International Monetary Fund

An assessment of public infrastructure development in the Western Balkans. The paper quantifies the large gaps across various sectors/dimensions, evaluates current infrastructure plans, and discusses funding options available to countries in the region. The paper also identifies important bottlenecks for increased infrastructure investment. Finally, the paper quantifies potential growth benefits from addressing infrastructure gaps, concluding that boosting the quantity and quality of infrastructure is vital for raising economic growth and accelerating income convergence with the EU. The paper concludes with country-specific policy recommendations.

The paper makes an analytical contribution to the revived discussion about the euro area’s institutional setup. After significant progress during the eurocrisis, the drive to complete Europe’s Economic and Monetary Union (EMU) had stalled, and the way forward will benefit from an in-depth look at the conceptual issues raised by the evolution and architecture of Europe, and the trade-offs involved. A thorough look at the underlying economic issues suggests that in the long run, EMU will benefit from progressing along three mutually supporting tracks: introduce more fiscal risk sharing, helping to make the sovereign “no bailout” rule credible; complementary financial sector reforms to delink sovereigns and banks; and more effective rules to discourage moral hazard. This evolution would ensure that financial markets provide incentives for fiscal discipline. Introducing more fiscal union comes with myriad legal, technical, operational, and political problems, raising questions well beyond the remit of economics. But without decisive progress to foster fiscal risk sharing, EMU will continue to face existential risks.

This paper describes the current and future economic situation in Europe: While Europe has enjoyed a strong recovery, medium-term perspectives are less exciting, hence the necessity for European government to use this window of opportunity to improve their fiscal policy and implement reforms aimed at transforming the short-term recovery into a long-term one. The recovery is also a great occasion for European Countries to strengthen their economic and monetary ties, and therefore deepen the Economic and Monetary Union.

Rising inequality and slow economic growth in many countries have focused attention on policies to support inclusive growth. While some inequality is inevitable in a market-based economic system, excessive inequality can erode social cohesion, lead to political polarization, and ultimately lower economic growth. This Fiscal Monitor discusses how fiscal policies can help achieve redistributive objectives. It focuses on three salient policy debates: tax rates at the top of the income distribution, the introduction of a universal basic income, and the role of public spending on education and health.

The April 2018 edition of Fiscal Monitor is focused on two broad themes: the burden of high global debt and the opportunities and challenges of digital government.
Chapter 1 explores how strong and broad-based growth provides an opportunity to rebuild fiscal buffers now, improve government balances, and anchor public debt.
Chapter 2 discusses how digitalization presents opportunities and challenges for fiscal policy and the ways in which it can change how governments design and implement current and future policies. The chapter also discusses how digitalization can positively transform governments by improving tax policy and administration, increasing spending efficiency and enhancing fiscal management.

Sub-Saharan Africa’s economy is set to register another year of solid economic performance, expanding at 4½ percent in 2015. This said, the expansion will be at the lower end of the range registered in recent years, mainly reflecting the adverse impact of the sharp decline in oil and other commodity prices.
The effect of this shock will be quite heterogeneous across the region. The region’s eight oil exporters will be hit hard and, with limited buffers, are expected to effect significant fiscal adjustment, with adverse implications for growth. For much of the rest of the region, near-term prospects remain quite favorable, with many countries benefiting from lower oil prices—although, for a number of them, this positive effect will be part offset by the decline in the prices of other exported commodities. Notable exceptions are South Africa, where growth is expected to remain lackluster, held back by continuing problems in the electricity sector, and Guinea, Liberia, and Sierra Leone, where the Ebola outbreak continues to exact a heavy economic and social toll.