1、FISCAL MONITOR OCTOBER 2022FISCAL MONITORIMF22OCTFISCAL MONITOR2022OCTIN THIS ISSUE:CHAPTER 1Helping People Bounce BackHelping People Bounce BackINTERNATIONAL MONETARY FUNDFISCAL MONITOR2022OCTHelping People Bounce BackINTERNATIONAL MONETARY FUND2022 International Monetary FundCover:IMF CSF Creative

2、 Solutions DivisionComposition:AGS,An RR Donnelley CompanyCataloging-in-Publication DataIMF LibraryNames:International Monetary Fund.Title:Fiscal monitor.Other titles:World economic and financial surveys,0258-7440Description:Washington,DC:International Monetary Fund,2009-|Semiannual|Some issues also

3、 have thematic titles.Subjects:LCSH:Finance,PublicPeriodicals.|Finance,PublicForecastingPeriodicals.|Fiscal policyPeriodicals.|Fiscal policyForecastingPeriodicals.Classification:LCC HJ101.F57ISBN:979-8-40021-274-1(paper)979-8-40021-129-4(PDF)979-8-40021-283-3(ePub)Disclaimer:The Fiscal Monitor is a

4、survey by the IMF staff published twice a year,in the spring and fall.The report analyzes the latest public finance developments,updates medium-term fiscal projections,and assesses policies to put public finances on a sustain-able footing.The report was prepared by IMF staff and has benefited from c

5、omments and suggestions from Executive Directors following their discussion of the report on September 29,2022.The views expressed in this publication are those of the IMF staff and do not necessarily represent the views of the IMFs Executive Directors or their national authorities.Recommended citat

6、ion:International Monetary Fund(IMF).2022.Fiscal Monitor:Helping People Bounce Back.Washington,DC:IMF,October.Publication orders may be placed online,by fax,or through the mail:International Monetary Fund,Publication ServicesPO Box 92780,Washington,DC 20090,USATelephone:(202)623-7430 Fax:(202)623-72

7、01E-mail:publicationsimf.orgwww.imfbookstore.orgwww.elibrary.imf.org International Monetary Fund|October 2022 iiiCONTENTSAssumptions and Conventions vFurther Information viPreface viiForeword viiiExecutive Summary xChapter 1.Helping People Bounce Back 1Introduction 1 Fiscal Policy to Build a Resilie

8、nt Society 1Building Resilience for Households against Job or Income Losses 3Responses to Surging Food and Energy Prices 10Ensuring the Resilience of Firms in Extraordinary Times 12Preparing a Strategy Ready to Deploy 14Box 1.1.Building a Resilient Future 17Box 1.2.Designing Government Support to Fi

9、rms during a Crisis 19References 21Economy Abbreviations 25Glossary 27Methodological and Statistical Appendix 31Data and Conventions 31Fiscal Policy Assumptions 34Definition and Coverage of Fiscal Data 38Table A.Economy Groupings 38Table B.Advanced Economies:Definition and Coverage of Fiscal Monitor

10、 Data 41Table C.Emerging Market and Middle-Income Economies:Definition and Coverage of Fiscal Monitor Data 42 Table D.Low-Income Developing Countries:Definition and Coverage of Fiscal Monitor Data 43List of TablesAdvanced Economies(A1A8)44Emerging Market and Middle-Income Economies(A9A16)52Low-Incom

11、e Developing Countries(A17A22)60Structural Fiscal Indicators(A23A25)66Selected Topics 69IMF Executive Board Discussion of the Outlook,September 2022 81FISCAL MONITOR:HELPING PEOPLE BOUNCE BACKiv International Monetary Fund|October 2022Editors Note(12/8/22):The reference to Christl and others(2022)wa

12、s revised after publication to better acknowledge the role of the Joint Research Centre of the European Commission,where most coauthors are affiliated.FiguresFigure ES.1.National Budget Balances,by Income Group,201922 xFigure ES.2.National Gross Debt and Interest Expense,by Income Group,201424 xFigu

13、re ES.3.Effect of Inflation Shock on the Debt Ratio,Selected Countries,2022 versus 2020 xFigure ES.4.Food and Energy Support Policies,by Income Group xiFigure ES.5.Sovereign Spreads,by Income Group,202022 xiFigure ES.6.Fiscal Impulse,Inflation,and Debt for G20 Countries xiFigure 1.1.Fiscal Policy Bu

14、ilds Resilience in Several Critical Areas 2Figure 1.2.Fiscal Responses in Large Crises 2Figure 1.3.Simulations of the Stabilization of Income and Consumption across EU Countries,2020 5Figure 1.4.Stabilization of Income across EU Countries,by Household Income Groups,2020 5Figure 1.5.Change in Per Cap

15、ita Income across Household Income Quintiles in Brazil,2020 6Figure 1.6.Evolution of Poverty and Income Inequality during the Pandemic in Brazil,201921 6Figure 1.7.US Consumption Growth during the Pandemic,by Income Group,201921 7Figure 1.8.Simulated Effects of Discretionary Support and Time-Varying

16、 Automatic Stabilizers 10Figure 1.9.Recently Announced Measures in Response to High Energy and Food Prices 11Figure 1.10.Domestic Consumption by Low-Income Households under Different Energy Subsidy Schemes 11Figure 1.11.Estimated Implicit Subsidy and Take-Up of Government Guarantee Programs,202021 1

17、4Figure 1.1.1.Children Missing Out on NonCOVID-19 Immunization 17Figure 1.2.1.Firms Receiving Public Support 19TablesTable 1.1.Selected Examples of Social Spending during the COVID-19 Pandemic in Emerging Market and Developing Economies 8Table 1.2.Appropriate Fiscal Tools to Deploy Depend on the Nat

18、ure of the Adversity of Shocks 15Online-Only AnnexesOnline Annex 1.1.Countercyclical of Fiscal Policies Online Annex 1.2.Income Stabilization before and during the COVID-19 Pandemic across EU Countries:A Microsimulation Approach Online Annex 1.3.Brazils Emergency Cash Transfer Program Online Annex 1

19、.4.Designing Fiscal Tools to Build Resilience:A DSGE-Based Analysis Online Annex 1.5.Externalities from Energy Pricing Subsidies International Monetary Fund|October 2022 vThe following symbols have been used throughout this publication:.to indicate that data are not available to indicate that the fi

20、gure is zero or less than half the final digit shown,or that the item does not exist between years or months(for example,200809 or JanuaryJune)to indicate the years or months covered,including the beginning and ending years or months/between years(for example,2008/09)to indicate a fiscal or financia

21、l year“Billion”means a thousand million;“trillion”means a thousand billion.“Basis points”refers to hundredths of 1 percentage point(for example,25 basis points are equivalent to of 1 percentage point).“n.a.”means“not applicable.”Minor discrepancies between sums of constituent figures and totals are

22、due to rounding.As used in this publication,the term“country”does not in all cases refer to a territorial entity that is a state as understood by international law and practice.As used here,the term also covers some territorial entities that are not states but for which statistical data are maintain

23、ed on a separate and independent basis.ASSUMPTIONS AND CONVENTIONSFISCAL MONITOR:HELPING PEOPLE BOUNCE BACKvi International Monetary Fund|October 2022Corrections and Revisions The data and analysis appearing in the Fiscal Monitor are compiled by IMF staff at the time of publication.Every effort is m

24、ade to ensure their timeliness,accuracy,and completeness.When errors are discovered,corrections and revisions are incorporated into the digital editions available from the IMF website and on the IMF eLibrary.All substantive changes are listed in the Table of Contents of the online PDF of the report.

25、Print and Digital Editions Print Print copies of this Fiscal Monitor can be ordered from the IMF Bookstore at imfbk.st/518863.Digital Multiple digital editions of the Fiscal Monitor,including ePub,enhanced PDF,Mobi,and HTML,are available on the IMF eLibrary at www.elibrary.imf.org/OCT22FM.Download a

26、 free PDF of the report and data sets for each of the figures therein from the IMF website at www.imf.org/publications/fm,or scan the QR code below to access the Fiscal Monitor web page directly:Copyright and ReuseInformation on the terms and conditions for reusing the contents of this publication a

27、re at www.imf.org/external/terms.htm.FURTHER INFORMATION International Monetary Fund|October 2022 viiThe projections included in this issue of the Fiscal Monitor are drawn from the same database used for the October 2022 World Economic Outlook and Global Financial Stability Report(and are referred t

28、o as“IMF staff projections”).Fiscal projections refer to the general government,unless otherwise indicated.Short-term projections are based on officially announced budgets,adjusted for differences between the national authorities and the IMF staff regarding macroeconomic assumptions.The fiscal proje

29、ctions incorporate policy measures that are judged by the IMF staff as likely to be implemented.For countries supported by an IMF arrangement,the projections are those under the arrangement.In cases in which the IMF staff has insufficient information to assess the authorities budget intentions and p

30、rospects for policy implementation,an unchanged cyclically adjusted primary balance is assumed,unless indicated otherwise.Details on the composition of the groups,as well as country-specific assumptions,can be found in the Methodological and Statistical Appendix of the October 2022 Fiscal Monitor.Th

31、e Fiscal Monitor is prepared by the IMF Fiscal Affairs Department under the general guidance of Vitor Gaspar,Department Director.The project was directed by Paolo Mauro,Deputy Director;and Paulo Medas,Division Chief.The main authors of Chapter 1 in this issue are W.Raphael Lam(team lead)and Roberto

32、Piazza(deputy lead),Fernanda Brollo,Xuehui Han,Gee Hee Hong,Youssouf Kiendrebeogo,Anh Dinh Minh Nguyen,John Ralyea,Alexandra Solovyeva,and Alberto Tumino,with contributions from David Amaglobeli,Carolina Bloch,Nick Carroll,Mengfei Gu,Emine Hanedar,Mauricio Soto,Cline Thvenot,and Joo Jalles(Universit

33、y of Lisbon),and research support from Andrew Womer and Zhonghao Wei.The Methodological and Statistical Appendix was prepared by Chenlu Zhang under the guidance of John Ralyea and Alexandra Solovyeva.Meron Haile and Andre Vasquez provided excellent coordination and editorial support.Rumit Pancholi f

34、rom the Communications Department led the editorial team and managed the reports production,with editorial assistance from Grauel Group and TalentMEDIA Services.Inputs,comments,and suggestions were received from other departments in the IMF,including area departmentsnamely,the African Department,Asi

35、a and Pacific Department,European Department,Middle East and Central Asia Department,and Western Hemisphere Departmentas well as the Communications Department,Institute for Capacity Development,Legal Department,Monetary and Capital Markets Department,Research Department,Secretarys Department,Statist

