Fiscal sustainability: Breaking BRIC piggy banks | The Economist:
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SINCE 2009 the word “austerity” has not been too far away from the lips of finance ministers across the globe. Deficits and debt-to-GDP ratios around the world surged due to the financial crisis, and it was felt that they were fast becoming unsustainable. Once the immediate danger of the global recession passed politicians across the globe rushed to reduce their budget deficits (often using, as an excuse, the publication of a now infamous paper written in 2010 by Carmen Reinhart and Kenneth Rogoff, suggesting that growth slows down in countries with debt-GDP-ratios of over 90%).
Some countries had extraordinary success in tightening their fiscal balances. America, for instance, managed to cut its budget deficit from over 12% of GDP in 2010 to an estimated 4% in 2013. Others still have much more work to do. International Monetary Fund (IMF) forecasts suggest that the developed world, as a whole, will not have a balanced fiscal position until 2018, even before paying interest on government debt.
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