Fiscal Rules and Fiscal Councils: Recent Trends and Performance during the COVID-19 Pandemic

Abstract

IMF Working Papers describe research in progress by the author(s) and are published to elicit comments and to encourage debate. The views expressed in IMF Working Papers are those of the author(s) and do not necessarily represent the views of the IMF, its Executive Board, or IMF management.

Sovereign debt responses to the COVID-19 pandemic

“…Our findings have important policy implications. First, our study speaks to the current debate on whether governments should relax or suspend existing fiscal rules to accommodate expansive fiscal policies (see, for example, Medas et al, 2022 ). While policies should be adaptive, certain principles are worth sticking to, and fiscal rules are one of these according to our study.…”

Determinants of compliance with fiscal rules: Misplaced efforts or hidden motivations?

“…In addition to the abovementioned dataset, another influential and more general database is the IMF FAD Fiscal Rules Dataset by Davoodi et al (2022). We use information from both sources to detail the rules that have been implemented in LAC.…”

“…Numerical targets are usually set on Budget Balance, Debt, Expenditure, or Revenue. See Kopits and Symansky (1998); Schaechter et al (2012); Eyraud et al (2018); Davoodi et al (2022) for details.…”

“…Finally, the need for fiscal rules to react to unexpected shocks has been highlighted at the operational level. Specifically, over time, several countries have included some features in the design of the rule to give them a greater degree of flexibility, transparency, and accountability (see Schaechter et al (2012); Eyraud et al (2018); Davoodi et al (2022)). To the extent that the rules' design responds to the countries' needs, it is possible that the compliance record will improve since it would no longer be affected by unforeseen situations.…”

West African Economic and Monetary Union

“…No time horizon was specified to reinstate the rules and other convergence criteria. However, in June 2021, Heads of States of all WAEMU countries committed along with their peers from other ECOWAS countries to converging toward the fiscal deficit anchor over the years 2024-26"(Davoodi et al (2022)). It is also worth noting that the fiscal rules expired following its suspension.©International Monetary Fund.…”