36、ics Department,and Strategy,Policy,and Review Department.Chapter 1 of the Fiscal Monitor also benefited from comments by Markus Brunnermeier(Princeton University),Wendy Edelberg(Brookings),Leonardo Iacovone(World Bank),Camille Landais(London School of Economics),Eric Parrado Herrera(Inter-American D

37、evelopment Bank),and Ricardo Reis(London School of Economics and Political Science).Both projections and policy considerations are those of the IMF staff and should not be attributed to Executive Directors or to their national authorities.PREFACEFISCAL MONITOR:HELPING PEOPLE BOUNCE BACKviii Internat

38、ional Monetary Fund|October 2022The global economy is being buffeted by a sequence of disturbances.After unprec-edented expansion in 2020,monetary and fiscal policy have pivoted together from expansion to tightening.Debt and deficits fell in 2021 and 2022 but remain above prepandemic levels and proj

39、ections.These developments reflect mainly the unwinding of pandemic-related measures and surprise inflation.In the context of high inflation,high debt,rising interest rates,and elevated uncertainty,consis-tency between monetary and fiscal policy is para-mount.In most countries,this means keeping the

40、 budget on its tightening course.Inflation surprises are contributing to the reduc-tion of debt and deficits.But we also must recognize that inflation surprises cannot endure.If inflation becomes broad-based and persistent,it will eventu-ally be reflected in inflation expectations.In such a situatio

41、n,assets that promise nominal returns become less attractive.High and volatile inflation makes credit more expensive and unreliable.There is thus a trade-off between short-run expediency and macroeco-nomic stability.With inflation elevated and financing conditions tightening,policymakers should prio

42、ritize macroeconomic and financial stability above all else.This is especially relevant as recent developments in bond markets show increased market sensitivity to deteriorating(or bad)fundamentals.That raises the prospect of more frequent and more disruptive fiscal crises across the world.Very high

43、 inflation,together with surging food and energy prices,translates into a politically salient cost-of-living crisis.Governments are adopting hundreds of policy actions this year in response to surging food and energy prices.Food spending is proportionately much greater in poorer countries(and poorer

44、 households).Hence,in these economies,food is the dominant driver of policy action.In advanced economies energy dominates.Our report includes the results of a survey of 174 countries covering about 750 measures enacted in the first half of 2022 to counter the food and energy crisis.The most common m

45、easures aim at dulling price pass-through and include reductions in consumption taxes,customs duties,and energy price subsidies.Most measures have not been targeted at those most in need.The rise of extreme poverty and food insecurity that began even before the pandemic is very concern-ing.Emergency

46、 support is necessary.The food crisis should be addressed,at the global level,by a broad set of initiatives including the lifting of restrictions on exports of food and fertilizers.Some emergency financing will be available through the new Food Shock Window under the IMF emergency financ-ing toolkit

47、.But more is needed,including through the voluntary rechanneling of wealthier countries allocations of the IMFs special drawing right(SDR)to poorer countries.At the national level,countries must prioritize food security.In many cases,binding financing constraints make the trade-offs very painful for

48、 countries.Coordi-nated global action is thus urgent.Compounding the food plight,the energy crisis especially in Europeis proving to be profound,protracted,and is likely to persist.Given the size of the shock,many households and firms require sup-port that facilitates adjustment.It is critical to de

49、sign the policy response in a way that navigates difficult,but pressing,trade-offs.The price mechanism must play a key role in the allocation of scarce energy resources and targeted measures help to reconcile the imperative of support for the vulnerable with maintaining the budget deficit on a downw

50、ard path.Facing a shifting landscape,policymakers must stay agile to be able to respond appropriately to the unexpected.Long commitments are not more than a pretense of certainty and can quickly become unaffordable.This Fiscal Monitor takes a deep dive into how fiscal policy can build a resilient so

51、ciety that helps people bounce back from significant adversity.The pandemic has shown that fiscal measures can be swift and impactful in protecting people and firms in difficult times.Governments have used novel and innovative tools,often leveraging digital technology.FOREWORDForeword International

52、Monetary Fund|October 2022 ixThese measures can be more efficient if building on a sound pre-existing social protection system when cri-ses strike.The Fiscal Monitor thus stresses the impor-tance of preparing a strategy,making social support readily scalable and better targeted and building fiscal b

53、uffers in normal times.These actions would allow governments to respond promptly and flexibly to deliver support to those who really need it.Infor-mation,transparency,the institutional capacity will be keyas will managing risks and exiting support measures.This is particularly challenging when facin

54、g shocks that are both as far-reaching and persistent as we are witnessing today.Vitor GasparDirector of the Fiscal Affairs DepartmentFISCAL MONITOR:HELPING PEOPLE BOUNCE BACKx International Monetary Fund|October 2022EXECUTIVE SUMMARYCurrent DevelopmentsRising inflation and climbing interest rates h

55、ave sup-planted more than a decade of muted inflation and low interest rates in many countries.Recession concerns are surfacing and geopolitical tensions have increased further as Russias invasion of Ukraine persists(October 2022 World Economic Outlook).Fiscal policy trade-offs are increasingly diff

56、icult,especially for high-debt countries where responses to the COVID-19 pandemic exhausted their fiscal space.Households are struggling with elevated food and energy prices,raising the risk of social unrest.A Shifting Landscape Puts Pressure on BudgetsIn 2021 and 2022,fiscal deficits have fallen sh

57、arply in advanced and emerging market economies but remain larger than prepandemic levels across income groups(Figure ES.1).The contraction in the average deficit for advanced econo-mies and emerging market economies(excluding China)is notable,reflecting the unwinding of pandemic-related measures am

58、id rising inflation.In addition,many oil export-ers are now running fiscal surpluses because of higher oil revenues.Conversely,Chinas deficit is projected to widen in 2022 as growth slows and inflation remains low.For low-income developing countries,which had a relatively mild fiscal response to the

59、 pandemic,the average deficit has barely changed.Compared with 2019,the larger deficits in advanced economies and low-income developing countries reflect higher spending than three years ago(partly because of responses to the food and energy crises),whereas in emerging market economies it is mainly

60、because revenues have yet to rebound.Global government debt is projected to be 91 percent of GDP in 2022,which is about 7.5 percentage points above the prepandemic levels,despite the recent reduction in the ratio for many countries(Figure ES.2).Debt decreased because of deficit reduction,economic re

61、covery,and infla-tion shocks(Figure ES.3).The sharp rise in food and energy prices also puts pressure on government budgets.Food and energy prices remain well above prepandemic levelsthe UN Food and Agriculture Organizations Food Price Index for August 2022 was 45 per-cent higher than in 2019.Countr

62、ies have implemented new Figure ES.1.National Budget Balances,by Income Group,201922(Percent of GDP)120246810Advancedeconomies2019202122Emerging marketeconomies,excluding China2019202122China2019202122Low-incomedevelopingcountries2019202122Source:IMF,World Economic Outlook database.Debt-to-GDP ratio

63、,advancedeconomies(left scale)Interest expense,advancedeconomies(right scale)Debt-to-GDP ratio,emerging market anddeveloping economies(left scale)Interest expense,emerging market anddeveloping economies(right scale)Figure ES.2.National Gross Debt and Interest Expense,byIncome Group,201424(Percent of

64、 GDP,weighted averages)1202040608010040123Sources:IMF,World Economic Outlook;and IMF staff calculations.Note:China is excluded.Bars for 202224 are projected data.201718192021222324201718192021222324Change in debt(2022 versus 2020)Contribution of inflationFigure ES.3.Effect of Inflation Shock on the

65、Debt Ratio,Selected Countries,2022 versus 2020(Percent of GDP)20151050510BrazilCanadaChinaGermanyIndiaItalySouthAfricaUnitedKingdomUnitedStatesSources:IMF,World Economic Outlook database;and IMF staff calculations.eXeCUTIVe SUMMArY International Monetary Fund|October 2022 ximeasures,including price

66、subsidies,tax cuts,and cash trans-fers,to help households.In most countries,the announced measures cost more than 0.5 percent of GDP(excluding existing subsidies)reflecting in part insufficient targeting.Low-income developing countries have incurred the highest relative cost for new food-related mea

67、sures(Figure ES.4).Budget constraints are tightening as global financial conditions become more challenging(October 2022 Global Financial Stability Report).Many emerging market economies and low-income developing countries have been managing surging spreads in 2022;the median spread for low-income d

68、eveloping countries has increased over 50 percent in the past year(Figure ES.5).Interest expense relative to GDP is projected to rise over the coming years even as debt stabi-lizes.If inflation becomes more volatile,borrowing costs could rise further as investors require a higher premium for long-te

69、rm debt.Also,revenue could fall if higher interest rates reduce central bank profits and the related dividend payments to governments.Moreover,almost 60 percent of the lowest-income economies are already in or at high risk of debt distress,highlighting the need for a robust Common Framework for debt

70、 relief.The global economy is slowing amid continued tight financing conditions.A sharp downturn would further accentuate trade-offs among competing priorities of demand management,debt stabilization,protection of vulnerable populations,and investment for the future.Fiscal Policy Needs to AdjustDefi

71、ning a consistent medium-term policy framework for the postpandemic world is crucial.Relying on repeated inflation surprises to reduce public debt is not a viable strat-egy and will lead to spending pressures(for example,wages and cost of services).Reducing deficits,as many advanced and emerging mar

72、kets are projected to do(Figure ES.6),is necessary to help tackle inflation and address debt vulnerabilities.Fiscal consolidation sends a powerful signal that policymakers are aligned in their fight against inflation,which,in turn,would reduce the size of required policy rate increases to keep infla

73、tion expectations anchored and keep debt servicing costs lower than otherwise.Many countries are also revamping their fiscal rules to anchor policies.While politically difficult,gradual and steady fiscal tightening is less disruptive than an abrupt fiscal pullback brought on by loss of market confid

74、ence.Prioritizing policies and programs is increasingly vital as governments operate within tighter budgets.Top priorities are to ensure everyone has access to affordable food and to protect low-income households from rising inflation.Median number of measures announced:231Source:IMF staff estimates

75、.Note:Whiskers reflect the 20th and 80th percentiles.Dots reflect the median and the number of announced measures of each type.Figure ES.4.Food and Energy Support Policies,by Income Group(Percent of GDP,median,20th and 80th percentiles)BothEnergyFoodBothEnergyFoodBothEnergyFoodAdvancedeconomiesEmerg

76、ingmarketeconomiesLow-incomedevelopingcountries00.20.40.60.81.01.2January 2020September 2021September 2022Figure ES.5.Sovereign Spreads,by Income Group,202022(Basis points)1,8001,6001,4001,2001,0008006004002000Emerging market economiesLow-income developing countriesSource:JPMorgan Emerging Market Bo

