The world monetary organization, IMF, calls on all governments to stick to their budgets
In Washington, the IMF on Wednesday (October 12) called on policymakers to prioritize protecting the vulnerable through targeted support while maintaining a tight fiscal stance to help fight inflation.
“Governments are facing difficult trade-offs in the context of sharp increases in food and energy prices,” said Vitor Gaspar, director of the IMF’s Fiscal Affairs Department, and his colleagues in a blog, on the occasion of the release of the IMF’s latest Fiscal Monitor report.
Politicians in control of their countries must protect low-income families from large losses in real income and ensure their access to food and energy, the blog notes.
“However, they must also reduce vulnerabilities associated with high public debts and, in response to inflation, maintain a tight fiscal stance so that fiscal policy does not run counter to monetary policy,” the blog continues.
Inflation is a real threat and could create a decline in people’s living standards everywhere, prompting governments to implement various fiscal measures, including budget subsidies, tax cuts and cash transfers, whose median fiscal cost is estimated at about 0.6% of the Gross Domestic Product.
Limiting price increases through price controls, subsidies, or tax cuts would be “costly” to budgets and “ultimately inefficient,” Gaspar and his colleagues said.
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