Download Population G.2. Fiscal balance

Statistical Yearbook for Asia and the Pacific 2013 • G. Economy
Fiscal positions have deteriorated in
most countries in Asia and the Pacific
since the global financial crisis began in
2008. This is demonstrated through the
increase in fiscal deficits as a percentage
of GDP.
increase in the already high deficits in countries
of the South Asian Association for Regional
Cooperation, at close to 6 per cent of GDP in
2011. While South-East Asia and developing
economies in the Pacific recorded a slight increase
in their fiscal deficits the same year, the fiscal
conditions improved in East and North-East
Asia, excluding Japan and Central Asia (based on
2010 data). As in the several preceding years,
India, Malaysia, Maldives, Myanmar, Pakistan
and Sri Lanka experienced sizeable fiscal deficits
in 2011. The persistent shortfalls have
constrained fiscal space in many of these
countries, thereby weakening their ability to
Figure G.2-1
Fiscal balance as a percentage of GDP, Asia
and the Pacific, 2010 and 2011
The average fiscal deficit in developing economies
in the Asian and Pacific region nearly doubled
from 1.0 per cent of GDP in the five years prior
to the global financial crisis (2003-2007) to
1.9 per cent of GDP during 2008-2011. This
was due to an unprecedented scale of fiscal
support to revive domestic demand and sluggish
economic activities, partly at the expense of tax
revenue. The crisis indeed reversed the improving
trend in the fiscal performance observed in the
pre-crisis period, when the average deficit
softened from 2.6 per cent of GDP in 2001 to
0.8 per cent of GDP in 2006 before turning to
a small surplus in 2007. If developed economies
in the region are included, the overall picture in
2010 would be even less encouraging given
a turnaround from fiscal surpluses to deficits
in Australia and New Zealand and more
pronounced deficits in Japan.
The average fiscal deficit in developing economies
in the region stood at 1.7 per cent of GDP in
2011, which was comparable to 1.8 per cent of
GDP in 2010. The marginal change in the
regional average nonetheless masks a further
225
Fiscal balance
Fiscal balance refers to the difference between
government revenues (through taxation and
sales of assets) and expenditure. A budget
surplus indicates a positive fiscal balance
whereas a deficit indicates a negative fiscal
balance. Budget deficits can be cyclical or
structural; that is, they can remain across
business cycles due to excessive government
spending compared with revenues. Fiscal
policies have a direct effect on the economic
performance of a country. The present topic
focuses on the fiscal policies adopted by
countries in the Asian and Pacific region in an
effort to mitigate the effects of the recent
financial crisis and to maintain economic
growth.
Population
Economy
G.2. Fiscal balance
G. Economy • Statistical Yearbook for Asia and the Pacific 2013
Population
weather adverse demand shocks. On the other
hand, Brunei Darussalam, Kiribati, Singapore
and Hong Kong, China have consistently
enjoyed fiscal surpluses in recent years.
Figure G.2-2
Government expenditure and revenue trends,
Asia-Pacific developing economies, 2000-2011
(percentage of GDP)
Economy
Fiscal balance
Figure G.2-3
Government expenditure and revenue trends,
Least developed countries (LDC), 2000-2011
(percentage of GDP)
Countries with lower income levels faced
higher budget deficits in 2010 and 2011.
Most least developed countries have exhibited
notable fiscal deficits over recent years. As
a group, least developed countries appeared to
fare less favourably than landlocked developing
countries and Pacific island developing
economies. Although the average government
revenue-expenditure ratio in least developed
countries rose steadily from 62.0 per cent in 2000
to about 72.4 per cent in 2010-2011, the level
is still much lower than that of developing
economies in the region (at slightly above 90
per cent). The data point to a need to push up
the government revenue-GDP ratio in least
developed countries from the currently low level
of about 10 per cent.
Figure G.2-4
The distribution of fiscal balance-GDP ratio
in selected groupings, 2007-2011 average
Note: The chart displays data for 44 countries in the region, 14 least
developed countries, 12 landlocked developing countries, and 12 Pacific
island developing economies. Brunei Darussalam and Kiribati are
excluded from the chart, as their average fiscal balances during 20072011 were about 20 per cent of GDP. For the Pacific island developing
economies grouping, the data are missing for American Samoa, French
Polynesia, Guam, Nauru, New Caledonia, Niue and Northern Mariana
Islands.