77、nd Index.Note:Lines are median and shaded areas are interquartile ranges for a sample of 49 emerging market economies and 9 low-income developing countries.Inflation in 2022Fiscal impulse in 2023543210123Change in debt,201922Source:IMF,World Economic Outlook database.Note:Includes Spain;excludes Arg

78、entina,Russia,Saudi Arabia,and Trkiye.Fiscal impulse is measured by the change in the cyclically adjusted primary balance.The size of the bubble reflects the inflation rate.Figure ES.6.Fiscal Impulse,Inflation,and Debt forG20 Countries(Percent of GDP)0302520151055FISCAL MONITOR:HELPING PEOPLE BOUNCE

79、 BACKxii International Monetary Fund|October 2022Faced with long-lasting supply shocks and broad-based inflation,attempts to limit price increases through price controls,subsidies,or tax cuts will be costly to the budget and ultimately ineffective.Governments should allow prices to adjust and provid

80、e temporary targeted cash transfers to the most vulnerable.Price signals are critical to promote energy conservation and encourage private investment in renewables.Public investment in critical areas should be safeguarded.As part of the prioritization effort,countries may need to raise additional re

81、venues and contain the growth of other expenditures,including public wages,both of which could help contain overall wage and price pressures.In the dwindling number of countries with fiscal space,and where inflation is under control,automatic stabilizers should operate fully.Helping People Bounce Ba

82、ckGovernment policies foster resilience by help-ing households and firms recover from or adjust to adversity.In advanced economies,fiscal actions were swift and forceful to protect peoples livelihoods from the outset of the COVID-19 pandemic and laid the foundation for a quick bounceback.Such measur

83、es also involved fiscal costs and risks,with implications for policies going forward.Fiscal responses were more diverse among emerging markets and developing econ-omies,with many economies financially constrained throughout the pandemic.Building a resilient society requires government actions to pro

84、tect households and firms against large losses of real income and employmentthe focus of this Fiscal Monitor.It also requires actions in other intertwined areas,including(but not limited to)health care and pandemic preparedness,adaptation to climate changes and natural disasters,and equitable access

85、 to opportunities.For example,a society with strong social safety nets and equitable access to health care and education helps ensure that individuals who lose their jobs do not suffer lasting setbacks in their well-being or lifetime earnings.The COVID-19 pandemic(and the global financial crisis a d

86、ecade and a half ago)led to innovative and forceful discretionary fiscal responses,against the backdrop of constrained monetary policy with interest rates near zero or negative,in many advanced economies.The ensuing reassessment of the appropriate size and mix of policy tools in response to large cr

87、ises can inform the response to current chal-lenges,including the cost-of-living squeeze associated with spikes in food and energy prices,and can help governments prepare for future adversities:Social protection systems help people bounce back from unemployment,sickness,or poverty,making them resili

88、ent to a broad set of negative shocks.As demonstrated during the pandemic,social safety nets or broad-based cash transfers can be expanded quickly,often by leveraging new technologies.But preparation is necessary to make such systems more readily scalable and better targeted,to limit unnecessary spe

89、nding,and to deliver support to those who truly need it.Reducing informality in the economya challenge in many low-income and developing economieswould allow people and firms to benefit from better protection when crises strike.Job-retention schemes provided strong income stabilization and were larg

90、ely well targeted.They are a useful part of the fiscal toolbox alongside unemployment income support,particularly in situations in which layoffs would curb labor productivity.To cushion the blow from high food and energy prices,policies should in general avoid price subsidies or controls that are co

91、stly and ineffective,and instead target support to low-income households through social safety nets.Countries without strong safety nets can expand social programs(for example,school feeding and public transportation)or lump-sum discounts on utilities.For low-income developing countries,food securit

92、y should be prioritized within the existing fiscal envelope.Exceptional financial support to firms averted an economy-wide implosion in recent crises but needs to be restricted to major crisis situations in which severe negative externalities,such as risks of widespread bankruptcies,are evident.Publ

93、ic interventions to support viable firms are risky because many countries have weak governance and limited capacity to assess or monitor firms viability.To manage the fiscal risks from measures without immediate budget impact,such as direct lending and public guarantees,governments should focus on t

94、ransparency,quantification of risks,good governance,and enlisting private sector expertise to assess firms viability.Building on the experience of the pandemic,policymakers can now develop tools that can be readily deployed and prepare strategies that set out desirable policy responses under various

95、 scenarios.eXeCUTIVe SUMMArY International Monetary Fund|October 2022 xiiiWhere protection systems are well developed,and high-frequency economic indicators are reliable,prelegislated actions conditional on previously speci-fied triggers may be considered(such as expanded unemployment insurance foll

96、owing consecutive employment drops).Encouraging the private sector to build its own resilience through insurance or hav-ing workers acquire new skills can reduce the need for government intervention,which can be devoted to protecting the most vulnerable households.Policy trade-offs are at the forefr

97、ont when design-ing fiscal strategies.To respond flexibly during adverse events,governments need to gradually build fiscal buffers in normal times(preferably in the context of a medium-term fiscal framework)and preserve debt sustainability and access to financing.Macroeco-nomic trade-offs also imply

98、 that when inflationary pressures are high,fiscal policy should protect the most vulnerable while pursuing a tightening stance to avoid overburdening monetary policy in the fight against inflation.Building buffers and tightening fiscal policy require prioritizing spending among competing needs and m

99、obilizing revenues in a growth-friendly way.These trade-offs are stark for low-income countries that face adverse shocks while pursuing development goalssimilarly important elements of resilience.Domestic measures need to be complemented by global cooperation to foster resilience.Global syner-gies o

100、n pandemic preparedness and vaccine deploy-ment were evident during the pandemic.Investing in climate adaptation can benefit from cooperation among countries.For emerging markets and develop-ing economies that are at risk of a food crisis and have limited resources or capacity,greater global efforts

101、 can provide emergency financing,humanitarian assistance,and unhindered trade.IntroductionA key role of government is to foster resiliencethe ability for households and firms to recover from or suc-cessfully adjust to challenges such as macroeconomic crises,pandemics,climate change,or the cost-of-li

102、ving squeeze associated with spikes in food and energy prices.Major crises such as the COVID-19 pandemic present the ultimate test of societal resilience.Many fiscal measures launched during the pandemic aimed to preserve the ability of people and firms to return to their activities before the crisi

103、s and to lay the founda-tions for a swift individual and collective bounceback.Views on the appropriate fiscal response to adverse events have been reshaped by the experience gained during the COVID-19 pandemic and the global finan-cial crisis that began in 2008.Previously,discretionary fiscal respo

104、nses were deemed too slow or hard to unwind(Blanchard,DellAriccia,and Mauro 2010;Blinder 2016),and automatic stabilizersbuilt-in mechanisms that raise spending or reduce taxes in a timely and temporary manner when adverse events occurwere considered sufficient.The two major global crises of the past

105、 decade and a half have led to a re-assessment.Fiscal interventions during the global financial crisis shored up private sector balance sheets and stimulated aggregate demand in advanced economies at a time when mone-tary policy was constrained because interest rates were nearly zero.During the unpr

106、ecedented global shock of the pandemic,political consensus made it possible to deploy even more rapid,diverse,and novel measures.At the outset of the pandemic,governments and central banks served as financiers of last resort by guaranteeing firms credit and liquidity.Many governments quickly provide

107、d cash transfers to support householdsoften not just poor households but also broader segments of the population.This Fiscal Monitor explores how fiscal policy and institutions can make society more resilient to cur-rent and future large adverse shocks.Broadly,the topic encompasses a comprehensive l

108、ist of potential challengesincluding climate change and natural disasters,health care and pandemic preparedness,and equitable access to opportunitiesand a set of fiscal tools and institutions whereby governments can bolster resilience.The report focuses on a narrower aspect:how to bounce back from l

109、arge,widespread real income losses.Policies considered fall into three categories.The first includes support to households and workers who have lost,or are at risk of losing,their jobs or incomes.The second comprises measures to limit the adverse impact of large spikes in food and energy prices on t

110、he real incomes of households(especially those of low-income families).The third encompasses providing public support to firms to bolster their liquidity and solvency through direct lending,guarantees,and equity injections to prevent bankruptcies.An early assessment of costs and effectiveness of pol

111、icies undertaken during the first 2 years of the pandemic can help strengthen policies to tackle current challenges and prepare for future adverse events.Policy trade-offs are at the forefront of the discussion.For example,the need for speedy discretionary action at a time of great uncertainty regar

112、ding the size and dura-tion of a shock may come at the cost of limited target-ing.Public guarantees and job support schemes may lead to market distortions that,if left unchecked,could hamper economic growth.Given that fiscal policy plays a more active role during large crises,the ability to provide

113、substantial fiscal interventions during severe crises requires taking a longer-term perspective that includes building greater fiscal buffers in normal times.These considerations emphasize how important it is to prepare a comprehensive fiscal strategy in advancewith a clear rationale for each fiscal

114、 instrumentready to deploy in time of need.Fiscal Policy to Build a Resilient SocietyThe analysis in this Fiscal Monitor focuses on a subset of policies that help people and firms bounce back from job and income losses in the aftermath of major crises.It considers the costs,timeliness,and effectiven

115、ess of such policies.Preexisting inequities in access to basic public services such as education and health care often amplify the harm to individuals from these major crises.HELPING PEOPLE BOUNCE BACK1CHAPTERInternational Monetary Fund|October 20221FISCAL MONITOR:HeLpINg peOpLe BOuNCe BACk 2Interna

116、tional Monetary Fund|October 2022More broadly,governments also build resilience by acting in several areas,such as strengthening health care systems and addressing climate change(Figure 1.1;see Box 1.1 for an overview and references).Governments undertake fiscal policies and provide basic public ser

117、vices that attenuate any long-lasting harm from crises and ensuing reductions in income or employment.The recent surge in inflation,with spikes in food and energy prices,has increased the cost of living,particularly for low-income families.If safety nets are inadequate and public services such as he

118、alth care or education insufficiently robust,the loss of real income or employment from a crisis can squeeze household budgets and push a family into a poverty trap,with worse health outcomes and curtailed school attendance for its children(Bellon,Pizzinelli,and Perrelli 2020;Brunnermeier 2021).Like

119、wise,a severe fall in demand or loss of access to credit can push otherwise viable firms into bankruptcy.Tools that counter large drops in income and employment thus reduce the likelihood of lifelong harm from a broad set of adverse events(Box 1.1).Fiscal policies have been more active during large

120、crises.The increase in deficits(as a fraction of GDP)for each percentage point drop in real GDP growth was bigger during the global financial crisis and the COVID-19 pandemic than during typical recessions(Figure 1.2;Online Annex 1.1).Fiscal activism during major crises is even stronger when conside

