April 2011 Fiscal Monitor Shifting Gears: Tackling Challenges on
the Road to Fiscal Adjustment
Carlo Cottarelli Director, Fiscal Affairs Department
April 12, 2011
Outline
1. Fiscal Developments in 2008-2010
2. Extent of Fiscal Imbalances in 2010
3. Projected Adjustment in 2011 and 2012
4. Risks Around the Baseline Projections
Fiscal Developments in2008-2010
Change in General Government Debt and Deficit: Advanced Economies
10
12
8
Incr
ease
in d
efic
it w
ith re
spec
t to
2007
6
4
2
0
0 5 10 15 20 25 30 35
(Percentage points of GDP)
Increase in debt with respect to 2007
Change in General Government Debt and Deficit: Advanced Economies
Incr
ease
in d
efic
it w
ith re
spec
t to
2007
Change in General Government Debt and Deficit: Advanced Economies
Incr
ease
in d
efic
it w
ith re
spec
t to
2007
10
12
8
6
4
2
0
0 5 10 15 20 25 30 35
(Percentage points of GDP)
Increase in debt with respect to 2007
10
12
8
6
4
2
0
0 5 10 15 20 25 30 35
(Percentage points of GDP)
Increase in debt with respect to 2007
0
Change in General Government Debt and Deficit: Emerging Economies
Incr
ease
in d
efic
it w
ith re
spec
t to
2007
Change in General Government Debt and Deficit: Emerging Economies
Incr
ease
in d
efic
it w
ith re
spec
t to
2007
12
10
8
6
4
2
0
-15 -10 -5 15 20 25 30
(Percentage points of GDP)
-2
-4
1050
Increase in debt with respect to 2007
12
10
8
6
4
2
0
-15 -10 -5 15 20 25 30
(Percentage points of GDP)
-2
-4
105
Increase in debt with respect to 2007
0
Change in General Government Debt and Deficit: Emerging Economies
(Percentage points of GDP)
12
10
8
6
4
2
0
-15 -10 -5 15 20 25 30
-2
-4
105
Increase in debt with respect to 2007
Incr
ease
in d
efic
it w
ith re
spec
t to
2007
Extent of Fiscal Imbalances in2010
Australia Austria Belgium Canada
Czech Republic Denmark
Estonia
Finland
France
Germany
Greece
Hong Kong SAR
Iceland
Israel Italy
Japan
Korea
Netherlands
New Zealand
Portugal
Singapore
Slovak Republic
Slovenia
Spain
Sweden
Switzerland
United Kingdom United States
-8
-6
-4
-2
0
2
4
6
8
10
12
0 20 40 60 80 100 120 140 160
Gen
eral
Gov
ernm
ent D
efic
it, 2
010
General Government Gross Debt, 2010
General Government Debt and Deficit, 2010: Advanced Economies
Ireland
Increase in Entitlement Spending: Advanced Economies
-1
1
3
5
7
Uni
ted
Sta
tes
Finl
and
Bel
gium
Net
herla
nds
Icel
and
New
Zea
land
Kor
eaN
orw
ayA
ustri
aU
nite
d K
ingd
omP
ortu
gal
Slo
veni
aS
witz
erla
ndC
anad
aG
reec
eA
ustra
liaG
erm
any
Fran
ceS
pain
Irela
ndD
enm
ark
Slo
vak
Rep
ublic
Italy
Japa
nC
zech
Rep
ublic
Sw
eden
Est
onia
Entitlement Spending, Change, 2010-30
Pension Health care
Projected Adjustment in 2011 and2012
Change in Debt and Deficit: Advanced Economies
(Percentage points of GDP)
10
8
6
4
2
0
Incr
ease
in d
efic
it w
ith re
spec
t to
2007
-5 0 5 10 15 20 25 30 35 40 45 50
Increase in debt with respect to 2007
Change in Debt and Deficit: Advanced Economies
(Percentage points of GDP)
Incr
ease
in d
efic
it w
ith re
spec
t to
2007
Change in Debt and Deficit: Advanced Economies
Incr
ease
in d
efic
it w
ith re
spec
t to
2007
10
8
6
4
2
0
-5 0 5 10 15 20 25 30 35 40 45 50
Increase in debt with respect to 2007
10
8
6
4
2
0
-5 0 5 10 15 20 25 30 35 40 45 50
Increase in debt with respect to 2007
(Percentage points of GDP)
Risks Around the BaselineProjections
Shocks to the Baseline Fiscal Projections
Financial sector shocks
Interest rate shocks
Implementation shocks
Change in General Government Primary Balance: Advanced Economies
-6
-5
-4
-3
-2
-1
0
1
2
3
1970 1980 1990 2000 2010
Gen
eral
Gov
ernm
ent P
rimar
y B
alan
ce
1970-2012 (Percent of GDP)
Thank You!
