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Business and Economics > Budgeting

You are looking at 1 - 10 of 17 items for :

  • Type: Journal Issue x
  • Policy Objectives; Policy Designs and Consistency; Policy Coordination x
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Cover IMF Working Papers
Gender Budgeting in G20 Countries
Virginia Alonso-Albarran
,
Ms. Teresa R Curristine
,
Gemma Preston
,
Alberto Soler
,
Nino Tchelishvili
, and
Sureni Weerathunga
Achieving gender equality remains a significant challenge, that has only deepened with the on-set of the COVID-19 pandemic. Gender budgeting (GB) can help promote gender equality by applying a gender perspective to fiscal policies and the budget process. This paper takes stock of GB practices in G20 countries and benchmarks country performance using a GB index and data gathered from an IMF survey. All G20 countries have enacted gender focused fiscal policies but the public financial management (PFM) tools to operationalize these policies are far less established. We find that notwithstanding heterogeneity across countries, the average G20 level of GB practice is relatively low. More progress has been made establishing GB frameworks and budget preparation tools than with budget execution, monitoring and auditing. Too few countries assess the upfront impact of policies on gender and/or evaluate ex-post the effectiveness of policies and programs. Where GB features are in place, they tend to operate as an ‘add-on’, rather than a strategic and integral part of resource allocation decisions. Progress with GB does not appear to be dependent on the level of country development. Key to future efforts will be harnessing opportunities for integrating GB tools into existing PFM systems and more closely linking GB initiatives with PFM reforms.
Keywords:
G20; Gender Equality; Gender Budgeting; Public Financial Management; GB practice; GB tool; Gender budgeting (Gb; GB index; IMF Gender Budgeting approach; Gender inequality; Gender budgeting; Budget planning and preparation; Women; Africa
Cover IMF Working Papers
Individual Treatment Effects of Budget Balance Rules
Mr. Francesco Caselli
and
Mr. Philippe Wingender
This paper investigates the heterogenous effects of budget balance rules on fiscal policy in a large sample of countries. To derive country-specific treatment effects of fiscal rules and conduct inference, we use a Synthetic Difference-in-Differences Method. Our results indicate that countries with a budget balance rule improve their fiscal balance on average by around 3 percent after its introduction. However, our results also illustrate the importance of going beyond the average treatment effect, as it masks significant heterogeneity in the country-specific impact of the rule. We find that countries that would have had large deficits in the absence of the fiscal rule exhibit positive treatment effects, thus reducing their budget deficits. On the other hand, countries with budget surpluses respond to fiscal rules by reducing their budget surplus and moving closer to the numerical target of the rule. Our results also suggest that rules’ design matters: a small overall number of fiscal rules, and the presence of a monitoring process outside the government, especially at the supra-national level, improve significantly the effectiveness of the rules.
Keywords:
fiscal policy; heterogeneous treatment effects; synthetic control; difference-in-differences; WP; treatment effect; budget balance rule; donor country; balance rule; distribution of treatment effect; effects from the baseline SDD specification; effects from the SDD specification; treatment effects from the SDD analysis; treatment fit
Cover IMF Working Papers
Review of the Public Financial Management Reform Strategy for Pacific Island Countries, 2010-2020
Mr. Richard I Allen
,
Ms. Majdeline El Rayess
,
Laura Doherty
, and
Priya Goel
This paper reviews the Public Financial Management (PFM) reform stategy for 16 Pacific Island Countries (PICs) during the period 2010-2020. The strategy was endorsed by the finance and economic ministers of the region (FEMM) in 2010. The paper analyzes more than 30 PEFA assessments carried out across the region. The region shares the generally slow pace of PFM reform that is also a feature of most developing countries. Some PICs have improved their PFM performance significantly, while others have done less well. PFM reforms have suffered from the small size and low capacity of many PICs, poorly designed PFM roadmaps, variable political suppport for reform, and vulnerability to natural disasters. The paper recommends that in the next five years, there should be a more granular and targeted approch to PEFAs. PICs should focus on basic PFM reforms and (where capacities allow) more transparent public finances, as well as better management of climate change considerations, public infrastructure, gender inequalities, and state-owned enterprises. Perseverance by countries in implementing reforms and leadership by finance ministries are critical. PFTAC’s advice is highly regarded across the region, and it could consider alternative modalities of CD delivery and stronger coordination with other development partners.
