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The Return to Fiscal Rules
Author:
Francesca Caselli
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Mr. Hamid R Davoodi
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Carlos Goncalves https://isni.org/isni/0000000404811396 International Monetary Fund

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Mr. Gee Hee Hong https://isni.org/isni/0000000404811396 International Monetary Fund

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Andresa Lagerborg
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Mr. Paulo A Medas
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Anh D. M. Nguyen https://isni.org/isni/0000000404811396 International Monetary Fund

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Jiae Yoo
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Series:
Staff Discussion Notes
Volume/Issue:
Volume 2022: Issue 002
Language:
English
Publication Date:
11 Oct 2022
DOI:
https://doi.org/10.5089/9798400219467.006
ISBN:
9798400223419
ISSN:
2617-6750
Pages:
36
Keywords:
Fiscal Rules; Public Debt Sustainability; Fiscal Credibility; Independent Fiscal Institutions; Fiscal Anchors; Fiscal Limits; debt vulnerability; debt rule; policy error; countercyclical fiscal policy; debt threshold; IMF Staff Discussion Note 2022/002; Fiscal governance; Fiscal councils; Global
Legal-disclaimer:
Staff Discussion Notes (SDNs) showcase policy-related analysis and research being developed by IMF staff members and are published to elicit comments and to encourage debate.The views expressed in this Policy Discussion Paper are those of the author(s) and do not necessarily represent those of the IMF or IMF policy.
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Governments face difficult policy trade-offs with record debt levels, tightening monetary policies, and urgent demands, including food and energy crises, the climate agenda, and population aging. Governments need to communicate fiscal plans to reduce debt sustainability risks and promote consistent macroeconomic policies. Many envisage a return to fiscal rules that had been suspended during the pandemic to strengthen credibility. This situation offers an opportunity to rethink fiscal rules and determine how governments can make fiscal policy more agile, including in responding to crises, without undermining fiscal sustainability. A risk-based medium-term fiscal framework that combines standards, rules, and strengthened institutions would strike a better balance between flexibility and credibility.
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Cover Staff Discussion Notes
Staff Discussion Notes
ISSN:
2617-6750
Publisher:
International Monetary Fund