Theoretical Considerations on the Fiscal Space

Abstract

This paper aims to capture the concept of fiscal space, which in principle denotes the amounts that governments can use to finance unforeseen or development expenditures without jeopardizing the country's fiscal sustainability, as well as the factors on which the size of available fiscal space depends. The importance of the fiscal space is highlighted again starting with 2020, with the covid-19 pandemic, when aid measures for some sectors of activity and the affected active population have requested additional amounts from governments, but the possibilities for intervention need to be calculated taking into account public debt, budget balance, tax collection performance and the ability to allocate resources efficiently.

Keywords

• fiscal space
• public debt
• cost efficiency