A cross-country database of fiscal space

Abstract

This paper presents a comprehensive cross-country database of fiscal space, broadly defined as the availability of budgetary resources for a government to service its financial obligations. The database covers up to 202 countries over the period 1990–2020, and includes 30 indicators of fiscal space grouped into four categories: debt sustainability, balance sheet vulnerability, external and private sector debt-related risks as potential causes of contingent liabilities, and market access. Using the database, the paper, first, documents the weakening of fiscal space in the 1990s, the broad-based improvement over the first decade of the 2000s, and the synchronized deterioration over the subsequent decade heading into the global recession of 2020. Second, it analyzes the behavior of fiscal space during a wide range of adverse events, including banking crises, natural disasters, and wars. The results show that some of these events coincide with a lasting deterioration in fiscal space whereas others tend to have at most short-lived consequences for fiscal space.