What does IMF data say about Australia’s spending and net debt?

Parliament house flag post

What does IMF data say about Australia’s spending and net debt?

Posted 13/06/2014 by Daniel Weight

On page 3 of the 2014-15 Budget Overview, the Government stated that:

the International Monetary Fund (IMF) warns that, without policy change, Australia would record the fastest spending growth of the top 17 surveyed advanced economies and the third largest increase in net debt as a share of the economy.

These claims were based on charts published on page 24 of the IMF’s Article IV Consultation—Staff Report for Australia, which was released in February 2014. One of the IMF’s charts appeared to show that Australia had the highest forecast change in real expenditure between 2012 and 2018 amongst all IMF advanced economies. Another chart appeared to show that Australia had the third highest forecast change in net debt as a percentage of GDP between 2012 and 2018 amongst all IMF advanced economies.

Even before the release of the 2014-15 Budget, the ABC’s FactCheck website concluded that Treasurer Hockey’s ‘comments on growth in spending and debt compared to the 17 nations surveyed by the IMF check out.’  However, economist Steven Koukoulas blogged:  ‘I smell a big, dirty, dead rat in the IMF report on Australia.’  The Kouk (as he is known) asked why certain countries had been omitted from the IMF’s analysis.

The IMF classifies 36 counties as ‘advanced economies.’  These are: Australia, Austria, Belgium, Canada, Cyprus, Czech Republic, Denmark, Estonia, Finland, France, Germany, Greece, Hong Kong SAR, Iceland, Ireland, Israel, Italy, Japan, Korea, Latvia, Luxembourg, Malta, Netherlands, New Zealand, Norway, Portugal, San Marino, Singapore, Slovak Republic, Slovenia, Spain, Sweden, Switzerland, Taiwan Province of China, United Kingdom, and the United States.

In its World Economic Outlook (WEO) database, the IMF releases economic data and forecasts for IMF member counties, including the 36 advanced economies.  The latest release is the April 2014 WEO, which is later than the IMF’s Article IV report, but which predates the 2014-15 Budget. 

Using the April 2014 WEO database to calculate all advanced economies’ forecast change in real expenditure between 2012 and 2018 provides the following results:

Change in Real Expenditure, 2012-2018 (in percent, general government)Graph showing change in Real Expenditure from 2012-2018 (in percent, general government)

Source: IMF World Economic Outlook database, April 2014; Parliamentary Library analysis

While Australia’s forecast real change in expenditure is higher than the average for advanced economies, the claim that it is the fastest amongst all IMF advanced economies is incorrect. The relevant chart in the IMF’s Article IV report, however, tends to suggest otherwise as it omits the following countries, all of which have a higher rate of growth than Australia: Hong Kong SAR, Luxembourg, Estonia, Norway, Israel, and Singapore.

Likewise, using the April 2014 WEO database to calculate all advanced economies’ forecast change in net debt as a percentage of GDP between 2012 and 2018 provides the following results: 

Change in Net Debt, 2012-2018 (in percent of GDP, general government)

Graph showing change in Net Debt from 2012-2018 (in percent of GDP, general government)

Source: IMF World Economic Outlook database, April 2014; Parliamentary Library analysis.
Note: the 2014 WEO does not hold net debt data for: Cyprus, Czech Republic, Hong Kong SAR, Luxembourg, Malta, San Marino, Singapore, Slovak Republic, Slovenia, or the Taiwan Province of China.

On this measure, Australia is forecast to have higher growth in net debt as a percentage of GDP between 2012 and 2018 than the average for IMF advanced economies.  Again, however, the relevant chart in the IMF’s Article IV report may not provide the true picture, as Japan, Finland and Spain are omitted.  The April 2014 WEO database shows that these three countries have a higher forecasted growth in net debt as a percentage of GDP than Australia.

In the IMF’s report, the choice of 17 countries is not consistent between the two charts in question, with the Czech Republic, Finland, Great Britain, Greece, Iceland, Ireland, Japan, and Portugal appearing on one chart but not the other.  Some IMF advanced economies, such as Spain, are not depicted at all.

In response to Senate Estimates questions on the charts in the IMF Article IV report, the Treasury Secretary, Dr Parkinson, agreed that 'having a ... differentiating subset through that series is obviously going to give you a different story compared to one that actually compared Australia against all advanced economies'.  He added that:

definitely switching between different subsets is not something that we would encourage people to do.  

To the extent that the Government and commentators rely upon what is stated in the IMF’s Article IV report, they are not inaccurate.  However, the IMF’s Article IV report may not actually be saying what some people presume it does. 

