A Cross-Country Database of Fiscal Space

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 200 countries over the period 1990-2016, and
includes 28 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. We illustrate potential applications of
the database by analyzing developments in fiscal space across three time frames: over
the past quarter century; during financial crises; and during oil price plunges. The main
results are as follows. First, fiscal space had improved in many countries before the
global financial crisis. In advanced economies, following severe deteriorations during the
crisis, many indicators of fiscal space have virtually returned to levels in the mid-2000s.
In contrast, fiscal space has shrunk in many emerging market and developing
economies since the crisis. Second, financial crises tend to coincide with deterioration in
multiple indicators of fiscal space, but they are often followed by reduced reliance on
short-term borrowing. Finally, fiscal space narrows in energy-exporting emerging market
and developing economies during oil price plunges but later expands, often because of
procyclical fiscal tightening and, in some episodes, a recovery in oil prices.