121、ring fiscal measures that are not immedi-ately recorded in the deficit,such as government loans,guarantees,and equity injections to firms.For the global financial crisis,the stronger response can be partly explained by the fact that advanced economies were more adversely affected and mon-etary polic

122、y was constrained.The pandemic was instead a global shock,and fiscal policy aimed to protect lives and livelihoods rather than to sustain aggregate demand.Conventional macroeconomic policies that stimulate aggregate demand had limited capacity to restore employment and income,given that health conce

123、rns constrained household spend-ing(Chetty and others 2020;Auerbach and others 2022).Fiscal responses to major crises were greater in advanced economies than in emerging markets or low-income countries,likely reflecting easier access to financing and perhaps better information about recipients of so

124、cial programs,in view of a smaller informal sector.The more muted deployment of fiscal tools in emerging market and developing economies was constrained by limited fiscal space.This likely contributed to some scarring in growth prospects relative to prepandemic levels(October 2022 World Economic Out

125、look).Several themes emerging from recent major crises are relevant to fiscal policies to meet current adversity and future challenges.First,governments deployed a wider range of tools during major crises than typical business cycles.During the pandemic,they used multiple discretion-ary measures,inc

126、luding broad-based cash transfers.In advanced economies,these measures operated on top of already well-established automatic stabilizers,such Source:IMF staff.Figure 1.1.Fiscal Policy Builds Resilience in Several Critical AreasHealth care andpandemicpreparedness Equitable access toopportunities Clim

127、ate adaptation andnatural disasters Protection againstlarge income and job losses Advanced economiesEmerging market economiesLow-income developing countriesSource:IMF staff estimates(see Online Annex 1.1).Note:The figure shows the average of time-varying coefficients by country income groups,based o

128、n panel regressions estimated on the sensitivity to GDP growth of the deficit-to-GDP ratio from 1980 to 2021.Typical recessions are defined as periods when individual countries growth rates are below their own average levels over the previous three years.Figure 1.2.Fiscal Responses in Large Crises(E

129、stimated coefficients)00.80.20.40.6Overall sample,19802021TypicalrecessionsGlobalfinancial crisis,200812COVID-19pandemic,2020CHAPTER 1 HeLpINg peOpLe BOuNCe BACk3International Monetary Fund|October 2022as unemployment insurance and social assistance.1 Firms benefited from measures to preserve liquid

130、ity and solvency.Second,to ensure that fiscal policies are cost-effective,it is important to determine the eligible recipients,such as those most in need of a hand up and less capable of bouncing back.Assessment should examine the distri-butional implications of policies in addition to their aggrega

131、te impact.Third,the case for fiscal interventionsbeyond their sizable fiscal costscannot be assessed in isolation from other policies.For example,a fiscal expansion can strongly support the economy when monetary policy is constrained.However,when inflation is above target,fiscal expansion can compli

132、cate the tasks of central banks.In some instances,fiscal interventions become necessary because of gaps in other policy frameworks.During the global financial crisis,for example,public bailouts of financial institutions were required to provide a backstop to the flow of credit.The ensuing fiscal cos

133、ts reflected weaknesses in financial regula-tion,pointing to the importance of actions by both the public and private sectors.At a time when public budgets are stretched,policies that facilitate the private sector to cope with adverse shocks in a self-reliant way are helpful.The following sections t

134、ake a more in-depth analysis of fiscal tools to support households and firms against the background of these themes and discuss ways to improve those tools to meet current challenges and future adversity.Building Resilience for Households against Job or Income LossesMany government programs protect

135、households from losses in income or employment.The scope of these programs in strengthening individual resilience expands during large crises,when it is harder for people to find a new job and afford a basic standard 1Social protection systems consist of policies designed to reduce individuals expos

136、ures to risks and vulnerabilities and to enhance their capacity to manage negative shocks such as unemploy-ment,sickness,poverty,disability,and old age.Social protection encompasses three broad categories:(1)social safety net programs(noncontributory transfer programs to ensure a minimum level of ec

137、onomic well-being),(2)social insurance programs(contributory interventions to help people better manage risks),and(3)labor market programs to insure individuals against unemployment risks and improve job search prospects.of living and when multiple household members real incomes may fall at the same

138、 time.In these dire situations,programs such as unemployment income support or targeted transfers not only reduce the likelihood that individuals will face financial distress and suffer lasting deterioration of their well-being but also cushion the adverse impact on aggregate demand and thus speed u

139、p economic recovery.Certain components in government budgets support households and firms automatically during adverse events.These automatic stabilizers are,by design,intended to be timely,targeted,and tempo-rary.On the spending side,they include unemploy-ment income support and social assistance,w

140、hereas on the revenue side they include income taxes,which ensures that individuals and firms automatically pay less tax when the economy slows down.But auto-matic stabilizers may be unavailable or may not be sufficient in a large crisis,especially in developing countries where informality is widesp

141、read.In those situations,discretionary measures can flexibly tailor assistance to specific situations.However,unless prior planning takes place or special efforts are made,such measures may be delayed because they require govern-ment or parliamentary approval and are often harder to unwind(Romer and

142、 Romer 2010;Eyraud,Gaspar,and Poghosyan 2017).The rest of this section looks separately at several automatic stabilizers and discre-tionary measures,with a focus on how they operated during the pandemic.2Automatic StabilizersThe size of automatic stabilizers can be mea-sured through microsimulations

143、 that quantify how well existing tax and benefit systems buffer shocks to households market income(income before taxes and transfers).This approach allows a detailed analysis based on household characteristics,but it does not account for the feedback effects on aggregate income when policies change(

144、see“Takeaways from Pandemic-Related Measures to Support Households”).2The distinction between automatic stabilizers and discretionary measures is indicative and depends on countries circumstances and legal frameworks.For example,in some European countries,job-retention schemes are activated automati

145、cally,but in others they have been used on a discretionary basis during the pandemic.FISCAL MONITOR:HeLpINg peOpLe BOuNCe BACk 4International Monetary Fund|October 2022Considering policies before the pandemic for coun-tries in the European Union(EU)and household-level data,microsimulations suggest t

146、hat the tax and benefit systems compensated households for nearly 40 per-cent of a large market income loss on average during 201119(Online Annex 1.2;Coady and others,forth-coming),compared with 32 percent for the United States before 2011(Dolls,Fuest,and Peichl 2012).3 The degree of consumption sta

147、bilization is estimated to have been 85 percent in the European Union on average(meaning that EU households reduced their consumption by 15 percent for each unit drop in market income).4 This means that households drew down their savings to maintain consumption despite the decline in their disposabl

148、e income.For low-income households,social benefits have been important in stabilizing disposable income,representing 40 per-cent of the overall income stabilization in the tax and benefit system(or absorbing 16 percent of the market income shock on average).For higher-income house-holds,the progress

149、ivity of direct taxes was instead more important in stabilizing income.Similar patterns were also observed in the United States and other major advanced economies.In addition to stabilizing individual income,spending-side automatic stabilizers tend to redistribute resources toward the poor or vul-ne

150、rable households and provide social insurance for all households,reducing their precautionary saving needs(McKay and Reis 2016,2021).In response to the pandemic,governments boosted protections against job and income losses.Two prominent instruments were unemployment income 3The approach uses a simul

151、ation model(EUROMOD)for EU countries to assess the impact of a change in tax and benefit systems,including simulations of tax liabilities and in-cash benefit entitlements at the individual or household level.The simulations are based on the 2019 EU Statistics on Income and Living Conditions(EU-SILC)

152、.The prepandemic shock is modeled in a stylized way involving a 5 percent proportional decline in market income across all households.The simulations exclude stabilization effects from old-age pensions,value-added taxes,and corporate income taxes.The results are not directly comparable with those ob

153、tained using other approaches that measure the size of automatic stabilizers on the basis of the cyclical component of the government budget responses to changes in GDP.The latter method finds that automatic stabilizers reduce one-half of output volatility in advanced economies and one-third in emer

154、ging market economies,with large variation across countries(see the April 2015 Fiscal Monitor;Mohl,Mourre,and Stovicek 2019).4The level of consumption stabilization is based on estimates of the marginal propensity to consume by household income groups for individual EU countries in Caroll,Slacalek,a

155、nd Tokuoka(2014)(see Online Annex 1.2).support and job-retention schemes.The latter encom-pass policies that subsidize workers wages in firms that have reduced working hours but preserved jobs.Many EU countries had some forms of job-retention schemes in place before the pandemic,some of which could

156、be activated automatically(through firms),such as Kurzarbeit in Germany.As the health crisis intensi-fied,governments introduced new or expanded existing job-retention and unemployment income support schemes.Take-up rates rose to a median of 13 per-cent of the working age population at the peak of t

157、he crisis,before gradually subsiding to prepandemic levels(Giupponi,Landais,and Lapeyre 2022).The United States stepped up its federal unemployment support by about 3 percent of GDP to raise benefits through weekly supplements,expand the eligibility to include independent workers,and extend the dura

158、tion of federal benefits.Different reliance on these fiscal tools was reflected in labor market outcomesmass layoffs or furloughs in the United States and reductions in working hours in Europe(Online Annex 1.2).Microsimulations for the European Union show that the degree of income stabilization incr

159、eased,thanks to the fiscal measures introduced in response to the pandemic.The tax and benefit systems(including pandemic-related measures)are estimated to have absorbed about 75 percent of the market income lossmuch larger than 40 percent prevailing before the crisis(Online Annex 1.2).The job-reten

160、tion schemes alone absorbed almost 40 percent of the market income shock at the EU level(Figure 1.3),at a fiscal cost of about 2 percent of GDP.An alternative scenario indicates that in the absence of job-retention schemes,the tax and benefit system would have absorbed only 47 percent of market inco

161、me losses.The income stabilization coefficient,expressed in percent,was 85 percent for households in the low-est income quintile,compared with 65 percent for those in the top income quintilealthough with significant variations among countries(Figure 1.4).Simulations also suggest that households migh

162、t have stabilized more than 90 percent of their consumption on average(Christl and others 2022),although caution is needed when interpreting the simulation results.5 5The consumption stabilization coefficient measures the share of the market income shock that is not transmitted to household consumpt

163、ion or demand(see Online Annex 1.2).A higher consumption stabilization coefficient means temporary market income shocks affect consumption less.CHAPTER 1 HeLpINg peOpLe BOuNCe BACk5International Monetary Fund|October 2022Real per capita consumption declined by 7 percent among EU countries on average

164、 in 2020,partly because of the unique nature of the pandemic,which prevented households from consuming because of lock-down restrictions.Higher income stabilization rates among the poorest segments of the population indicated that policies were largely targeted toward those who needed help the most.

