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This paper analyzes the tradeoffs between savings, debt and public investment in the Republic of Congo, a developing country with looming oil exhaustibility concerns. Our results highlight the risks to fiscal and capital sustainability of oil exporting countries from large scaling-up in public investment and oil price volatility in view of a projected decline in the oil revenue to GDP ratio. However, structural reforms that improve the efficiency of public investment can allow for a relatively faster buildup of sustainable public capital and sustain higher non-oil growth without adversely affecting the debt ratio or savings. Moreover, we show that even if a government pursues prudent fiscal policy that preserves resource wealth and debt sustainability in the face of exhaustible and volatile resource revenues, low public investment quality in the form of a misallocation of resources can hinder attainment of sustainable public capital and positive non-oil growth.

Debts, Public --- Debts, Government --- Government debts --- National debts --- Public debt --- Public debts --- Sovereign debt --- Debt --- Bonds --- Deficit financing --- Macroeconomics --- Public Finance --- Taxation --- Investment --- Capital --- Intangible Capital --- Capacity --- Fiscal Policy --- International Lending and Debt Problems --- Exhaustible Resources and Economic Development --- Nonrenewable Resources and Conservation: Government Policy --- National Government Expenditures and Related Policies: Infrastructures --- Other Public Investment and Capital Stock --- Business Taxes and Subsidies --- Energy: Demand and Supply --- Prices --- Debt Management --- Sovereign Debt --- National Government Expenditures and Related Policies: General --- Public finance & taxation --- Public investment spending --- Oil, gas and mining taxes --- Oil prices --- Expenditure --- Taxes --- Public investments --- Expenditures, Public --- Congo, Democratic Republic of the

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High public debt often produces the drama of default and restructuring. But debt is also reduced through financial repression, a tax on bondholders and savers via negative or belowmarket real interest rates. After WWII, capital controls and regulatory restrictions created a captive audience for government debt, limiting tax-base erosion. Financial repression is most successful in liquidating debt when accompanied by inflation. For the advanced economies, real interest rates were negative ½ of the time during 1945–1980. Average annual interest expense savings for a 12—country sample range from about 1 to 5 percent of GDP for the full 1945–1980 period. We suggest that, once again, financial repression may be part of the toolkit deployed to cope with the most recent surge in public debt in advanced economies.

Debts, Public --- Interest rates --- Liquidity (Economics) --- Assets, Frozen --- Frozen assets --- Finance --- Debts, Government --- Government debts --- National debts --- Public debt --- Public debts --- Sovereign debt --- Debt --- Bonds --- Deficit financing --- Econometric models. --- Banks and Banking --- Financial Risk Management --- Inflation --- Money and Monetary Policy --- Public Finance --- Economic History: Macroeconomics and Monetary Economics --- Growth and Fluctuations: General, International, or Comparative --- Interest Rates: Determination, Term Structure, and Effects --- Debt Management --- Sovereign Debt --- Price Level --- Deflation --- Public finance & taxation --- Macroeconomics --- Monetary economics --- Real interest rates --- Negative interest rates --- Debt reduction --- Financial services --- Prices --- Monetary policy --- Asset and liability management --- Debts, External --- United States

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Latin America’s bold fiscal policy reaction to the global financial crisis was hailed as a sign that the region had finally overcome its procyclical fiscal past. However, most countries of the region have not yet rebuilt their fiscal space, despite buoyant commodity revenues and relatively strong growth in the aftermath of the crisis. Using the experience of Brazil, Chile, Colombia, Mexico, Peru, and Uruguay, this paper examines the lessons and legacies of the crisis by addressing the following questions, among others: How much did the 2009 fiscal stimulus help growth? What shortcomings were revealed in the fiscal policy frameworks? What institutional reforms are now needed to provide enduring anchors for fiscal policy? How much rebuilding of buffers is needed going forward?.

Macroeconomics --- Public Finance --- Fiscal Policy --- Structure, Scope, and Performance of Government --- Fiscal Policies and Behavior of Economic Agents: General --- National Government Expenditures and Related Policies: General --- National Budget, Deficit, and Debt: General --- Debt --- Debt Management --- Sovereign Debt --- Public finance & taxation --- Fiscal policy --- Public debt --- Fiscal stance --- Expenditure --- Fiscal governance --- Debts, Public --- Expenditures, Public --- Brazil

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Successive reforms have brought many positive elements to the European Union’s fiscal framework. But they have also increased its complexity. The current system involves an intricate set of fiscal constraints, which hampers effective monitoring and public communication. Compliance has also been weak. This note discusses medium-term reform options to simplify the framework and improve compliance. Based on model simulations and practical considerations, it argues for moving to a two-pillar approach, with a single fiscal anchor (public debt-to-GDP) and a single operational target (an expenditure growth rule, possibly with an explicit debt correction mechanism) linked to the anchor.

Macroeconomics --- Public Finance --- Fiscal Policy --- National Budget, Deficit, and Debt: General --- Intergovernmental Relations --- Federalism --- Secession --- National Government Expenditures and Related Policies: General --- Debt --- Debt Management --- Sovereign Debt --- Public finance & taxation --- Fiscal stance --- Expenditure --- Public debt --- Fiscal governance --- Fiscal policy --- Expenditures, Public --- Debts, Public --- France

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West African Economic and Monetary Union (WAEMU) countries face a well-known dilemma between the need to provide shock-smoothing mechanisms and the lack of adequate mechanisms to do so. WAEMU countries are subject to frequent and, to a large extent, asymmetric shocks. They have remained poorly diversified and vulnerable to external shocks, such as changing weather conditions. In addition to limited shock-smoothing mechanisms at the regional level, WAEMU members’ ability to respond to shocks through national policies is also constrained by limited fiscal space and the need to preserve external stability—not only at the national level but also at the union level. In this context, developing a well-defined fiscal rule framework at the national level would help to build the necessary fiscal space for shock-smoothing. In addition, the development of specific shock-smoothing mechanisms—including a more developed and integrated financial sector—would also be critical. In addition, promoting financial development is also a challenge, which needs to be addressed in tandem with an adequate surveillance system. Some of these challenges have been faced by other monetary unions, such as the euro area.

Africa --- Business & Economics --- Political Science --- Financial Risk Management --- Insurance --- Macroeconomics --- Public Finance --- Fiscal Policy --- Insurance Companies --- Actuarial Studies --- Financial Institutions and Services: Government Policy and Regulation --- Debt --- Debt Management --- Sovereign Debt --- Insurance & actuarial studies --- Economic & financial crises & disasters --- Public finance & taxation --- Fiscal rules --- Fiscal policy --- Fiscal councils --- Deposit insurance --- Financial institutions --- Public debt --- Crisis management --- Debts, Public --- Côte d'Ivoire