ◽  
Economic Restructuring ◽  
Right Wing ◽  
Case Scenario ◽  
Content Type ◽  
Growth Prospects ◽  
The Government ◽  
Social Conservatism

Significance After protracted negotiations, Croatia, at last, has a government, comprising the conservative Patriotic Coalition -- the Croatian Democratic Union (HDZ), plus a few small parties -- and the centre-right Bridge ('Most') of Independent Lists. The government is unusual because it is led by a non-partisan figure, Tihomir Oreskovic, a businessman who grew up in Canada and has only a shaky grasp of the Croatian language. In a best-case scenario, the government could deliver important and necessary reforms. Impacts Efforts to cut public spending will reduce the risk of a damaging financing crisis. A programme of economic restructuring will boost Croatia's long-term growth prospects. The election of two right-wing parties will consolidate the drift towards social conservatism. Tensions in the coalition will perpetuate political instability and could precipitate new elections.

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