REGIONAL OFFICE FOR ASIA AND THE PACIFIC (OAP)

Asia-Pacific Regional Seminar

Tailoring Fiscal Responses for a Fairer Recovery 
Presentations from the latest Fiscal Monitor “A Fair Shot”

How should governments' fiscal policies adapt to get ahead of the pandemic and set the stage for a greener, fairer, and more durable recovery? The IMF Regional Office for Asia and the Pacific hosted a seminar on fiscal responses to COVID-19 to share key points of the April 2021 edition of the IMF Fiscal Monitor. The lead authors from the IMF Fiscal Affairs Department presented how governments’ fiscal responses needed to be tailored to country circumstance to contain the pandemic and enabled a strong recovery, and discussed how fiscal policies could tackle inequalities, especially in access to basic public services.

Speakers:

• David Amaglobeli is a Deputy Division Chief in Fiscal Affairs Department of the IMF. Previously he was an assistant to the director in Fiscal Affairs Department. He has worked on intense surveillance country cases and on the design and review of IMF-supported programs in several crisis countries, including most recently Ukraine. Before joining the IMF in November 2009, he held several positions in his native Georgia, notably as acting governor of the National Bank of Georgia, and deputy minister of finance. In these official capacities, he negotiated debt restructuring agreement with the Paris Club of creditors and introduced an inflation targeting regime.

• Jean-Marc Fournier is an Economist in the Fiscal Affairs Department of the IMF. Previously, he worked at the OECD Economics Department, in INSEE’s forecasting department and as an Adjunct Professor at ENSAE. He has worked on various topics, including in particular fiscal policy, income inequality, the EU single market, public finance and the Covid-19 crisis. He is the author of scientific publications on macroeconomics, the global financial crisis, income inequality and econometrics. He graduated from the Ecole Polytechnique, the ENSAE and the EHESS.
  

• Raphael Lam is a senior economist in the Fiscal Affairs Department of the IMF. He previously worked on the China and Japan team in the Asia and Pacific Department, and had participated in the IMF’s lending program to Iceland during the global financial crisis. His previous research also covered fiscal and financial sector issues. He holds a Ph.D in Economics from University of California.
  

Summary of the April 2021 Fiscal Monitor - A Fair Shot

Chapter 1: Tailoring Fiscal Responses
This chapter overviews countries’ fiscal actions and discusses how governments' policies should adapt to get ahead of the pandemic, protect vulnerable households and viable firms, and set the stage for a greener, fairer, and more durable recovery. Global cooperation on vaccination must be scaled up to produce and distribute vaccines to all countries at affordable costs. Until the pandemic is brought under control globally, fiscal policy must remain flexible and supportive, and increasingly tailored to country circumstances. To balance the risks from growing debt with those from premature withdrawal of policy support, policymakers need to develop credible medium-term fiscal frameworks. This effort could be supported by improving the design of fiscal rules or by “preapproving” future tax reforms. Fiscal policy should also enable a green, digital, and inclusive transformation of the economy in the post–COVID-19 environment.

Chapter 2: A Fair Shot 
This chapter discusses fiscal policies to tackle inequalities, especially in access to basic public services. Large preexisting inequalities have worsened the effect of the COVID-19 pandemic, while the crisis, in turn, has escalated these inequalities. A holistic approach, which encompasses both predistributive and redistributive policies, are needed to break the circle of inequality. Investing in education, healthcare and early childhood development and strengthening social safety nets can have a powerful effect on improving access and hence lifetime opportunities. These policies can be financed by raising tax progressivity and strengthening overall tax capacity. Given that public support for better access to basic services, financed through higher taxes, has been strong and is likely rising with the pandemic, governments need to announce comprehensive policy packages, embedded in medium-term fiscal frameworks, that gives everyone a fair shot and strengthens trust in governments. Such reforms can support inclusive growth, strengthen trust, and build social cohesion.