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Working paper: Fiscal space for health

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Adrian Gheorghe

Adrian Gheorghe

Fiscal space, in its broadest sense, refers to ‘the capacity of government to provide additional budgetary resources for a desired purpose without any prejudice to the sustainability of its financial position’. It refers to the effort to create room within the budget for additional spending while at the same time not jeopardising the fiscal stability of the economy.

For some, ‘fiscal space’ is defined less in terms of the emphasis on the ‘gap’ or ‘room’ in the budget for ‘additional’ spending and more in terms of political economy factors. They define fiscal space as ‘the financing that is available to government as a result of concrete policy actions for enhancing resource mobilisation, and the reforms necessary to secure the enabling governance, institutional, and economic environment for these policy actions to be effective, for a specified set of development objectives’. This definition implies a long term outlook and is more pragmatic in terms of integrating an analysis of feasible policy options in light of exiting political settlement in the country.

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