by Isabel Ortiz and Matthew Cummins

This paper warns of an emerging post-pandemic fiscal austerity shock—one that is far more
premature and severe than the one that followed the global financial crisis—and presents
alternative options to ensure that populations do not yet again have to suffer from austerity cuts. It
does so by: (i) examining IMF government expenditure projections until 2025; (ii) summarizing
the most common austerity measures to be avoided given their negative social impacts; and (iii)
calling on governments to urgently create fiscal space to finance an equitable socio-economic
recovery and progress toward human rights and the Sustainable Development Goals (SDGs).

Analysis of expenditure projections shows that austerity cuts are expected in 154 countries in 2021,
and as many as 159 countries in 2022. The trend continues at least until 2025, with an average of
139 countries each year, according to IMF projections contained in the October 2020 World
Economic Outlook database. Austerity is projected to affect 5.6 billion persons in 2021 or about
75% of the global population, rising to 6.6 billion or 85% of the world population in 2022. By
2025, 6.3 billion people or 78% of the total population may still be living under austerity.

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