Governments must adapt their approaches to public spending

A fiscal crisis is looming across the world. Governments face tepid productivity growth, which is constraining revenues. Meanwhile, pressures on the expenditure side will continue to mount over the coming years owing to rising interest payments, ageing populations, asset maintenance and climate change.

Long-term fiscal projections make for grim reading. For instance, the Congressional Budget Office forecasts that the total US federal deficit will rise to 8.5% of gross domestic product over the next 30 years, from 5.6% in 2024. The IMF projects that global public debt will approach 100% of GDP by the end of the decade. It is something of a fantasy to expect that governments can operate under current conditions for a prolonged period.

Against this backdrop, OMFIF has published a new report in collaboration with EY. ‘The future of public money’ outlines the need for an urgent rethink of how public spending is framed, conducted and evaluated to ensure governments can meet growing societal demands while improving the sustainability of public finances.

To inform this report, OMFIF and EY conducted three steering committee meetings with public finance experts from organisations including the International Monetary Fund, US Treasury, US Congress, European Commission, UK National Audit Office, rating agencies, banks and academia. These insights are supplemented by analysis of external reports and OMFIF’s research.

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