Budget deficits and debt: a summary of the Bank's 1995 Symposium

Chronic government budget deficits and escalating government debt have become major concerns in both developed and developing countries. To address the far-ranging implications, the bank's 1995 symposium in Jackson Hole, Wyoming, brought together a distinguished group of central bankers, finance ministers, academics, and financial market representatives from around the world.> Weiner summarizes the papers and commentary presented at the symposium. The discussions were marked by unusually strong agreement on several points. First, most participants agreed that government deficits and debt are already excessive and will become unsustainable as aging populations increasingly draw on unfunded pension and health care programs. Second, large and growing fiscal imbalances harm economic performance, impose unacceptably large burdens on future generations, and raise the risk of major financial market disruptions. Third, solutions to the deficit and debt problem should stress spending reductions, not tax increases. And fourth, fiscal reforms will need to be decisive, transparent, and equitable if they are to receive public support.