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.

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.

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.

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.

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.

Liberia's next president faces mounting expectations

2017 ◽  
Keyword(s):  
Financial Institutions ◽  
Foreign Investment ◽  
Government Expenditure ◽  
Public Spending ◽  
International Financial Institutions ◽  
Content Type ◽  
Capital Spending ◽  
Election Violence ◽  
Poor Infrastructure

Significance Whoever succeeds outgoing President Ellen Johnson Sirleaf will have to tackle widespread state corruption, cut recurrent government expenditure and boost infrastructure spending to spur economic growth. Impacts Post-election violence could spike if the opposition loses and accuses a partial electoral commission of manipulation. Low capital spending and poor infrastructure will remain a persistent deterrence to long-term private and foreign investment. International financial institutions will pressure the new government to cut public spending. Further delays to a proposed constitutional referendum are likely.

Orthodox debt strategy may not pay off for Mexico

2020 ◽  
Keyword(s):  
Capital Markets ◽  
Public Debt ◽  
Fiscal Deficit ◽  
International Capital ◽  
Foreign Investors ◽  
Content Type ◽  
International Capital Markets ◽  
Borrowing Costs ◽  
Bond Issues

Significance Public debt increased from the second quarter of 2020, mainly due to the sharp economic contraction and peso depreciation. Impacts A debt downgrade would not cut off Mexico’s access to international capital markets, but it would increase borrowing costs significantly. Efforts to avoid a higher fiscal deficit, and debt, will weigh on growth expectations for 2021. As Mexico becomes less attractive for foreign investors, long-term bond issues in dollars will become more popular than those in pesos.

scholarly journals COMMONWEALTH Forum: Addressing Pennsylvania’s Structural Budget Deficit

Commonwealth ◽  
2018 ◽  
Vol 20 (1) ◽  
Author(s):  
Bob Dick ◽  
Marc Stier
Keyword(s):  
Budget Deficit ◽  
Status Quo ◽  
The State ◽  
Fiscal Year ◽  
Political Climate ◽  
Structural Deficit ◽  
The Status ◽  
Structural Budget

In November 2016 Pennsylvania’s Independent Fiscal Office released a five-year projection of the health of the Commonwealth’s economy and budget. The long-term estimates were not promising as increasing expenditures outstripped existing sources of revenues. Left unchanged, the status quo would result in a deficit of almost $3 billion in fiscal year 2021–22. Tackling this “structural deficit” is one of the most difficult issues facing the state of Pennsylvania. Given the current political climate it should come as no surprise that there is no consensus on resolving this problem. COMMONWEALTH invited representatives from two very different policy perspectives to provide their solutions to the structural deficit. We would like to thank Bob Dick of the Commonwealth Foundation and Marc Stier of the Pennsylvania Budget and Policy Center for addressing this important issue in the COMMONWEALTH Forum.

Future Saudi bond issues will require more reforms

2016 ◽  
Keyword(s):  
Government Expenditure ◽  
Banking System ◽  
Tax Revenue ◽  
Economic Downturn ◽  
Content Type ◽  
Bond Issues ◽  
Oil Exports ◽  
The Government ◽  
Key Questions

Significance The government has disclosed details to prospective investors about the state of its finances, as part of a marketing exercise for the bond sale. It also laid out more of its strategy for coping with an economic downturn driven by plunging revenue from crude oil exports -- although key questions remain unanswered. Impacts Public debt will rise rapidly over the next five years, but from a negligible level and to not more than 50% of GDP. The government will need to improve the extent and timeliness of financial information to retain the confidence of bond investors. Government expenditure cuts will damage the private sector in the short term, causing problems for contractors and their creditor banks. The central bank will have to show skill in managing debt issuance and maintaining sufficient liquidity in the banking system. Long-term economic sustainability will depend on a significant increase in tax revenue, which could cause political unrest.

IMF bailout would force Pakistan’s Khan to compromise

2018 ◽  
Keyword(s):  
Saudi Arabia ◽  
Welfare State ◽  
Current Account ◽  
Budget Deficit ◽  
Prime Minister ◽  
Current Account Deficit ◽  
Fiscal Year ◽  
Content Type ◽  
The Us ◽  
Us Government

Subject Pakistan's likely need for an IMF bailout. Significance Prime Minister Imran Khan, sworn in earlier this month, came to power promising to create an ‘Islamic welfare state’. In the fiscal year ending June 2018, the current account deficit was nearly 6% of GDP and the budget deficit nearly 7% of GDP. Pakistan in September 2016 completed a three-year Extended Fund Facility programme with the IMF worth some 6.6 billion dollars, and in the last month has availed of loans worth 2.0 billion dollars from China and 4.0 billion dollars from Saudi Arabia. Impacts The US government will issue further warnings against an IMF bailout being used to pay off Pakistan’s debt to China. The revival of ties between Pakistan and Saudi Arabia may hinder Islamabad’s efforts to improve ties with Tehran. Khan’s governing coalition will be relatively stable, fewer constituent parties reducing the risk of splits, and the opposition divided.

Progress in merging India’s oil companies may be slow

2017 ◽  
Keyword(s):  
Energy Security ◽  
Oil And Gas ◽  
Fiscal Year ◽  
Content Type ◽  
Oil Companies ◽  
Energy Company ◽  
Oil And Natural Gas ◽  
Term Energy ◽  
At Home

Subject India's efforts to make state-run oil companies more competitive at home and abroad. Significance India’s Oil and Natural Gas Corporation (ONGC), which specialises in exploration, is set to acquire a majority stake in refiner Hindustan Petroleum Corporation Limited (HPCL) by the end of the fiscal year ending March 2018. The planned consolidation of these two state-owned enterprises (SOEs) reflects the Indian government’s aim of making public sector oil companies more competitive at home and abroad, improving long-term energy security. Impacts India’s oil ministry will become increasingly involved in scrutinising oil companies’ competitiveness domestically and overseas. Any perceived privatisation of the ONGC’s assets could be met with protests by many of its 33,000 employees. The ONGC will in the long term need to diversify into a broader energy company rather than focusing only on oil and gas.

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