Keywords:
WP; PEFA assessment; PFM advisor; PFM reform; PFM performance; PFM system; CD activity; Public Expenditure and Financial Accountability (PEFA); Budget planning and preparation; Fiscal risks; Budget execution and treasury management; Pacific Islands; Pacific Islands Countries; public finance management (PFM) reform; PFTAC; PEFA
Cover IMF Working Papers
Independent Fiscal Councils: Recent Trends and Performance
Mr. Roel M. W. J. Beetsma
,
Mr. Xavier Debrun
,
Xiangming Fang
,
Young-Bae Kim
,
Victor Duarte Lledo
,
Samba Mbaye
, and
Xiaoxiao Zhang
Countries increasingly rely on independent fiscal councils to constrain policymakers’ discretion and curb the bias towards excessive deficits and pro-cyclical policies. Since fiscal councils are often recent and heterogeneous across countries, assessing their impact is challenging. Using the latest (2016) vintage of the IMF Fiscal Council Dataset, we focus on two tasks expected to strengthen fiscal performance: the preparation or assessment of forecasts, and the monitoring of compliance with fiscal rules. Tentative econometric evidence suggests that the presence of a fiscal council is associated with more accurate and less optimistic fiscal forecasts, as well as greater compliance with fiscal rules.
Keywords:
WP; output gap; bond yield; interest rate; independent fiscal councils; fiscal rule compliance; fiscal forecasts; fiscal council; IFC dummy; government effectiveness; absolute value; EU law; council interaction; public finance; Fiscal councils; Fiscal rules; Fiscal stance; Budget planning and preparation; Europe; Global
Cover IMF Working Papers
Australia’s Fiscal Framework: Revisiting Options for a Fiscal Anchor
Allan Dizioli
,
Mr. Philippe D Karam
,
Mr. Dirk V Muir
, and
Siegfried Steinlein
This paper revisits options for fiscal anchors in Australia against the backdrop of a medium-term budget balance anchor that has led to larger than expected upward drift in the net debt to GDP ratio since the end of the mining investment boom. The IMF’s G20MOD model is used to compare the budget balance anchor with a long-term debt anchor. Using model simulations evaluated against objective macro stabilization-debt control criteria under three likely scenarios for the Australian economy, the latter is found to perform at least as well as the former. The paper also considers the operationalization of a long-term debt anchor utilizing a combination of fiscal rules which includes expenditure restrictions and a flexible time horizon for convergence, aiming at encouraging countercyclical fiscal policy and minimizing the cost in terms of real GDP foregone in the medium term under fiscal consolidation.
Keywords:
WP; government; long-term debt; net; debt; Fiscal policy; fiscal rules; general equilibrium models; taxation; commonwealth government; budget constraint; debt target; territory treasury; government's goal; government budget constraint; deficit target; government dissaving; government face; long-term government debt target; debt ratio; Budget planning and preparation; Business cycles; Global
Cover IMF Working Papers
The Case for an Independent Fiscal Institution in Japan
Mr. George Kopits
In response to the recent financial crisis and the ensuing buildup in public indebtedness, an increasing number of advanced economies have created independent fiscal institutions (IFIs) to improve the quality of public finances and to strengthen the credibility of government policy. A review of Japan’s fiscal policymaking over the past decades suggests that Japan would greatly benefit from establishing an IFI in line with internationally accepted standards of good practice. Such an institution could help correct critical weaknesses in policymaking and anchor expectations, especially if introduced as part of a fiscal framework with a medium-term perspective.
