9.6 percentage points. In other words, the brakes were applied and the car slowed down but the previous level of momentum was so high that it continued moving forward at a rate of 9.6 percentage points. Discretionary items however had a negative force of 5.6 percentage points and this thrust the car into reverse at a momentum or speed of -5.0 percentage points. This is because discretionary items were already travelling at a much slower momentum of only 0.6 percentage points in 2008 so applying a strong negative force would propel discretionary expenditures to have a negative momentum which means it was experiencing negative growth.

The Moldova example highlights the importance of momentum and force viewed together. Items that have developed large momentum will require a large amount of force to slow down or if necessary, reverse. Rigid items though tend to be harder to apply negative force too because of the issues defined in section 3. Discretionary items tend to have much larger force numbers given the easier ability to ramp up spending or slash spending of these categories of spending as required. For Moldova however, the amount of discretionary expenditures as a share of the budget is falling and when seen as a buffer available for policy makers to maintain fiscal sustainability – the stocks are very low. Policy makers in Moldova over recent years have reined in expenditure to GDP (Figure 23) but this has been matched by a corresponding fall in revenues to GDP (Figure 22) and future attempts to improve the fiscal deficit must also take a serious look at the other 86 percent of the budget (rigid expenditures) to make serious inroads (Figure 11). (For a detailed breakdown see Case study: force toolkit applied to Moldova.) The higher volatility that would be typically associated with discretionary expenditure can be seen with Paraguay (Figure 19). In seven out of the eight years of force data in Paraguay discretionary expenditures were larger in absolute movements than they were for rigid expenditures. The most notable burst of force was the 22.5 percentage point outcome in 2012 for discretionary expenditures which alone breached the two year threshold derived in section 4. However through the detailed expenditure it can be seen that this was largely driven by an exceptional transfer to the central bank and as such not likely to lead to a future crisis. Notably the second largest contribution was wages, a rigid expenditure that can prove difficult to unwind.

In the case of Armenia, as demonstrated in Figure 18, the momentum in discretionary expenditures was highest prior to the crisis then fell strongly during the crisis in 2008. With the exception of 2009 when there was a temporary pick up, momentum of discretionary items was generally low or negative after the crisis. On the other hand rigid expenditures accelerated during the crisis before slowing down but continuing to gain momentum of around five percentage points a year through to 2012. The overall momentum of the budget slowed down from 31 percent in 2007 to 20 percent in 2008, largely driven by cuts to discretionary expenditures. On the other hand rigid expenditures, led by pension expenditures, actually gained momentum during the crisis.