Tuesday, November 3
Mr. Raphael Espinoza, IMF, Deputy Chief of the Fiscal Policy & Surveillance Division, IMF Fiscal Affairs Department
Mr. Kurt Bayer, Senior Research Associate, wiiw
The webinar started with a presentation by Raphael Espinoza on the role public investment can play in the COVID-19 recovery. Not only is there a case for reversing the underinvestment in sectors such as healthcare or social housing, but macroeconomic conditions are ripe for more investment, and public investment is a form of stimulus that protects fiscal space. The crisis has further shed light on the lack of resilience of our economies, and public investment could assist in the transition towards a sustainable, inclusive and resilient economy. A phased recovery strategy is recommended – focusing on maintenance and active projects with priority of health sector during lockdown, to an identification of a pipeline of appraised and ready for implementation projects in health, infrastructure, schools and transport during partial reopening, to a post-pandemic focus on smart projects assisting the structural transformation of the economy (digitalization and climate change).
Kurt Bayer in his discussion welcomed the timely, important and well-researched chapter, welcoming in particular the focus on maintenance, given the need for much of the material and immaterial infrastructure that needs to be renewed, maintained and upgraded. A sustainability dividend, which encompasses social, environmental and economic returns, would be an important element to reinforce the public goods character of public investment. Furthermore, in a political economy context, vested interests should be addressed by building sustainability coalitions for a green transition.
The webinar discussed these and other questions from the audience, e.g. concerning the employment generation potential, human capital multipliers, or fiscal rules by reviewing the potential of public investment to support the recovery as a part of a country’s broader fiscal strategy. Thereby, it made transparent the trade-offs, challenges, as well as needs to improve infrastructure governance that pursuing the investment-for-recovery strategy entails.
The webinar was based on Chapter 2 of the IMF Fiscal Monitor “Public Investment for the Recovery”), October 2020
It was held in English, with simultaneous translation into Russian.
Hervé Joly, JVI Director opened the webinar; moderation was provided by Barbara Dutzler, Senior Economist.
Barbara Dutzler, Senior Economist, JVI