Whilst one may be able to discount our negative long-term projections due to the uncertainty involved in such forecasts, based on the demographic transition that is underway, one cannot ignore their general negative direction.
Many advanced countries face fiscal challenges that — rather than primarily evolving from prior debt obligations — concern future obligations, with an increasing impact on primary deficits. These obligations are primarily associated with the cost of providing pensions and healthcare in the face of growing old-age dependency ratios. These ‘demographic and health’ deficits present a number of challenges to the formulation and implementation of future fiscal adjustments.