226
Statistical Yearbook for Asia and the Pacific 2013 • G. Economy
Population
Box G.2
Fiscal policy in Asia and the Pacifica
Some countries in the Asian and Pacific region have
implemented measures to improve fiscal conditions and
to ensure that public spending achieves inclusive and
sustainable development.
Several countries have recently launched measures to
enhance fiscal conditions in the aftermath of the
financial crisis. On the revenue side, new taxes have been
introduced or reintroduced: the value added tax in the
Lao People’s Democratic Republic in 2010, the 15 per
cent withholding tax on interest from bank deposits in
the Cook Islands, the net profit tax in the Federated
States of Micronesia in late 2012, and the licensing
scheme for foreign vessels in Nauru. Efforts to broaden
the tax base, simplify the tax structure or modernize the
tax administration are seen in Bangladesh, Myanmar,
Pakistan, the Philippines and Sri Lanka. On the
expenditure side, Turkey rationalized administered prices
in 2012 to relieve some fiscal burden, while Malaysia
placed greater emphasis on the value-for-money of
public spending programmes. Meanwhile, India
announced its five-year fiscal consolidation plan.
Examples of the use of government revenues for inclusive
development include financial assistance to vulnerable
groups such as low-income and elderly citizens in
Malaysia and Singapore, higher health insurance
subsidies in Viet Nam, a free education policy in Papua
New Guinea, and electrification in Myanmar and
Timor-Leste. Some countries in Asia and the Pacific have
also demonstrated a shift towards programmes that
support sustainable development, such as energy-saving
technology in China and green growth in the Republic
of Korea.
a ESCAP, Economic and Social Survey of Asia and the Pacific 2013: Forward-looking Macroeconomic Policies for Inclusive and Sustainable Development
ESCAP. Economic and Social Survey of Asia and the Pacific 2013: Forward-looking Macroeconomic
Policies for Inclusive and Sustainable Development (United Nations publication, Sales No. E.13.II.F.2).
Available from www.unescap.org/pdd/publications/survey2013/index.asp.
International Monetary Fund. Fiscal Monitor. Available from www.imf.org/external/ns/cs.
aspx?id=262.
Technical notes
Fiscal balance (percentage of GDP)
The difference between total revenues and total
expenditures of the central Government
expressed as a percentage of GDP. Aggregate
calculations: Weighted averages using GDP as
weight. Missing data are not imputed.
Government revenue (percentage of GDP)
Total current and capital revenues received by the
central Government expressed as a percentage of
GDP. Aggregate calculations: Weighted averages
using GDP as weight. Missing data are not
imputed.
Government expenditure (percentage of GDP)
The sum of current and capital expenditures of
the central Government expressed as a percentage
of GDP. Aggregate calculations: Weighted
averages using GDP as weight. Missing data are
not imputed.
Source
Source of fiscal balance data: Asian
Development Bank, Key Indicators for Asia and
the Pacific 2012 (Mandaluyong City, Philippines,
2012). Data on government expenditures and
revenue are mostly taken from country sources.
The coverage of budget data is not standard
throughout the region. Data provided by many
countries refer only to the central Government,
but those provided by other countries refer to
provincial and local governments as well. Data
obtained: 13 February 2013.
227
Fiscal balance
Further reading
Economy
(United Nations publication, Sales No. E.13.II.F.2).