165、Microsimulations,together with regression results,further suggest that income stabilization was stronger for the young and for less-educated workers,as well as those working in sectors that rely on personal contact,which were more vulnerable to the pandemic shocks(Online Annex 1.2).Findings in the l

166、itera-ture indicate that stabilization from unemployment income support was also the greatest for low-skilled workers,who,according to Ando and others(2022),were the most vulnerable to job losses.Similar effects were observed in the United States from its tempo-rary expansion of unemployment income

167、support,which was progressive,with most benefits accruing to low-income workers(Ganong and others 2022).By stabilizing income and redistributing resources across individuals,the pandemic-related measures also affected income inequality.Microsimulations show that the Gini coefficient of income inequa

168、lity would have increased by 0.65 percentage point in the European Union in 2020 before taxes and transfers,whereas the Gini coefficient of inequality in disposable income(after taxes and transfers)would have declined by 0.24 percentage point(Online Annex 1.2).Discretionary Fiscal SupportGovernments

169、 in many countries used discretionary measuresespecially broad-based cash transfersto provide direct income support to households during the pandemic.Cash transfers can be deployed in response to a wide range of shocks,including situa-tions in which other measures are insufficient(because the crisis

170、 is too severe)or less feasible(for example,job-retention schemes where informality is high).Cash transfers can be used flexibly because they are usually not tied to past or current work status,which makes them appealing in unusual crises such as the pan-demic.They are typically progressive(their pr

171、opor-tional impact on disposable income is greater among poor households than among rich ones)because they generally consist of a flat amount for each individual or household,and eligibility is usually capped for those with higher incomes.Even so,cash transfers can be disbursed only if the governmen

172、t can identify and ver-ify eligible recipients and deliver payments to thema constraint especially relevant for many low-income countries.If such information and capacity are lacking in regard to destitute people,for example,because Job-retention schemesOther benefitsTaxes and social insurance contr

173、ibutionsUnemployment benefitsConsumption stabilizationSources:Christl and others 2022;and IMF staff estimates.Note:Based on EUROMOD simulations and 2019 data for the European Union(see Online Annex 1.2).Data labels in the figure use International Organization for Standardization(ISO)country codes.EU

174、=European Union.Figure 1.3.Simulations of the Stabilization of Income and Consumption across EU Countries,2020(Stabilization coefficients,expressed in percent)012020406080100MLTPOLSWEGRCLTUITABGRESTCYPLVAESPCZEIRLPRTFINSVKHRVHUNDEUFRALUXBELROUSVNAUTNLDDNKEUSources:Christl and others 2022;and IMF sta

175、ff estimates.See also Lam and Solovyeva,forthcoming.Note:Based on EUROMOD simulations and 2019 data for the European Union(see Online Annex 1.2).Red diamonds refer to the median level.Blue boxes are the interquartile ranges.Whiskers are the 10th and 90th percentile levels.Figure 1.4.Stabilization of

176、 Income across EU Countries,by Household Income Groups,2020(Stabilization coefficients,expressed in percent)120405060708090100110First quintile(lowest income)SecondquintileThirdquintileFourthquintileFifth quintile(highest income)FISCAL MONITOR:HeLpINg peOpLe BOuNCe BACk 6International Monetary Fund|

177、October 2022they have limited ties to the formal economy,these programs are likely less effective.The Emergency Aid program in Brazil(Auxilio Emer-gencial)during 202021 provides a case study of the use of cash transfers because of its broad coverage and the availability of high-quality data(Online A

178、nnex 1.3).The program initially covered almost one-third of the population,including 90 percent of the households in the bottom 40 percent of the income distribution.Benefits were three times higher than the standard social benefit and more than half of the national minimum wage.The effect on househ

179、old income is assessed using household-level data and microsimulations based on BraSim,a tax and benefit tool developed by the World Bank(Cereda,Rubiao,and Sousa 2020).The stabilization effects of the Emergency Aid pro-gram in Brazil far exceeded those of the social protec-tion system in place befor

180、e the pandemic.Simulations show that,on average,per capita disposable income in Brazil edged up by 2.1 percent in 2020.Disposable income increased in the majority of households(more than 60 percent of households)and rose by more than 20 percent in low-income households(Figure 1.5;Brollo,Lara Ibarra,

181、and Campante Vale,forthcoming).As a result,the poverty rate and the Gini index of disposable income inequality fell temporarily in 2020(Figure 1.6).A counterfactual scenario without the Emergency Aid program suggests that the prepandemic tax and benefit system would have absorbed only one-quarter of

182、 the market income loss,and that aver-age per capita disposable income would have declined by 4.1 percent.The cumulative fiscal cost for the Emergency Aid program,in 202021,was approxi-mately 4 percent of GDP.An alternative simulation suggests that a lower benefit level of the program(at one-third o

183、f the initial benefit amounts)would still have effectively protected income for the population at large,at about half the cost(Online Annex 1.3).Many advanced economies approved cash transfer programs and disbursed the benefits swiftly under the pressures of the health crisis.For example,the United

184、States disbursed the first round of the Economic Impact Payments by mid-April 2020(about two weeks after the Coronavirus Aid,Relief,and Economic Secu-rity CARES Act was enacted in late March 2020)(Gelman and Stephens 2022).6 Together with other fiscal measures,the programs more than compensated for

185、the loss in market income among most of the population.Real disposable income for households in 6According to data from the US Treasury,the three rounds of Economic Impact Payments,disbursed between April 2020 and December 2021,amounted to$800 billion in total.The payments covered most of the popula

186、tion,phasing out beginning with an adjusted gross income of$75,000 for singles and$150,000 for married persons.The first round of Economic Impact Payments was mandated under the CARES Act,which was signed into law on March 27,2020.About half of first-round payments were delivered by mid-April 2020,a

187、nd nearly 90 percent were delivered by early June 2020(Gelman and Stephens 2022).StabilizationpreCOVID-19 benefits(right scale)Disposable income(preCOVID-19 benefits)Net market incomeDisposable income(including Auxilio Emergencial)Stabilization including Auxilio Emergencial(right scale)Sources:BraSi

188、m tax and benefit tool;and IMF staff estimates.Note:Estimates are based on microsimulations.Net market income includes contributory pension benefits received.Stabilization coefficient is defined as(1 percent change in disposable income/percent change in market income)100.Stabilization coefficients i

189、ncluding the Emergency Aid program for the bottom 60 percent of households are larger than 230 and are not drawn to scale.Figure 1.5.Change in Per Capita Income across Household Income Quintiles in Brazil,2020(Percent change,left scale;percent,right scale)10505101520253050050100150Bottom202040406060

190、80Top 20AverageHousehold income group56PreCOVID-19 benefitsIncluding Auxilio Emergencial programSources:BraSim tax and benefit tool;and IMF staff estimates.Note:Estimates are based on microsimulations.Poverty is defined as per capita household income less than half of minimum wage(US$6.30 per day in

191、 2011 purchasing power parity PPP terms).Extreme poverty is US$2.25 per day at 2011 PPP,defined using the Bolsa Familia eligibility thresholds.Income inequality is based on disposable income(market income after taxes and transfers).Figure 1.6.Evolution of Poverty and Income Inequality during the Pan

192、demic in Brazil,201921(Percent,left scale;Gini coefficients,right scale)0510152025303540455055PovertyExtreme poverty201920212019202120192021Inequality(right scale)CHAPTER 1 HeLpINg peOpLe BOuNCe BACk7International Monetary Fund|October 2022the bottom 50 percent of the income distribution rose on ave

193、rage by 9 percent in 2020 and by 17 percent in 2021,compared with 2019 levels(Blanchet,Saez,and Zucman 2022).The transfers were effective at sup-porting consumption levels of low-income households soon after they received the cash transfers(Chetty and others 2020;Autor and others 2022;Meyer,Murphy,a

194、nd Sullivan 2022;Figure 1.7).7 Even middle-and higher-income families benefited from the transfers.Their disposable income rose by about 8 percent in 2020 and 2021,relative to that in 2019.However,because of social distancing constraints,families in higher income groups saved most of this additional

195、 income and reduced consumption in 2020.The increase in disposable income for a large frac-tion of the population in some countries points to the trade-offs policymakers faced when designing the pro-7With the recognition that direct comparison across episodes is difficult,the effects on consumption

196、appeared smaller than those resulting from previous cases of cash transfers(Johnson,Parker,and Souleles 2006;Barnes and others 2022),possibly owing to the unique nature of the pandemic,such as lockdown restrictions and ample liquidity being in place(Auerbach,Gorodnichenko,and Murphy 2021;Parker and

197、others 2022).Small effects on consump-tion of low-income households were also found during the pandemic in the case of direct cash transfers for childcare in Germany(Goldfayn-Frank,Lewis,and Wehrhofer 2022).grams.Policymakers needed to design support programs under great uncertainty regarding the co

198、urse of the pan-demic and economic recovery,and had limited capacity to target the recipients who needed assistance most in real time.In hindsight,some government interventions appear generous.Broad-based cash transfers were ini-tially effective in protecting household income,partic-ularly in low-in

199、come households,and contained the rise in poverty.As more information on the pandemic became available and economic conditions improved,adjusting support to better target individuals could have reduced the fiscal costs.The considerations just discussed hold for advanced and a few emerging market eco

200、nomies.The fiscal response to the pandemic in many emerging market and developing economies was instead constrained by lim-ited fiscal space.For these countries,the main concern is the potential negative repercussions that their relatively modest fiscal response might have on their ability to bounce

201、 back to prepandemic paths in output(April 2022 Fiscal Monitor).This could affect efforts to reduce poverty in the coming decade(World Bank 2022).Preexisting social safety nets were the most import-ant tools used by emerging market and developing economies,in which automatic stabilizers such as unem

202、ployment income support are less prevalent and provide limited coverage because many jobs and busi-nesses are informal(Ohnsorge and Yu 2022).Although several countries incorporate elements in their social safety nets that automatically adjust transfers(for instance,by linking them to natural disaste

203、rs),8 most do not have mechanisms in place to automatically scale up benefits in response to adverse shocks.As a result,many emerging market economies and low-income countries had to rely on discretionary measures to sup-port vulnerable households.Several countries leveraged digital tools and big da

204、ta(Table 1.1).For example,Colombia implemented a harmonized payment system whereby beneficiaries could withdraw benefits from their designated bank accounts.Indonesia and Thailand created dedicated websites for direct registration of new beneficiaries,and Togo selected households for cash transfer p

205、rograms based on satellite and phone record data.Satellite imagery was combined with census data 8For example,the number of beneficiaries of Ethiopias Produc-tive Safety Nets Program increases if there is warning of impending drought.Similarly,Kenyas Hunger Safety Net Program has clear triggers spec

206、ifying who is covered by the scheme,as well as the amount and duration of benefits,depending on drought conditions.Private consumption growth(left scale)Implied saving rates(right scale)Figure 1.7.US Consumption Growth during the Pandemic,by Income Group,201921(Percentage change relative to the 2018

