The Asian Development Bank Institute co-hosted a high-level, two-day fiscal forum in Tokyo, Japan on 10-11 June, together with the Fiscal Affairs Department (FAD) of the IMF, and the Policy Research Institute (PRI) of the Japanese Ministry of Finance. The central theme of the Forum was “Fiscal Policy for Long-term Growth and Sustainability in Aging Societies.” Policymakers from over twenty Asian countries presented on current and future fiscal policy challenges and possible remedies in the context of aging societies. The Forum specifically focused on issues related to long-term growth and fiscal sustainability in Asia. High levels of subsidies, aging populations and the resulting rise in social spending, and pressure for greater infrastructure investment are threats to future growth in the region. Asia faces the challenge of maintaining fiscal sustainability in light of increasing pressure to raise social spending and redistribute income. Policy recommendations for fiscal reform to help increase revenues, included raising taxes, improving compliance, and reforming flat consumption tax systems to more progressive value added tax (VAT) arrangements. On spending, proposals included improving the quality of spending on infrastructure, incorporating PPPs with proper risk sharing to meet economic infrastructure needs, and ensuring that projects encourage private sector activity. The Forum was attended by over 70 high-level policymakers, experts, and stakeholders from the US, Europe, and Asia.
This workshop will allow government policy makers to utilize fiscal policy to promote inclusive economic growth in Asia. Past fiscal policy initiatives in Asia have promoted economic development but have also promoted economic inequality. This workshop hopes to promote new fiscal policies that will promote inclusive economic development as well as promote fiscal sustainability while addressing future challenges such as aging populations.
Fiscal balance is becoming an increasingly important issue for Asian economies to address. Since 1990, Japan’s gap between total government expenditure and tax revenue has widened and bond issuance has increased sharply, exceeding tax revenue in 2009. As a result, Japan’s outstanding government bonds at the end of 2012 reached over 700 trillion yen, representing 17 times the tax revenue, and increased Japan’s public debt to GDP ratio to 214%. Unfortunately, many Asian economies are experiencing similar increasing public debt to GDP ratios due to the fiscal measures taken to counteract the 2008 global financial crisis. This massive stockpiling of debt, particularly in developed countries, has impacted on financial markets, resulting in increasingly volatile global capital markets as states with prolonged stagnation, high inflation, and partial default; need to adopt austerity measures in order to return to more manageable debt levels. Furthermore, developed economies are facing the emerging challenge of aging populations, demanding increased social services that will result in new challenges, as increasing demands for social services outstrip the government’s ability to fund these services.
Developing Asia also faces significant challenges utilizing fiscal policy for inclusive growth. Asia’s rapid economic growth fueled by globalization, technological progress, and market reform, has also worsened income inequality between rich and poor. Government expenditures have been small by international standards but will become increasingly more prominent to promote inclusive growth. Historically, the role of fiscal policy in Asia has been to facilitate economic growth by providing basic infrastructure. As a result, Asia possesses limited experience of using fiscal policy to promote equity and evidence suggests that Asia falls short relative to advanced economies in government expenditure for education, health care, and social protection as identified by the Asian Development Bank. Asia will need to learn to utilize fiscal policy to actively promote inclusive growth without compromising its strategic priorities of economic growth and fiscal sustainability.
This forum will delve into current challenges in long-term, sustainable growth and the role of fiscal policy to address these challenges. The forum will consist of 5 sessions and conclude with a round table discussion. For each session, 2-3 overview presentations will be followed by 2-3 country presentations. 2-3 discussants will lead the post presentation discussion portion.
- Discuss current challenges in Asia in regard to financial sustainability of fiscal policy to promote inclusive economic growth with fiscal sustainability
- Provide a venue for government officials to share challenges in building fiscal policy in their respective economies
- Allow researchers to share their latest research regarding fiscal policy
- Promote closer cooperation among key stakeholders involved in fiscal policy
The target audience will be comprised of senior officials from agencies responsible for fiscal policy in their respective economies, including 34 participants from 23 countries.
The audience is expected to actively participate on both days of the conference.
How to register
By invitation only.
Policy Research Institute (PRI), Ministry of Finance Japan (MOF), International Monetary Fund (IMF), and Fiscal Affairs Department (FAD)