ABSTRACT
This chapter examines a number of policy recommendations that can help developing Asia harness fiscal policy to promote inclusive growth. These recommendations can be categorized into five broad groups: overall fiscal policy directions; fiscal spending policy; fiscal revenue policy; fiscal planning for inclusive growth; and fiscal innovation for inclusive growth. Pursuing inclusive fiscal policy is not, however, just a matter of spending more: it is also better targeting spending at the poor and spending on programs that benefit the poor. The challenge for Asian policy makers is to raise sufficient revenue to support more inclusive fiscal policy without harming growth. Effectively using fiscal policy to reverse widening inequality requires a planning tool with explicit equity objectives: the medium-term fiscal framework for inclusive growth. Fiscal policy is a powerful tool for promoting more inclusive growth as is evident in the experiences of other countries, especially of the advanced economies.
