Monetary and fiscal support from central governments successfully accelerated the economic recovery from COVID-19. While GDP growth slowed, revenues and expenditures at subnational government levels were stabilized due to central support and reliance on stable tax bases. Despite vaccination programs, COVID-19 death rates remain high, and the future outlook is uncertain as infections rise again in winter months. Central government fiscal positions are now more fragile, and inflation and potential interest rate hikes could increase debt burdens across levels of government.

1. INTERGOVERNMENTAL
RELATIONS AND THE COVID-
19 CRISIS: EARLY LESSONS
Interim Meeting of the Network on Fiscal Relations Across Levels of
Government
22-23 November 2021
Sean Dougherty, Senior Advisor and Head of Secretariat, Network on Fiscal Relations

2. © OECD |
Monetary and fiscal support have been successful in
accelerating the economic recovery, shaped as a √
2
Intergovernmental Relations and the COVID-19 Crisis: Early lessons
Slow recovery
Quick recovery
Quarterly GDP growth rate in OECD countries (average in bold)
Source: OECD Economic Outlook database

3. © OECD |
The impact of the crisis at the subnational level was alleviated due to
central support and the reliance of SNGs on more stable tax bases
3
Intergovernmental Relations and the COVID-19 Crisis: Early lessons
Nominal growth of revenues (left) and expenditures (right) of different levels of government between 2019 and 2020
Source: OECD System
of National Accounts –
unconsolidated

4. © OECD |
Despite the success of vaccination programmes, COVID-19 related deaths
are at same rate as in 2020, for latest periods in OECD & partner countries
4
Intergovernmental Relations and the COVID-19 Crisis: Early lessons
Source: Fiscal Federalism 2022, based on country time series data from Our World in Data and John Hopkins University (https://github.com/owid/covid-19-data/tree/master/public/data)
Number of COVID-19 related deaths per month in OECD and partner countries
0
50,000
100,000
150,000
200,000
250,000
300,000
350,000
400,000
European Union United States Brazil India Mexico United Kingdom
Colombia South Africa Turkey Chile Canada Japan
Israel China South Korea Australia New Zealand
Same period

5. © OECD |
The share of
people who
received at
least one
dose of
COVID-19
vaccine has
increased
substantially
since June
5
Intergovernmental Relations and the COVID-19 Crisis: Early lessons
Source: Our World in Data
Share of people who received at least one dose of COVID-19 vaccine

6. © OECD |
Future outlook is uncertain
6
Intergovernmental Relations and the COVID-19 Crisis: Early lessons
1) Infections are increasing again as the winter months approach (in the
North), but likely to be less lethal than before based on vaccinations
2) The possibility of targeted lockdowns aimed at containing the virus may
negatively affect economic activity, while the fiscal positions of central
governments are more fragile now than they were in early waves
3) Inflation is rising in most OECD countries, which may trigger interest rate
rises, increasing debt burdens across levels of government
4) How soon can we return to “normal” and how soon can we revisit our
intergovernmental institutions?

7. Bienvenue!
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