E SchizaPublic sector conference presentation 2012

The global body for professional accountants

A new age of constraints.


About the GECS

• ACCA’s quarterly economic survey• 3+ years of records

•ACCA: Q1 2009 to Q3 2011•ACCA and IMA: Q4 2011 to date

• The largest and broadest of its kind•2,500 responses per quarter (1.6% error)•Ca. 10% in the public sector•Only IFAC SMP poll surveys more


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Q1 2009 Q2 2009 Q3 2009 Q4 2009 Q1 2010 Q2 2010 Q3 2010 Q4 2010 Q1 2011 Q2 2011 Q3 2011 Q4 2011 Q1 2012 Q2 2012 Q3 2012

AmericasMiddle EastAsia PacificCentral and Eastern EuropeSouth AsiaWestern EuropeAfrica


The fiscal response.


Spending will grow

Spending will fall

Government will overspend

Government will underspend

Cyprus

USA

Australia

Ireland

UKCanada

UAE

Ghana

Pakistan

Trinidad & Tobago

Nigeria

Uganda

Saudi Arabia

Mauritius

China

Russia


1. Efficiency.


INEFFICIENCY COSTS REVENUE

• Shift in public attitudes• Low returns on public spending• Loss of revenue due to poor tax

administration• Lower tax morale• More so in a recession


2. Fiscal slippage.


IMF: “We got fiscal

multipliers wrong. We assumed 0.5; they are between

0.9 and 1.7”


More significant influence on confidence

ACCA/IMA 2012: Global Economic Conditions Survey Q4 2011

Revenues falling

Global economy seen as making progress

New orders falling

Very good policies

Austerity

Sector-specific factors

Poor policies

Access to growth capital

Business size

Unstable customers

Value-added business opportunities


More significant influence on investment

ACCA/IMA 2012: Global Economic Conditions Survey Q4 2011

Falling new orders

Falling revenues

Potential for new orders?

Profitable projects

Sector-specific

Finance & Gov support

SME

‘Excessive’ austerity

Unstable customers

Global Economy improving

‘Excessive’ spending

Unstable suppliers

Poor policy


Labour taxes only Capital taxes only Labour &capital taxes Real 10 yr yields

Max add tax yield/GDP

Max interest rate


Max interest rate


Max interest rate

GDP Cons

Mathias Trabandt & Harald Uhlig, 2012. "How Do Laffer Curves Differ Across Countries?," NBER Chapters, in: Fiscal Policy after the Financial Crisis, National Bureau of Economic Research, Inc.


3. Liquidity and Solvency


Arlsanalp & Tsuda, 2012. “Tracking global demand for advanced economy sovereign debt," IMF Working Papers 12/284, International Monetary Fund


DEBT SUSTAINABILITY

• Debt < (NPV of future fiscal surpluses)• This is a moving target in every way.• In practice, policymakers use arbitrary

thresholds•120% debt/GDP is the best example


Delia Velculescu, 2010. "Some Uncomfortable Arithmetic Regarding Europe’s Public Finances," IMF Working Papers 10/177, International Monetary Fund


Population Division of the Department of Economic and Social Affairs of the United Nations Secretariat, World Population Prospects: The 2010 Revision, http://esa.un.org/unpd/wpp/index.htm


4. Perceptions and generalisations.


Germany Greece Denmark

Outside general government

Within general government

Government employees as % of the labour force


5. Competitiveness.


Thanks!

E SchizaPublic sector conference presentation 2012

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