The OECD recommended that member countries today to reduce the level of public debt to a maximum of 50% of gross domestic product (GDP) to protect against possible future difficulties, such as the impact of aging.
Japan, New Zealand, USA, Ireland and the UK are the countries that need a budget adjustment most important and immediate with a view to reach that 50% of GDP by 2050, according to a report released today by the Organization for Economic Cooperation and Development (OECD).
All these countries need a correction of at least nine points of GDP (up to twelve in the case of Japan) in medical expenses, long-term care for elderly or disabled and pensions.
The cut should be between six and four points of GDP in descending order for the Netherlands, Belgium, Finland, Canada, France, Slovakia, Germany, Poland, Austria, Czech Republic, South Korea and Spain.
The least-present needs four to two points of GDP, are Hungary, Greece, Australia, Portugal, Italy, Switzerland, Denmark and Sweden.
The authors found that states such as Spain, Greece, Ireland, Iceland and Portugal have launched efforts to consolidate public finances “very ambitious” view of the past, with cuts of between 5% and 12% of GDP.
They added that others, particularly the U.S., Japan and the United Kingdom, must proceed with scissors budget of more than 5% of GDP.
“Given the weight of an aging population and other expenses, the reform of entitlement programs to benefit should occupy a large space in any strategy to ensure the long term,” he said.
The OECD identified areas of savings which are either favorable to economic growth or have few negative effects, and, depending on the country, representing between 4% and 10% of GDP.
These efficiency improvements in health or education, but also expanding the tax base of tax for the removal of exemptions or deductions.
In the case of Spain, for example, has estimated that encrypted with different items, you can achieve fiscal consolidation equivalent to 7.3% of GDP, of which 1.6 points obey to increased efficiency in health care, a 1.4 VAT (reducing the sectors applying a reduced rate) or a point with the wage bill of government.
Category: Mutual Funds