207、 first-quarter levels,left scale;change in percent of disposable income relative to the 2018 first-quarter levels,right scale)1050510152025168081624324010thpercentile(lowerincome)25thpercentile50thpercentile75thpercentile90thpercentile(higherincome)2019202120192021201920212019202120192021Sources:Mey

208、er,Murphy,and Sullivan 2022;US Bureau of Labor Statistics Consumer Expenditure Surveys;and IMF staff estimates.Note:Savings are estimated as the difference between quarterly disposable income and total expenditures.Consumption is estimated using a method similar to that in Meyer,Murphy,and Sullivan(

209、2022).FISCAL MONITOR:HeLpINg peOpLe BOuNCe BACk 8International Monetary Fund|October 2022Table 1.1.Selected Examples of Social Spending during the COVID-19 Pandemic in Emerging Market and Developing EconomiesCountry Expanded EligibilityIncreased BenefitsAdditional Targeting Digital InnovationsRemark

210、sBoliviaElderly,school students,and families with childrenBolivia implemented several programs to support vulnerable groups,including:(i)the Bono Contra el Hambre program,a transfer of Bs1,000(US$146)each to over 4 million people between 18 and 59 years old who were not receiving either salaries or

211、pensions;(ii)the Bono Familia program to compensate low-income families,which paid Bs500(US$73)for each child in elementary school,Bono Canasta Familiar,and Bono Universal;(iii)conditional cash transfers continued in Bono Juancito Pinto(for school students,created in 2006),Bono Juana Azurduy(for mot

212、hers needing assistance,created in 2009),Renta Dignidad(for the elderly,since 2008).BrazilElderly,poor,and unemployed Deliver payments through state-owned banks;mobile apps for registrationBrazil allocated more resources to the Bolsa Familia program and included an additional 1.2 million new benefic

213、iaries;introduced the Auxilio Emergencial program for workers and low-income households during April 2020December 2021.ChileLow-income householdsDeliver payments through state-owned banksCash transfers for the most vulnerable households.ChinaChina increased the coverage and benefits of Dibaoits soci

214、al assistance program for the poorestparticularly to cover families affected by COVID-19 and falling into poverty.ColombiaInformal workersMobile-banking applicationsIn addition to higher benefits for current beneficiaries in existing programs,a cash transfer program(Solidarity Income)of Col$160,000(

215、or US$42)monthly was delivered electronically for informal workers and families,including 3 million households identified via social registries and tax collection databases.EgyptInformal workers in existing databases,by local governments or community organizationsEgypt provided a monthly payment of

216、LE500 over three months for informal workers registered in the workforce directorates databases of governorates.IndiaElderly and families with childrenMobile-banking applicationsIndia provided Rs1000(US$13)to all beneficiaries under the National Social Assistance Program(NSAP)for elderly,widows,and

217、disabled receiving social pensions(35 million beneficiaries),front-loaded payments of Rs2000(US$26)for 87 million farmers,and transferred Rs500(US$6.5)for three months to 200 million women with a Pradhan Mantri Jan Dhan Yojana(PMJDY)(financial inclusion)account.IndonesiaDedicated website for registr

218、ationAssistance for 10 million beneficiary families in the Family Hope Program was increased by 25 percent in 2020;the food aid program(e-food vouchers)was expanded to more recipients with additional benefits for nine months.PeruFamilies affected by COVID-19 in existing databases,by local government

219、s or community organizations Digital networks for cash paymentsPeru introduced an exceptional payment of about US$107 for each vulnerable family affected by the quarantines.RwandaInformal workers in existing databases,by local governments or community organizations Rwanda distributed food to informa

220、l sector workers in Kigali identified through the system of Mudu Gudus,a network of community organizations in charge of targeting and distributing social transfers.TogoThe Novissi system used a machine-learning approach based on geospatial,survey,and phone metadata.The Novissi emergency social assi

221、stance program was introduced in April 2020 to provide cash transfers to more than 570,000 informal workers and additional beneficiaries in the poorest 100 cantons.Sources:Fiscal Monitor Database of Country Fiscal Measures in Response to the COVID-19 Pandemic(https:/www.imf.org/en/Topics/imf-and-cov

222、id19/Fiscal-Policies-Database-in-Response-to-COVID-19);Shang,Evans,and An 2020;and Una and others 2020.CHAPTER 1 HeLpINg peOpLe BOuNCe BACk9International Monetary Fund|October 2022to map the poorest urban areas and target beneficiaries in Nigeria.Countries increased transfers through the social safe

223、ty net,but the transfers were often delayed and it was challenging to deliver support on time and reach those most in need,according to extensive sur-veys by the World Bank on more than 50 developing countries(World Bank 2022).Takeaways from Pandemic-Related Measures to Support HouseholdsDiverse and

224、 forceful fiscal responses during the pandemic opened new grounds to support households against income or job loss.The preceding analyses provide several takeaways that can inform policy design when policymakers are tackling current challenges and preparing for future adversity.First,job-retention s

225、chemes can become a more prominent part of the resilience toolkit for future crises,together with unemployment income support measures.Once their architecture is put in place,both schemes can provide a timely,effective buffer and reduce the loss of labor income,especially for vulner-able workers suc

226、h as youth and low-skilled workers.These two tools are best used in different conditions.The pandemic presented a unique situation for using job-retention schemes,given that it triggered a deep but short-lived disruption to the labor markets(April 2021 World Economic Outlook,Chapter 3).Policymak-ers

227、 were wary of the risks of massive layoffs that could undermine valuable employer-employee relationships(see“Ensuring the Resilience of Firms in Extraordinary Times”),especially in countries with rigid labor markets that would be less able to reabsorb unemployed workers quickly,or in countries with

228、inadequate levels of social protection.In this context,job-retention schemes are especially useful for workers who typically fall outside of regular unemployment income support,such as workers who have not worked long enough to qualify for unemployment assistance.The advantage of preserving work rel

229、ationships in the short term is illustrated by a model analysis(calibrated to a typical advanced economy)whereby long-term unemployment leads to a productivity loss for workers even after they are re-employed(Online Annex 1.4).Simulations show that a persistent pro-ductivity loss from unemployment w

230、ould reduce the consumption stabilization coefficient by 80 percent,even when unemployed workers receive unemployment income support.9 Job-retention schemes can avert such large productivity loss from unemployment,which would then help contain the decline in the consump-tion stabilization coefficien

231、t to only 10 percent.In con-trast,if the shocks persisted for a long time,preserving jobs through job-retention schemes would hinder necessary reallocation.In that case,a well-designed unemployment support scheme is preferred.In the early stages of the pandemic,concerns about large economic transfor

232、mation after the pandemic made job-retention schemes appear less appropriate.In hindsight,the pan-demic did not lead to overwhelming structural changes,and the use of job-retention schemes quickly returned to prepandemic levels.The second takeaway is that targeting support to the right beneficiaries

233、 would raise the impact of fiscal responses and save valuable fiscal resources.Policymak-ers can integrate social registries updated with current information(for instance,Ingreso Familiar de Emergen-cia in Chile and the National Socio-Economic Registry in Pakistan)and make use of high-frequency hous

234、ehold surveys,where available,to facilitate better targeting for new beneficiaries.Broad-based support to households incomes was necessaryat least at the onset of the pandemic.As economic conditions improved,the gen-erosity of measures could have been scaled back faster.Preparing a strategy in advan

235、ce to deploy fiscal tools can improve governments ability to target those in need of most support and to attune sup-port to evolving economic conditions.One option is to set out the likely course of action and policy responses under different scenarios.This allows a timely response without delaying

236、the necessary fiscal support in a large crisis.In some cases,it would be helpful to put in place semi-automatic stabilizersthat is,prelegislated increases in benefits or eligibility with previously agreed triggers such as a decline in employment beyond a threshold.These combine the benefits of timel

237、y and targeted support,while retaining the flexibility to adjust the generosity and coverage of income support to the severity of 9The productivity loss is calibrated to 0.12 percentage points in the quarter following a negative shock,as in Engler and Tervala(2018).The consumption stabilization coef

238、ficient is defined as 1 minus the ratio of volatility of consumption in the scenario with productivity loss of unemployment to that in the baseline scenario without productivity loss.A higher coefficient means households can stabilize consumption more in a negative shock(see Online Annex 1.4).FISCAL

239、 MONITOR:HeLpINg peOpLe BOuNCe BACk 10International Monetary Fund|October 2022the negative shocks(Solow 2005;Boushey,Nunn,and Shambaugh 2019;Blanchard and Summers 2020;April 2020 Fiscal Monitor;April 2020 World Economic Outlook,Chapter 2).Results from a dynamic stochastic general equilib-rium model

240、show that semi-automatic stabilizers could stabilize household consumption better than conven-tional automatic stabilizers(that is,those with fixed generosity and coverage),at a modest fiscal cost(Online Annex 1.4).Additional stabilization comes from greater support at the time of a crisis and guida

241、nce of expec-tations about fiscal policy.In addition,by transferring resources toward low-income unemployed individuals,semi-automatic stabilizers support aggregate consump-tion and reduce inequality.This enhances stabilization at aggregate and individual levels for a relatively modest fiscal cost,t

242、hanks to lower output losses.Timeliness and tailoring to economic conditions of fiscal support are crucial,as Figure 1.8 illustrates(see Online Annex 1.4).The figure depicts the effects of a severe adverse shock that,in the absence of a fiscal response,would raise the unemployment rate by 7 percenta

243、ge points.Three policy scenarios are considered:(1)timely and antic-ipated fiscal supportin the form of expanding the benefit levels of unemployment income supporttailored to the aggregate economic conditions(such as semi-automatic stabilizers);(2)large but short-lived discretionary fiscal support;a

244、nd(3)delayed discretion-ary response.Fiscal support tends to be more effective if it is timely and short-lived than if it is smaller and delayed.At a similar fiscal cost,a timely fiscal support stabilizes consumption one-third more than a delayed response.The“semi-automatic”mechanism is more effecti

245、ve in stabilizing consumption and employment than the other two scenarios.Semi-automatic stabiliz-ers have,however,two potential limitations.First,it is difficult to prespecify the triggers for more generous support because the nature of shocks is different.Ide-ally,these would be based on observabl

246、e variables that are available at high frequency and co-move strongly with the underlying economic conditions.Second,put-ting policy support in place for too long could generate work disincentives(Grosh and others 2008;Landais,Michaillat,and Saez 2018).The third takeaway is that social safety nets c

247、an be scaled up quickly,but this requires preparatory work ahead of future crises.Social safety nets are com-patible with a diverse set of shocks and can reach a targeted(but potentially large or specific)segment of the population,if governments can identify those in need and deliver assistance in a