Keywords:
WP; IFI head; a number of IFIs; IFI projection; IFI surveillance; debt ratio; Japan’s fiscal policy; public debt sustainability; independent fiscal institutions; government policy; regime shift; fiscal policy stance; IFI mandate; government initiative; Multilateral development institutions; Budget planning and preparation; Europe
Cover IMF Working Papers
Evaluating Designs for a Fiscal Rule in Bulgaria
Mr. Jochen R. Andritzky
The enhanced Stability and Growth Pact calls on euro area members and aspirants to set boundaries to fiscal deficits through high-level legislation. A limit on the deficit, such as the deficit ceiling in Bulgaria's organic budget law, serves to protect solvency. The recent crisis clearly indicated that the key challenges are not only to contain the deficit but also to avoid a procyclical stance during upswings and to build a buffer for rainy days. Ideally, fiscal policymaking is guided by a fiscal rule that adapts through the economic cycle. This paper lays out the objectives of fiscal rules and analyzes how these objectives can be met in Bulgaria through either a growth-adjusted balance rule or an expenditure rule complemented by a deficit ceiling.
Keywords:
WP; expenditure rule; balance rule; output gap; Fiscal policy; Budget deficits; Fiscal rules; Bulgaria; deficit ceiling; growth limit; debt ratio; countercyclical expenditure policy; Fiscal stance; Budget planning and preparation; Eastern Europe; Global
Cover IMF Working Papers
Democratic Accountability, Deficit Bias, and Independent Fiscal Agencies
Mr. Xavier Debrun
Despite growing interest among policymakers, there is no theory of independent fiscal institutions. The emerging literature on "fiscal councils" typically makes informal parallels with the theory of central bank independence, but a very simple formal example shows that such a shortcut is flawed. The paper then illustrates key features of a model of independent fiscal agencies, and in particular the need (1) to incorporate the intrinsically political nature of fiscal policy - which precludes credible delegation of instruments to unelected decisionmakers - and (2) to focus on characterizing "commitment technologies" likely to credibly increase fiscal discipline.
Keywords:
WP; public goods; central bank; Fiscal councils; fiscal policy; deficit bias; delegation; deficit contract; fiscal policy decision; deficit ceiling; equilibrium deficit; policy mistake; bias of the kind; assessment of competence; inflation contract; Budget planning and preparation; Central bank autonomy; Inflation; Africa
Cover IMF Working Papers
Fiscal Rules and Countercyclical Policy: Frank Ramsey Meets Gramm-Rudman-Hollings
Mr. Evan C Tanner
Fiscal rules—legal restrictions on government borrowing, spending, or debt accumulation (like the Gramm-Rudman-Hollings Act in the United States)—have recently been adopted or considered in several countries, both industrial and developing. Previous literature stresses that such laws restrict countercyclical government borrowing, thus preventing intertemporal equalization of marginal deadweight losses of taxation—an idea associated with Frank Ramsey. However, such literature typically abstracts from persistent current deficits that are financed by future tax increases. Eliminating such deficits may substantially reduce tax rate variability—the very goal of countercyclical borrowing—even over a finite horizon. Thus, Gramm-Rudman-Hollings and Frank Ramsey are not necessarily enemies and they may even be good friends!
Keywords:
WP; government expenditure; Ramsey approach; tax smoothing; countercyclical policy; primary deficit; GDP ratio; debt accumulation; variability rise; debt-GDP constant; debt target; Fiscal rules; Tax expenditures; Public expenditure review; Central America; Caribbean
Cover IMF Working Papers
Reconciling Stability and Growth: Smart Pacts and Structural Reforms
Mr. Roel M. W. J. Beetsma
and
Mr. Xavier Debrun
This paper analyzes the decision of a government facing electoral uncertainty to implement structural reforms in the presence of fiscal restraints similar to the Stability and Growth Pact. The model shows that a pact may harm structural reforms, sacrificing future growth for present stability. The welfare gains brought about by a pact depend on a trade-off between the reduction in the deficit bias and the induced reduction in the amount of structural reform. A pact becomes more attractive (“smarter”) if it takes into account the fiscal impact of structural reforms, in line with a recent proposal by the European Commission.
Keywords:
WP; public goods; Structural reforms; Stability and Growth Pact; Monetary Union; Sanctions; partisan government; budget constraint; deficit bias; incumbent government; Budget planning and preparation; Employment protection; Structural policies; Europe