Southern Public Administration Education Foundation  Assessing
fiscal sustainability in the G-7 countries  Published in PFM,
Vol. 8 No. 3  Rising longevity, falling fertility rates, and the
retirement of the baby boom generation will substantially raise
age-related government spending in most advanced and many
emerging market countries. This paper assesses the evolution of
fiscal sustainability for each of the G-7 countries using two
standard primary gap indicators. The estimated fiscal adjustment
required to ensure long-run fiscal sustainability is substantial
for all G-7 countries. In particular, ensuring fiscal
sustainability would require an average improvement in the
primary balance of about 4 percentage points of GDP. While the
overall adjustment required to achieve long-run fiscal
sustainability in G-7 countries is large, there are significant
growth benefits to putting public finances on a sustainable
footing in the near term versus delayed adjustment.
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