248、 timely manner.Doing so necessitates large-scale and dynamic information systems,including universal and robust identification systems and the ability to collect and verify up-to-date socioeconomic information,while addressing concerns about information quality,privacy,and security(Aiken and others

249、2022).Strong implementation capacity to deliver payments is also key,as is coordination among government entities.Responses to Surging Food and Energy PricesThe sharp rise in food and energy prices that began in 2021 and was exacerbated by Russias invasion of Ukraine has prompted governments to resp

250、ond once more.Since early last year,global oil prices have doubled,natural gas prices in Europe have increased sharply,and prices for fertilizers have more than tripled.Figure 1.8.Simulated Effects of Discretionary Support and Time-Varying Automatic Stabilizers(Percentage point deviations from the b

251、aseline scenario,unless otherwise stated)1.Aggregate Consumption7654321011 2 3 4 5 6 7 8 9 10Quarters2.Unemployment RatePercent101234567Percent1 2 3 4 5 6 7 8 9 10Quarters3.Replacement Rate0.500.520.540.560.580.600.620.640.660.681 2 3 4 5 6 7 8 9 10QuartersPercent4.Fiscal Costs012345673.55.96.1Semi-

252、automaticstabilizersDelayeddiscre-tionaryresponseDiscre-tionaryresponse:large andtemporaryPercent of GDPSource:IMF staff estimates(see Online Annex 1.4).Note:The unanticipated adverse events occur in the first and second quarters and then gradually fade away.The semi-automatic unemployment income su

253、pport features a time-varying replacement rate that increases by 2 percentage points for each 1 percentage point deviation of unemployment rate from its natural rate.The two discretionary responses vary in terms of size and timing.Fiscal costs across scenarios are cumulative over 2 years and are exp

254、ressed in percent of GDP.Semi-automatic stabilizersLarge and temporary discretionary responseDelayed discretionary responseCHAPTER 1 HeLpINg peOpLe BOuNCe BACk11International Monetary Fund|October 2022Soaring food and energy prices have raised the cost of living for households and thus reduced their

255、 real incomes across most countries.These developments have given rise to concerns about potential social unrest,have pushed more households into poverty,and have placed more than 340 million people at risk of food shortage in the short term,according to the World Food Programme.The impact has diffe

256、red across countriesdepending on whether they are net importers or exporters of commodities.Some emerging markets and low-income developing countries may be at risk of a food crisis.Adverse effects have also differed across individuals within a country,considering that a surge in food prices hurts l

257、ow-income households,especially,who spend a greater share of their income on food than others do.Rising prices of necessities and basic staples can cause devastating,long-lasting harm for people.These concerns underlie the multiple measures under-taken in response to the recent spike in food and ene

258、rgy prices(Figure 1.9).In many cases,countries imple-mented measures to mitigate directly the rise in the cost of living for most households,although some of these measures involve large fiscal costs and tend to be ineffi-cient(Amaglobeli and others 2022).In advanced econ-omies,cash and semi-cash tr

259、ansfers(including vouchers and utility bill discounts)have been common,but most other measures have aimed at lowering prices includ-ing reductions in the value-added tax(VAT)for some energy products(for example,in Belgium and Italy)and excise taxes(for example,in France and Korea).Emerg-ing market a

260、nd developing economies have most used price subsidies and reductions in VAT and excise taxes(for example,Poland,Thailand,and Trkiye).The lower pass-through of the global spikes to domestic energy prices in emerging market and developing economies is explained by the prevalence of price subsidies,es

261、pecially in the Middle East,North Africa,and sub-Saharan Africa.Pricing subsidies or cuts on fuel and energy taxes to limit the pass-through are often hard to reverse when prices come down.Energy pricing subsidies do not really insulate the domestic economy from the shock when many countries impleme

262、nt them at the same time,because commodity price increases lead to a negative terms-of-trade shock and a fall in real income for commodity importers,regard-less of the domestic subsidy scheme in place.Energy price subsidies in many countries at a global scale would translate one to one into a higher

263、 global energy price,while leaving the domestic(subsidized)price relatively unchanged.Price subsidies on energy across countries will be costly but ineffective at protecting the most vulner-able individuals,as illustrated in a multicountry model(Online Annex 1.5;Figure 1.10).They will also compli-ca

264、te the green transition toward renewable energy sources.EnergyFoodBothSource:IMF staff estimates.Note:Based on an IMF survey of 174 countries on the measures taken during the period from January to June 2022 in response to rising food and energy prices.The stacked bars show the breakdown of total me

265、asures in each category.Figure 1.9.Recently Announced Measures in Response to High Energy and Food Prices(Share of surveyed countries,as of July 2022)Advanced economiesEmerging market and developing economies806040200020406080Export restrictionIn-kind transfersWage billCorporate income taxCustoms du

266、tiesPrice freezesBelow-the-line measuresPersonal income taxPrice subsidiesCash transfersSemi-cash(vouchers or discounts)Consumption taxes13911635261265230174938817192844567275No subsidyOnly domestic subsidyGlobal subsidySource:IMF staff simulations(see Online Annex 1.5).Note:At time 2,a temporary re

267、duction in global supply increases the international price of energy products.Under the“no subsidy”scenario,domestic consumption of low-income households falls.Under the scenario with“only domestic subsidy”on energy prices,with that subsidy financed by taxes on richer households,consumption of low-i

268、ncome households can be fully stabilized.But if all countries enact the same“global subsidy”scheme,then international prices rise and consumption is the same as with“no subsidy.”Figure 1.10.Domestic Consumption by Low-Income Households under Different Energy Subsidy Schemes(Percent of precrisis cons

269、umption)15129630Time12345FISCAL MONITOR:HeLpINg peOpLe BOuNCe BACk 12International Monetary Fund|October 2022Overall,they will result in a net transfer of fiscal resources from commodity-importing countries to commodity exporters.The global bidding up of prices from subsidies can be detrimental to l

270、ow-income countries that already lack policy space and strong social protection.Protecting vulnerable households from spikes in food and energy prices is best achieved by strengthening social safety nets to deliver temporary targeted cash transfers(Online Annex 1.4;Amaglobeli and others 2022).The fi

271、scal cost can be offset by other measures,including taxes,although one needs to weigh carefully whether taxes on windfall profits from fuel extractions are appropriate.In general,a permanent tax on windfall profits from fossil fuel extraction based on economic rents(that is,excess profits)can be con

272、sidered if an adequate fiscal instrument is not already in place.It helps raise revenue without reducing investment or increasing inflation and avoids distortions from a temporary tax on windfall profits(Baunsgaard and Vernon 2022).Targeted cash transfers are a better option than blanket price subsi

273、dies on fuel because they allow the rise in fuel costs to pass on eventually to end users to facilitate energy conserva-tion and switching out of fossil fuels.In most countries,pricing subsidies provide greater benefits to high-income individuals.Low-income countries should prioritize food security

274、within the existing fiscal envelope.Countries without strong social safety nets can expand existing social programs(for example,public transportation and school feeding programs)to provide relief to vulnerable house-holds.A gradual adjustment of food prices may help reduce food waste especially in a

275、dvanced economies.At the global level,facilitating trade and lifting export restrictions on the purchase of food for human-itarian assistance will support low-income countries at risk of a food crisis in meeting their urgent needs.Ensuring an adequate and affordable supply of food and energy in glob

276、al markets will also support low-income countries in the short term.Stronger domestic and international efforts to transition to a more diverse,renewable energy mix would reduce vulnerabilities to fossil fuel price shocks.Ensuring the Resilience of Firms in Extraordinary TimesGovernment support to f

277、irms expanded massively in scale and scope during the COVID-19 pandemic and the global financial crisis that began in 2008.The goal during the pandemic was to allow firms to avoid bank-ruptcy and preserve employer-employee relationships while economic activity was restricted,so that firms could boun

278、ce back as soon as lockdowns ended and business resumed.Direct lending,public guarantees,subsidized private bank lending,and equity support were used on an unprecedented scale.For example,some countries including Germany,Italy,and Japan announced public guarantee envelopes reaching about 30 percent

279、of GDP.Many emerging market and developing economies intervened in their distressed state-owned enterprises,which often operated in core sectors or provided basic services.Some also used discretionary budget measures such as deferrals on taxes and social security contribu-tions,in addition to job-re

280、tention schemes that,as noted,benefited workers and firms jointly.Likewise,during the global financial crisis,many advanced economies made ample use of public loans,guarantees,and equity support to shore up the balance sheets of financial institutions and systemic firms(Cusmano and Thompson 2018).Co

281、llectively,these measures alleviated corporate cashflow crunches and preserved working capital,although private demand recovered more gradually in the 2010s than in 2021,partly because of differences in the strength of the balance sheets of private financial institutions and households.In times of n

282、ormal economic activity,government support to private firms is usually limited to encour-aging investment through tax incentives or promoting access to finance for small and medium-sized enter-prises or specific sectors.In typical business cycles,support to firms seldom extends beyond the automatic

283、stabilization implied by the tax system(because firms pay lower taxes when profits decline).During major crises,exceptional interventions by the public sector can avert an economic collapse,although such support entails large fiscal risks.In situations of extreme uncertainty,banks may become relucta

284、nt to extend liquidity even to sound and viable firms,impairing their ability to conduct business.A failure of systemic firms could disrupt supply chains or credit relationships,and the disruptions could spread to other firms and lead to sizable job and income losses if left unaddressed(Gourinchas a

285、nd others 2022).In such cir-cumstances,public interventionsalong with monetary or financial policiescan restore market confidence,preserve valuable links between firms and their creditors,and reduce lasting effects from systemic bank failures(Edelberg,Sheiner,and Wessel 2022).The benefits of public

286、financial support to via-ble firms amid major crises include the confidence channelsin which firms expected profits depend on CHAPTER 1 HeLpINg peOpLe BOuNCe BACk13International Monetary Fund|October 2022investors and consumers views of future economic conditions(Battersby and others 2022).Adverse e

287、vents can make people more pessimistic,leading to a contraction in demand.Incentives for firms to invest wane and business prospects suffer.Banks become less willing to extend credit.A wave of bankruptcies,even among viable firms,is possible.The adverse impact of the initial shock is thus amplified

288、by widespread pessimism.A well-designed public guarantee program can break this self-reinforcing formation of pessimistic expectations by reducing the share of viable firms that are forced to downsize.This in turn lifts peoples views on economic prospects.Such benefits of support to firms by governm

289、ents are larger in deeper crises,when a greater share of firms is subject to bankruptcy risks.However,public support to firms comes with risks,which could outweigh potential benefits.When uncertainty is great,distinguishing between illiquid but viable and nonviable firms is difficult(Ebeke and other

290、s 2021)and processing or monitoring support for many small and medium-sized enterprises can strain govern-ments administrative capacity(Diez and others 2021).For countries with limited fiscal space,borrowing costs may rise during crises,increasing the opportunity cost of public funds for other neede

