Global Perspective: The question of debt management is a key concern, particularly for countries with large external finance requirements

Fiscal policy was at the top of the agenda at the IMF Annual Meeting held in Washington, DC in October 2019, which was attended by finance ministers, central bank governors and private sector executives from around the world. The event provided an opportunity for member countries to issue statements outlining their opinions on the global economic landscape, which are of considerable interest to the international investment community.

Expert Takes

Representing the European Commission, vice president Valdis Dombrovskis and commissioner Pierre Moscovici called for a more “supportive policy mix in the current juncture”, adding that “fiscal policy should be used in an effective and timely manner in countries with fiscal space”. Meanwhile, Steven Mnuchin, US Treasury secretary, argued that “with space for monetary easing diminishing in many countries, fiscal policy paired with pro-growth structural reforms that will durably raise investment, job creation and productivity will need to play a larger role”. The message from some of the global economy’s most influential figures was clear: it is time for fiscal policy to take over where monetary policy has run its course as an effective tool. For many developing economies, however, this advice is difficult to implement.

A high proportion of emerging markets rely heavily on the export of commodities to secure the revenue needed for fiscal expenditure. As a result, the sharp decline in commodity prices in 2014 and 2015 continues to negatively affect fiscal conditions, causing high levels of public debt.

Read the full Global Perspective in The Report: Ghana 2020