Tuesday, July 28
Mr. Eivind Tandberg, Public Financial Management Division, Fiscal Affairs Department, IMF
Mr. Jean-Francois Wen, Senior Economist, Tax Policy Division, Fiscal Affairs Department, IMF
Ms. Yuko Kinoshita, Deputy Chief of the Fiscal Operations Division, Fiscal Affairs Department, IMF
This webinar was the sixth of a series focusing on the recent IMF special series on fiscal policies to respond to the COVID-19 challenges.
Investment is key for economic recovery and growth. Yet, facing the COVID-19 pandemic, many governments have resorted to cuts in their public investment program as they rushed to reprioritize spending towards health expenditure and support for businesses and households. Private investors alike cut back their capital-spending budget in the face of enduring uncertainty. As governments ponder which industries or companies to support to safeguard employment and reignite growth, it remains an open question to what extent climate change considerations will be part of their agenda.
The panelists discussed the role of investment for recovery and growth from three different perspectives. While efforts to reprioritize spending during the pandemic let to cuts of public investment with lower social and economic benefits, timely, targeted, and temporary public investment programs should form part of the fiscal stimulus for recovery. If policy-makers decided to use tax incentives to incentivize profitable companies, the use of bonus depreciation rather than corporate income tax cuts were recommended as the more cost-effective investment stimulus. Finally, climate change should be addressed during crisis containment and recovery, as the effects of COVID responses – good or bad – will be felt for decades. Guiding principles as well as Do’s and Don’ts were outlined and discussed with the audience.
The following notes from the IMF FAD’s special COVID series provided the basis for discussion:
The webinar was opened by Thomas Richardson, JVI Director, and Torben Hansen, Deputy Chief of the Public Financial Management Division, IMF Fiscal Affairs Department.
Moderation was provided by Barbara Dutzler and Tatiana Evdokimova (both JVI).
Barbara Dutzler, Senior Economist, JVI