291、d spending.Moreover,prolonged support to firms can delay the reallocation of resources to more productive uses or crowd out funding for new businesses.The costs of exceptional support to firms likely outweigh the benefits in most circumstances for countries with large shares of informal jobs and bus

292、inesses in their economies,weak governance,and scant information about firms balance sheets.Even in advanced economies with strong legal,administrative,and institutional systems,the large fiscal costs and fiscal risks may be warranted only in exceptional circum-stances to avert a severe economic cri

293、sis.While government interventions to support firms contained the rise of bankruptcies during the pan-demic,some programs entailed large fiscal risks.Bankruptcy rates declined by 11 percent on average across 42 advanced economies and emerging markets during the pandemic(Araujo and others 2022).10 Ho

294、wever,some programs appeared generous and entailed large fiscal costs(Chodorow-Reich,Sunderam,and Iverson 2022).Untargeted programs can imply that nonviable firms before the pandemic nonetheless 10Estimates by Auerbach and others(2022)for the United States suggest that fiscal support to firms,alongs

295、ide other fiscal responses,contained the rise of bankruptcies,particularly for firms at the brink of exit.obtained benefits.In the United States,some firms used loans from the Paycheck Protection Programintended to retain workers during the pandemicto make non-payroll payments or build up savings,le

296、ading to small employment effects(Granja and others 2020),while many small businesses did not receive support loans(Kaplan,Mills,and Sarkar 2022).Firm-level survey results across 74 emerging market and develop-ing economies suggest that about one-fifth of firms that were not much affected during the

297、 pandemic received some form of government support.In low-income developing countries,the majority of firms that did not receive(but likely qualified for)policy support missed out because firm owners were not aware of those sup-port measures(World Bank 2021).To make support to firms more effective,g

298、ov-ernments should strive for good targeting and com-munication.Support should be triaged based on an assessment of firms viability.Well-defined exit strategies,sound legal frameworks,good governance,and sound management of fiscal risks are priorities in this regard(Box 1.2).Limiting the duration of

299、 support programs can contain fiscal costs.Likewise,sharing risks with private banks through partial guarantees can reduce government exposure.Estimating and managing fiscal risks from support to firms on an ongoing basis reduce subsequent losses.This requires establishing regular surveys or registr

300、ies to obtain timely information about firms.Some measures,such as public guarantee programs that do not have immediate budget impact and are contingent on the recovery of the firms,make estimation difficult.Countries use different approaches to report the cost of support,including con-tingent liabi

301、lities,in the budget and fiscal risk statements but often underestimate the true cost(Battersby and oth-ers 2022).This in part reflects the difficulty in estimating implicit subsidies from government loans and guarantee programs.Hong and Lucas(forthcoming)apply an approach reflective of the fair val

302、ue of support in seven advanced economies.They measure the fair value of the subsidy component as the difference between actual disbursement of loans and guarantees and the net present value of expected future cash flows(including loan prin-cipal repayment,interest,and guarantee fees)over the durati

303、on of the programs.To calculate this net present value,market interest rates are used as the discounting factor because they reflect market participants views about the default risk for firms participating in the loan guarantee programs(US Congressional Budget Office 2012).Results for seven advanced

304、 economies suggest that FISCAL MONITOR:HeLpINg peOpLe BOuNCe BACk 14International Monetary Fund|October 2022governments subsidized a median of 30 percent of loan principal during the pandemic(Figure 1.11).Differences in program design explain the variation across coun-tries,ranging from 24 percent t

305、o 100 percent:longer maturities or higher guarantee rates raise the subsidy component,whereas higher fees or interest rates reduce it.Guarantees were often more generous for small enter-prises,leading to higher subsidies and associated fiscal risks.For example,the US Paycheck Protection Program is e

306、stimated to have been fully subsidized(essentially amounting to grants to firms),partly reflecting lenient requirements on repayment.Preparing a Strategy Ready to DeployPreparation can help governments protect households and firms even better during large adverse shocks in advance.Specifying fiscal

307、responses in advance to tackle all possible adversities is not feasible.Similarly,targeting support in real time in situations of great uncertainty is challenging.Nonetheless,countries can prepare strate-gies and tools that can be more readily deployed.Building fiscal buffers in normal times is a pr

308、erequisite for policies to respond flexibly during cri-ses without jeopardizing access to financing.As evident during the pandemic and the global financial crisis,fiscal policy can be active and powerful,if resources are available.Experience from the aftermath of earlier crises indicates that countr

309、ies often do not rebuild sufficient buffers afterwardpublic debt remained elevated after the emergencies subsided,constraining countries ability to respond to negative shocks.In the early stages of the pandemic,advanced economies and some emerging markets were able to finance a major fiscal expansio

310、n,despite elevated public debts,because interest rates were at the effective lower bound and inflation was below target.Those conditions are no longer in place and may not be in place when the next crisis strikes.Low-income countries face a stark trade-off because they need to build fiscal buffers a

311、gainst adverse shocks while pursuing development goalssimilarly important elements of resilience.Building buffers requires gradual fiscal adjustment and involves trade-offs,including prioritizing competing spending needs and mobilizing domestic revenues,while pur-suing inclusive and sustainable grow

312、th.Fiscal adjust-ments should in general be gradual and differentiated according to circumstances,under a medium-term fiscal framework to promote credibility.Experience from the pandemic points to trade-offs between the risk of doing too much and the risk of doing too little,or between large fiscal

313、costs and gener-osity of support(in terms of coverage or amounts per individual).Preparation can ameliorate those trade-offs,by improving the ability to target those in need and lim-iting incentives for individuals and firms to shirk or take on excessive risks.It may be helpful to develop a strategy

314、 that sets out desirable policy responses under various scenarios.In some cases,the evolution of high-frequency indicators of economic conditions can then be related by policymakers to such scenarios,facilitating their responses.In a few instances,it may also be feasible to put in place“semi-automat

315、ic”stabilizers(preagreed responses)that will thus be timely and attuned to economic conditions.Such an approach would make fiscal policy responses more predictable.The anticipation of policy support would help guide households and investors expectations and increase policy effectiveness.In turn,time

316、ly and efficient measures would limit net fiscal costs.The transparency of such an approach would integrate measures into medium-term fiscal frameworks,promote fiscal credibility,and reduce the influence of short-term political pressures.Social protection systems are part of a resilience infrastruct

317、ure and are compatible with a broad set of negative shocks.The recent crises have shown not only that social safety nets can be expanded quickly,often leveraging new technologies,but also that preparation is necessary to make them more readily scalable and well targeted to deliver cash or in-kind su

318、pport to those who truly need it.Gathering information about Subsidy elementTake-up(percent of GDP)Source:Hong and Lucas,forthcoming.Note:The take-up is measured by the take-up rate multiplied by the announced program size in percent of GDP.The subsidy component is a weighted average across countrie

319、s as of the end of 2021.Figure 1.11.Estimated Implicit Subsidy and Take-Up of Government Guarantee Programs,202021(Percent of loan principal and percent of GDP)0102030405060708090100UnitedStatesJapanUnitedKingdomFranceGermanyItalySpainCHAPTER 1 HeLpINg peOpLe BOuNCe BACk15International Monetary Fund

320、|October 2022people and firms,and reducing informality in normal times make it possible to provide support more effec-tively and efficiently during crises.In the face of soaring food and energy prices that have squeezed household budgets,countries can provide targeted and temporary support to vulner

321、able house-holds.For emerging market and developing economies without strong social safety nets,existing social programs(for example,child benefits,public transportation,or school feeding programs)can be expanded to provide relief to vulnerable households,while taking advantage of the opportunity to

322、 strengthen the social protec-tion system.Existing targeting methods in developing countries,although imperfect,can provide more on a per beneficiary basis,compared with universal programs(Hanna and Olken 2018).Improved legal frameworks and administrative capacity can facilitate targeting,lever-agin

323、g digital innovations to verify eligibility and deliver payments,while limiting leakage and fraud.Different types of adversity require a different mix of policy tools.The appropriate choice depends on the nature of the event,available policy space,and the extent of resilience in the private sector.F

324、or exam-ple,when inflationary pressures are high,fiscal policy should protect the most vulnerable while maintaining a tightening stance to facilitate the monetary policys price stability objective.Scaling up existing means-tested cash transfers is preferable to enacting energy pricing subsi-dies bec

325、ause the rise in fuel costs passes on to end users,facilitating energy conservation and switching out of fossil fuels.For low-income countries,food security should be prioritized within the existing fiscal envelope.In general,rare events with major adverse impact(for example,major natural disasters

326、or pandemics)would require multiple instruments and more proactive public interventions(Table 1.2).The response to negative shocks that occur with high probability but have less pronounced impact(for example,typical business cycles Table 1.2.Appropriate Fiscal Tools to Deploy Depend on the Nature of

327、 the Adversity of ShocksType of AdversityFiscal ToolsOutput or Employment ShockMajor Disruption in Key Goods and Services(for example,large spikes in food and energy prices)Major Natural DisastersTemporaryLonger LastingAutomatic stabilizersUnemployment income support1():Supplement with active labor

328、market policiesJob-retention schemesScale-up of social protection():Ready to scale up as needed():Facilitate better social well-being(equity and poverty reduction)():Widen eligibility to cover affected people not just poor people Progressive taxesDiscretionary or ad hoc measuresCash transfers():Only

329、 if targeted and severe adversity():Build on current social protection system or targeted discounts on utility bills():Targeted transferPricing subsidiesDiscretionary support to firmsTax deferral():Particularly if limited access to finance before the shocksFinancing measures(for example,direct lendi

330、ng and public guarantees)():If severe externalities exist():Should instead facilitate exit of nonviable firms():Unless evident severe externalities existSource:IMF staff compilation.1 Comprises contributory unemployment insurance and noncontributory unemployment assistance benefits.Note:refers to ap

331、propriate tools to be used to protect against income losses for the specific type of adversity.stands for less appropriate tools.Fiscal tools are not mutually exclusive,and governments can use multiple tools at the same time depending on the availability of the fiscal space and the nature of the sho

332、cks,institutional capacity of governments,debt sustainability concerns,and the private sector risk-sharing mechanism,among other factors.FISCAL MONITOR:HeLpINg peOpLe BOuNCe BACk 16International Monetary Fund|October 2022or seasonal hurricanes)could rely on automatic stabiliz-ers or existing market-

333、based mechanisms such as private insurance for natural disasters.If those stabilizers are not available,targeted discretionary support could protect against income losses within available fiscal space and fiscal rule limits.Fiscal responses need to have a clear exit strategy to ensure that they are temporary.To manage fiscal risks from measures without immediate budget impact,governments should fo