The fiscal crisis continues to be one of the risks facing the global community in the coming year. This means that public consciousness of the danger that governments may become unable to pay their debts has risen to an all-time high.
The latest developments signal the urgency of getting global public finances back into order; most immediately because the bankruptcy of a sovereign – or even uncertainty about disruptions in sovereign payments – has painful spillovers to financial sectors, business and households, and more fundamentally because, when public funding dries up, almost all other elements of countries’ reform agendas also stall.
The Global Agenda Council on Public Finance & Social Protection Systems has worked for the last two years to raise awareness of the problem, and identify options to resolve it. When the council started its work, Europe was in crisis, so efforts were devoted to defining a fiscal framework that would allow the Euro area to endure. The council also tackled the difficult challenge of how to handle Europe’s high debt, which could require fundamentally revisiting international frameworks for debt restructuring.
Although China’s public finances are considered healthier, its rapid growth and vast transformation raise concerns about hidden pressures on government finances, which are analysed by the council. And Japan, the country with the world’s highest gross debt (240% of GDP) is not in crisis. The council is scrutinizing the country’s finances for signs of strain, and will discuss strategies for ensuring that the debt remains sustainable.
The Council has one more dimension to its work – social protection systems – with the aim to develop optimal and efficient management systems for public finances, as well as developing a framework for comparing the coverage, benefits and fiscal sustainability of social insurance and safety net policies across countries.
Council Manager: Liana Melchenko, Practice Lead, Knowledge Networks and Analysis, firstname.lastname@example.org
Forum Lead: Michael Drexler, Head of Investors Industries, Member of Management Committee, Michael.email@example.com