Fiscal Policy Paper: Financial Year 2011/2012

Fiscal Responsibility Statement: Over the past two decades, the world has seen bouts of financial crises, most notably: Mexico in 1995; South-East Asia in 1997; Russia in 1998; and, more recently, the United States in 2008. Each crisis had a major contagion effect and devastated several economies directly and indirectly. The crises confirmed that public debt constitutes one of the main sources of risk to economic growth and employment. Empirical evidence points to a negative correlation between economic growth rates and public debt accumulation. When the dimension of expectations in a globalized world is added, it brings into sharp focus the need to sustain consistent and credible fiscal policies over time. The necessity of dealing with financial volatility in capital markets has compelled most economies, mainly emerging and developing economies, to embrace credibility through the adoption of measures aimed at strengthening the macroeconomic fundamentals.

Additional Resource 1: 

fiscal_policy_paper2011-12_0.pdf