Thank you for your comment. If it does not require moderation, it will appear shortly.
Facebook LinkedIn Twitter Add | Email Print


Flagpost is a blog on current issues of interest to members of the Australian Parliament

Parliamentary Library Logo showing Information Analysis & Advice




Refugees asylum immigration Australian foreign policy Parliament climate change elections women social security Australian Bureau of Statistics Employment indigenous Australians Sport illicit drugs people trafficking taxation Medicare welfare reform Australian Defence Force higher education welfare policy United Nations health financing gambling Asia Middle East criminal law disability Australian Sports Anti-Doping Agency World Anti-Doping Agency United States federal budget school education forced labour aid statistics Australian Electoral Commission WADA income management Industrial Relations emissions trading dental health Australia in the Asian Century steroids detention Private health insurance OECD ASADA labour force transport Law Enforcement Australian Federal Police people smuggling poker machines National Disability Insurance Scheme Australian Crime Commission 43rd Parliament slavery election results Papua New Guinea Australian Public Service constitution International Women's Day corruption Afghanistan Fair Work Act child protection Aviation debt federal election 2013 parliamentary procedure ALP New Zealand Newstart Parenting Payment political parties Census politics High Court skilled migration voting Federal Court terrorist groups Higher Education Loan Program HECS governance youth paid parental leave environment foreign debt gross debt net debt defence capability customs Senate doping health crime health risks multiculturalism aged care Gonski Review of Funding for Schooling sex slavery sea farers Special Rapporteur leadership United Kingdom UK Parliament Electoral reform banking firearms public policy Population violence against women domestic violence mental health China ADRV terrorism science research and development social media pensions welfare ASIO intelligence community Australian Security Intelligence Organisation accountability public service reform Carbon Pricing Mechanism carbon tax mining military history employer employee fishing by-election European Union same sex relationships international relations coal seam gas family assistance planning Senators and Members United Nations Security Council Australian economy food vocational education and training Drugs health reform Indonesia children codes of conduct terrorist financing health system money laundering early childhood education Canada Financial sector national security fuel disability employment Tasmania integrity transparency Australian Secret Intelligence Service sexual abuse federal state relations World Trade Organization Australia housing affordability bulk billing water renewable energy children's health health policy Governor-General US economy export liquefied natural gas foreign bribery question time speaker superannuation expertise climate Intergovernmental Panel on Climate Change Department of Agriculture Fisheries and Forestry food labelling Pacific Islands reserved seats new psychoactive substances synthetic drugs UNODC carbon markets Indigenous constitutional recognition of local government local government consumer laws PISA royal commission US politics language education baby bonus Leaders of the Opposition Parliamentary remuneration Australia Greens federal election 2010 servitude Trafficking Protocol energy forced marriage rural and regional Northern Territory Emergency Response ministries social citizenship human rights emissions reduction fund; climate change child care funding refugees immigration asylum procurement Indigenous health e-voting internet voting nsw state elections 44th Parliament 2015 ABS Age Pension Death penalty capital punishment execution Bali nine Bali bombings Trade EU China soft power education Fiji India Disability Support Pension Antarctica Diplomacy by-elections state and territories workers Bills anti-corruption fraud bribery corporate ownership whistleblower G20 economic reform innovation standards NATO Members of Parliament Scottish referendum Middle East; national security; terrorism social services Criminal Code Amendment (Misrepresentation of Age to a Minor) Bill 2013 online grooming sexual assault of minors ACT Assembly public health smoking plain packaging tobacco cigarettes Asia; Japan; international relations Work Health and Safety Migration; asylum seekers; regional processing China; United States; international relations fiscal policy Racial Discrimination Act; social policy; human rights; indigenous Australians Foreign policy Southeast Asia Israel Palestine regional unemployment asylum refugees immigration political finance donations foreign aid Economics efficiency productivity human rights; Racial Discrimination Act employment law bullying asylum seekers Animal law; food copyright Australian Law Reform Commission industry peace keeping contracts workplace policies trade unions same-sex marriage disorderly conduct retirement Parliament House standing orders public housing prime ministers election timetable sitting days First speech defence budget submarines Somalia GDP forestry world heritage political engagement leave loading Trade; tariffs; safeguards; Anti-dumping public interest disclosure whistleblowing Productivity Commission regulation limitation period universities Ireland cancer gene patents genetic testing suspension of standing and sessional orders animal health live exports welfare systems infant mortality middle class welfare honorary citizen railways disciplinary tribunals standard of proof World Health Organisation arts international students skilled graduate visas temporary employment visas apologies roads Italy national heritage NHMRC nutrition anti-dumping Constitutional reform referendum Rent Assistance competition policy pharmaceutical benefits scheme obesity evidence law sacrament of confession US presidential election international days DFAT UN General Assembly deregulation Regulation Impact Statements administrative law small business Breaker Morant homelessness regional engagement social determinants of health abortion Youth Allowance Members suspension citizen engagement policymaking workplace health and safety Trafficking in Persons Report marine reserves hearing TAFE Victoria astronomy resources sector YMCA youth parliament alcohol Korea rebate Australian Greens presidential nomination Racial Discrimination Act entitlements political parties preselection solar hot water Financial Action Taskforce Horn of Africa peacekeeping piracy Great Barrier Reef Stronger futures political financing Hung Parliament political education social inclusion Social Inclusion Board maritime early childhood National Quality Framework for Early Childhood Education and Care Murray-Darling Basin Iran sanctions Norway hospitals republic President Barack Obama Presidential visits ANZUS qantas

Show all
Show less
Back to top