Summary (English)

Offers an array of possibilities that can be explored to expand fiscal space.

These include:

(i) re-allocating public expenditures,
(ii) increasing tax revenues,
(iii) lobbying for increased aid and transfers,
(iv) tapping into fiscal and foreign exchange reserves,
(v) borrowing and restructuring existing debt, and/or
(vi) adopting a more accommodative macroeconomic framework.

To serve as a general advocacy resource, the annex provides a summary of the latest fiscal space indicators for 182 countries.

The need to increase fiscal space for social and economic investments has never been greater. Just at a time when populations are most in need of public assistance, fiscal contraction is intensifying and spreading quickly across the developing world. Analyzing IMF data for 128 countries, UNICEF's earlier paper Austerity measures threaten children and poor households shows that 91 developing countries are planning to reduce public expenditures in 2012 - many undergoing excessive contraction, defined as cutting expenditures below pre-crisis levels in terms of GDP.

It is essential to find fiscal space to ensure social spending and investments necessary for sustained equitable results for children and human development. Given the significance of public investment in enhancing the prospects for equitable, inclusive economic growth and social development, including the achievement of the MDGs, it is critical that governments explore options to ramp up social spending and employment-generating economic investments during - and in support of - the recovery. Each country is unique, and fiscal space options should be carefully examined - including the potential risks and trade-offs associated with each opportunity - at the national level and considered in an inclusive dialogue of alternatives to ensure a Recovery for All.
 

Related info

See also: Austerity measures threaten children and poor households, UNICEF, 2011.

Note

Social and Economic Policy. Working Paper