Abstract
Abstract In the aftermath of the COVID-19 pandemic the narrative emerging out of the International Monetary Fund (IMF) stresses avoiding a divergent recovery, whereby some countries steam ahead with high growth rates while others fall behind. In this account, the postcrisis period should not witness budget cuts, but investment in employment and human capital formation. Is austerity a thing of the past? This chapter reviews available evidence, focusing on public spending projections by the IMF and the precise content of IMF lending arrangements. Overall, the chapter shows that the abandonment of austerity argument is partially true now, but questionable in the medium term. An original analysis of public expenditure projections reveals that by 2023, 86 out of 189 countries—mostly middle-income ones—will face contractions in government spending compared to their 2010s average, thereby exposing a cumulative total of 2.3 billion people to the socioeconomic consequences of budget cuts.
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