October 29, 2004
Aging populations. Climate change. Scarce water. Costly medical advances. Globalization. Security threats. As they look ahead, policymakers around the world today can foresee, with reasonable certainty, a number of troubling long-term developments taking place in their economies and their societies. Given the expanded role of government in most countries today, and given existing policy commitments, these developments are likely to have fiscal consequences that will burden public budgets for decades to come. Policymakers everywhere therefore need urgently to address the following questions: Has the time come for their governments to adapt their current fiscal policy framework and fiscal institutions to address these risks to long-run fiscal solvency? And, if such changes are necessary, what kinds of specific strategies should they pursue over the short-to-medium run? Finally, how will they assess-and persuade their citizens to accept-the short-term costs that may be entailed, and how will they come to grips with the problems of formulating policy in a world where these long-term challenges, however certain to occur, are maddeningly uncertain in their manifestation and timing.
Dr. Peter S. Heller is the Deputy Director, Fiscal Affairs Department, International Monetary Fund. Educated at Trinity College (USA) and receiving a Doctorate in Economics from Harvard University, Dr. Heller taught economics at the University of Michigan in Ann Arbor from 1971-77. Since then, he has worked for the IMF, working largely on fiscal policy issues in countries as diverse as China, India, Somalia, Thailand, Japan, Ethiopia, Korea, Kenya, Indonesia, Israel, Jordan, Bosnia, Slovenia, and Russia. He has published extensively in a number of areas, relating principally to fiscal policy, economic development and poverty reduction, aging populations, public expenditure policy, health care reforms in developing countries, pension and civil service reform, climate change, privatization, and globalization. In recent years, he participated in the World Health Organization's Commission for Macroeconomics and Health and is presently a member of the Millennium Task Force of the Millennium Project of the United Nations. He is the author of the recent book "Who Will Pay? Coping with Aging Societies, Climate Change, And Other Long-Term Fiscal Challenges."