Global Crises, fiscal space and national response

Abstract

Abstract:

            The main aim of this paper is to examine the impacts of the crisis on fiscal space and government social spending. It also examines the design and implementation of national rescue packages, concentrating in particular on the composition of stimulus packages in terms of social protection and employment measures. This study analyses data from the year 2000 to 2011 in order to find out the Global Crises, fiscal space and national response. In this analysis various secondary sources have  been  used.  It analyses the impacts, shortcomings, challenges, and policy reform measures of the Global food crisis.

The global nature of the recent crisis limits that option. Countries with the flexibility to implement counter-cyclical policies have been better able to mitigate the impacts of the crisis on their economies and people Likewise, countries that have social protection systems as well as active labour market programmes in place, have been in a better position to mitigate adverse social impacts. It seems many countries learned lessons from previous crises and devoted substantial shares of their stimulus spending to the social sector to either expand existing programmes or to implement new ones.  Unfortunately, many poorer developing countries lack the institutional and/or fiscal capacity to finance effective stimulus and welfare measures on their own. Instead, they must depend on aid to fill budgetary shortfalls in education, health and other programmes aimed at addressing poverty.

            Educational, Scientific and Cultural Organization estimates that the average annual shortfall in funding needed to meet the internationally agreed development goals in education is $16 billion, $5 billion more than previously estimated (United Nations Educational Scientific and Cultural Organization, 2010). The crisis dampens the prospects for closing this gap. Thus, policy adjustments to support social spending and improve economic growth are essential to limit the impact of the crisis on poverty.