G. Economy • Statistical Yearbook for Asia and the Pacific 2013
G.2.1 Fiscal balance
Government revenue
Government expenditure
% of GDP
Fiscal balance
% of GDP
% of GDP
1995
2000
2010
2011
1995
2000
2010
2011
1995
2000
2010
2011
East and North-East Asia
China
DPR Korea
Hong Kong, China
Japan
Macao, China
Mongolia
Republic of Korea
12.4
10.3
13.1
13.5
16.8
20.7
17.9
22.3
16.0
17.8
16.3
20.3
22.4
21.7
23.4
-3.5
-5.0
-2.8
-3.5
-1.7
-3.8
-1.1
16.1
12.0
17.1
11.8
21.6
11.2
22.9
11.3
16.4
16.0
17.7
18.1
17.4
18.0
19.4
19.6
-0.3
-4.0
-0.6
-6.3
4.3
-6.7
3.5
-8.3
24.7
17.8
34.0
22.5
36.7
23.1
38.4
23.6
23.3
15.3
36.0
18.1
33.8
21.4
39.7
22.1
-1.5
0.3
-7.7
1.1
0.5
1.4
-5.8
1.5
South-East Asia
Brunei Darussalam
Cambodia
Indonesia
Lao PDR
Malaysia
Myanmar
Philippines
Singapore
Thailand
Timor-Leste
Viet Nam
20.9
36.5
7.6
17.7
11.1
22.9
6.5
18.9
34.8
18.1
17.9
49.1
10.0
14.7
13.1
17.4
4.2
14.3
29.8
14.7
17.9
47.7
12.7
16.2
18.3
40.6
14.8
15.8
20.8
22.9
3.5
18.1
18.5
16.9
-0.8
10.9
-2.1
-1.1
-4.6
-5.5
0.7
-3.7
9.9
-2.8
26.4
23.8
22.6
28.0
-1.3
-4.3
-1.1
25.8
-3.1
-0.7
-2.2
-5.4
-4.5
-3.5
7.7
-2.4
3.6
-4.5
-1.8
24.0
-4.5
-1.2
19.8
3.5
15.1
-7.2
3.0
-12.9
0.8
-3.2
0.6
14.0
2.6
20.1
18.9
28.5
21.3
16.6
23.9
25.5
18.5
16.8
14.7
19.1
18.4
30.7
19.8
23.7
20.3
17.4
17.9
17.0
66.0
14.8
14.7
26.7
22.1
9.8
18.2
15.6
15.3
21.9
17.9
54.3
13.2
15.8
15.1
20.1
14.0
13.4
22.4
16.7
22.0
28.0
9.8
19.1
9.9
8.5
23.2
9.8
10.8
11.5
23.4
10.7
12.5
22.9
9.0
14.4
37.2
14.1
14.5
42.2
15.5
20.6
15.2
38.6
15.6
15.2
38.7
14.9
-2.2
0.1
-4.2
-4.5
-3.9
-5.7
0.4
-3.6
2.0
-4.9
-2.9
19.3
-5.9
25.8
10.4
17.3
20.6
30.0
10.5
13.4
16.4
24.1
15.0
14.0
14.6
27.8
15.2
14.3
14.3
36.6
16.6
23.0
29.6
37.3
16.3
18.9
25.0
41.4
20.4
20.3
22.1
41.8
21.4
19.1
20.9
-6.4
-4.5
-5.6
-8.8
-4.4
-4.3
-5.4
-9.3
-16.1
-2.3
-5.9
-8.0
-10.2
-2.3
-4.6
-6.9
14.4
11.8
22.3
26.8
27.1
14.2
23.1
21.5
31.3
29.0
15.3
25.3
24.0
20.1
25.7
27.8
20.1
16.2
16.3
22.2
18.0
27.3
27.6
34.0
22.0
31.2
24.0
30.4
30.7
21.5
33.4
-5.9
-5.2
19.6
16.7
15.9
14.7
15.5
22.9
14.2
-4.0
-11.5
-4.9
-1.0
-1.3
-0.1
-2.2
-4.1
-0.9
-5.6
-2.4
-4.9
-1.7
0.6
-1.9
-2.1
-5.0
10.0
20.5
29.7
14.1
23.5
28.0
19.3
14.3
21.8
21.1
14.7
23.9
28.9
25.1
12.6
21.5
27.4
21.5
-7.4
0.4
-2.9
-0.6
-0.3
-1.0
-7.1
1.8
0.3
-5.8
21.9
17.4
20.1
32.6
24.4
