Murdoch University Research Repository

Welcome to the Murdoch University Research Repository

The Murdoch University Research Repository is an open access digital collection of research
created by Murdoch University staff, researchers and postgraduate students.

Learn more

Creating fiscal space to pay for pension expenditure in Asia

Asher, M.G. and Bali, A.S. (2017) Creating fiscal space to pay for pension expenditure in Asia. Economic and Political Studies, 5 (4). pp. 501-514.

Link to Published Version:
*Subscription may be required


Many Asian countries are projected to age rapidly and will need to devote a larger proportion of their GDP to finance age-related expenditure including on pensions. Governments therefore will have to create additional fiscal space to fund such expenditure to sustain the credibility of existing pension promises. This paper presents an exploratory framework for creating fiscal space. The framework has three interrelated components: enhancing broad-based growth, improving revenue performance and better expenditure management. The paper distinguishes between funding of pensions, i.e. the share of GDP devoted to pensions, and financing of pensions, i.e. the different methods and instruments used to finance pensions. The focus of the paper is on funding, and the framework relies on both the income-expenditure flows and the government balance sheet to create fiscal space. Several examples of how potential fiscal space can be created in Asian economies of China, India and Indonesia to make their pension promises more credible are provided. The paper emphasises that the measures discussed for enhancing fiscal space should not be undertaken as a purely technical exercise, but should be combined with managing the political economy in a given context.

Item Type: Journal Article
Murdoch Affiliation(s): School Of Business and Governance
Publisher: Taylor & Francis Ltd
Copyright: © 2017 Economic and Political Studies
Item Control Page Item Control Page