Fiscal crisis in PIIGS (Portugal, Ireland, Italy, Greece and Spain) in the wake of the Greek’s economic crisis caused to express discomfort on their fiscal sustainability. Despite of some measure for ensuring fiscal consolidation to get relief loan from the EU and IMF, those cannot make sure to overcome unfolding economic crisis. Therefore, the purpose of this report is to present the policy implications to achieve fiscal consolidation after global financial crisis.

    Debt crisis of PIIGS comes from economic factors which are fundamental but vulnerable, such as structural failures of EMU system, weak manufacturing indus-tries and sharp rise in external debts from intra-Europe. In terms of financial condi-tions of PIIG countries, they are faced with significant problems such as low tax revenue along with huge shadow economy and increased mandatory expenditure. After the financial crisis, most countries undertake massive stimulus package to bring the world economic recovery on track. While lack of transparency and result-oriented are reasons to trigger the fiscal crisis, the budget process is considered as being fragmented, time-consuming.

    The main points that have been made in this report are as follows: Firstly, Pay-as you-go rules in new entitlement spending such as pension, health care as well as social security benefits and new tax cut should be phased in over a few years. Sec-ondly, fiscal discipline should be fostered by adopting fiscal rules. Thirdly, The legal-ization of underground economy, broadening tax base via modification of non-taxable and reduction, establishment of liability management strategies in state-owned companies and public enterprises must be considered to enhance fiscal consolidation. Lastly, transparency of fiscal statistics should be restored in order to regain robust confidence in itself.