26.3
23.7
22.1
26.5
24.7
28.1
25.8
-2.1
1.8
-4.3
-3.6
22.1
39.8
25.5
25.2
27.0
25.5
22.6
29.9
25.3
22.0
23.5
31.0
28.6
26.7
35.6
27.4
25.7
28.7
-2.9
-2.8
-0.3
1.8
-1.5
-3.1
-4.1
3.3
-2.1
-3.7
25.1
25.0
48.3
26.0
79.5
29.6
26.4
93.4
22.0
22.5
79.1
24.7
22.3
39.2
20.4
86.7
93.1
77.0
86.5
58.6
67.2
90.2
62.4
66.9
83.6
61.3
15.9
-27.2
-0.4
41.8
8.1
-3.5
12.9
4.6
1.1
38.3
34.6
33.8
35.5
32.6
40.8
2.9
2.0
-7.1
24.2
19.5
25.7
25.6
21.6
21.1
216.4
18.2
18.8
26.1
25.1
32.2
20.6
51.9
18.1
68.5
28.3
39.6
32.3
26.3
53.2
29.3
56.8
32.9
31.2
31.6
22.2
186.9
25.3
45.3
30.7
42.1
34.6
28.4
104.1
27.0
-12.2
-2.0
-0.7
-0.6
-0.3
-2.0
-6.1
-2.6
0.7
-7.3
7.2
-4.9
-0.1
-2.1
13.7
13.0
15.2
20.4
9.7
20.9
14.1
13.1
15.6
21.5
8.8
17.9
16.9
13.8
18.7
18.0
13.0
17.9
17.4
13.5
19.6
20.1
16.8
16.9
20.4
20.1
20.6
22.8
17.9
18.9
21.2
20.9
21.3
24.0
19.8
-4.2
-3.2
3.5
-4.3
-5.6
-2.2
-1.4
-3.7
-0.8
-3.5
-6.2
-1.8
-1.5
-3.1
-1.1
-3.7
-7.3
-1.7
-1.4
17.9
26.0
14.8
17.0
18.1
18.7
17.2
22.9
14.1
18.3
11.3
21.7
10.4
22.4
11.2
18.5
9.9
20.3
15.9
26.9
16.1
22.9
16.3
23.2
15.5
24.0
-4.4
-3.9
-5.6
-0.8
-4.9
-1.8
-5.6
-1.3
9.5
14.6
8.5
12.5
14.0
14.3
12.9
13.4
20.4
15.4
12.6
21.9
14.4
16.5
13.5
16.9
16.9
18.6
17.8
17.2
22.4
20.0
16.7
23.3
-3.2
-1.8
-3.7
-4.5
-2.9
-4.6
-3.5
-3.8
-1.9
-4.6
-4.2
-1.3
South and South-West Asia
Afghanistan
Bangladesh
Bhutan
India
Iran (Islamic Rep. of)
Maldives
Nepal
Pakistan
Sri Lanka
Turkey
North and Central Asia
Armenia
Azerbaijan
Georgia
Kazakhstan
Kyrgyzstan
Russian Federation
Tajikistan
Turkmenistan
Uzbekistan
Pacific
American Samoa
Australia
Cook Islands
Fiji
French Polynesia
Guam
Kiribati
Marshall Islands
Micronesia (F.S.)
Nauru
New Caledonia
New Zealand
Niue
Northern Mariana Islands
Palau
Papua New Guinea
Samoa
Solomon Islands
Tonga
Tuvalu
Vanuatu
Asia and the Pacific
Developed countries
Developing countries
LLDC
LDC
ASEAN
ECO
SAARC
Central Asia
Pacific island dev. econ.
Low income econ.
Lower middle income econ.
Upper middle income econ.
High income econ.
Africa
Europe
Latin America and Carib.
North America
World
228
24.0
29.3
27.7
25.6
13.8
21.0
14.0
18.9
27.7
27.4
39.8
56.2
17.7
16.7
25.9
15.8
40.6
31.5
41.9
40.5
93.3
23.4
-0.5
-7.0
-4.6
1.0
-2.7
-2.9
-3.9
-3.2
-4.8
-2.0
-1.8
-2.5
0.4
-3.5
0.4
-3.5
-0.2
-6.3
6.3
-2.3
-1.8