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Ms. Miho Nakamura
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IMF Regional Office for Asia and the Pacific
Email: mnakamura@imf.org

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Institutions for Fiscal Credibility—Fiscal Policy Rules and Fiscal Councils: Experience and Prospects in the Asia-Pacific Region

IMF Conference Co-hosted by Regional Office for Asia and the Pacific and Fiscal Affairs Department
Venue: Tokyo, Japan

Thursday June 12, 2014


The IMF Fiscal Affairs Department and Regional Office for Asia and the Pacific are organizing a conference on "Institutions for Fiscal Credibility—Fiscal Policy Rules and Fiscal Councils: Experience and Prospects in the Asia-Pacific Region."

In many countries, the budgetary footprint of the 2008-09 crisis came on top of already high inherited debts and ahead of intensifying pressures on government spending—related to aging in many advanced economies and China, and to growing demand for public goods and services in rapidly growing economies. As a result, the credibility of government commitments to face present and future obligations in full has been put at risk. To confront this challenge, policymakers have often opted for reforming the rules and processes shaping the conduct of fiscal policy. The underlying idea is to foster sound public finances by placing adequate constraints on policy discretion, including through measures that enhance transparency and democratic accountability.

The conference will focus on two broad classes of institutional reforms: fiscal policy rules that set long-lasting numerical limits on budgetary aggregates, and fiscal councils, non-partisan “watchdog” institutions that raise transparency and the reputational costs of unsound policies. These two approaches are increasingly used in combination and often complement simultaneous reforms of public financial management systems, notably by providing an anchor to medium-term budget frameworks.

The aim of the conference is to take stock of recent developments in the area of fiscal rules and fiscal councils. The review of international experience, with a particular attention to the Asia-Pacific region, will allow distilling key policy lessons on the nature and drivers of effective reforms.

The conference will be hosted in Tokyo, Japan, and will take place on June 12.

Participation to the conference is by invitation only. Should you have any questions regarding the program, please do not hesitate to contact Yuko Kinoshita or Xavier Debrun and Miho Nakamura for any practical question.

Thursday, June 12, 2014

8:45 - 9:10

Registration

9:10 - 9:30

Opening session

Opening Statement: Odd Per Brekk (Director, Regional Office for Asia and the Pacific, IMF)

Inaugural remarks: Martine Guerguil (Deputy Director, Fiscal Affairs Department, IMF)

9:30 - 11:00

Towards a New Generation of Fiscal Policy Rules

The session takes stock of fiscal rules around the world. The main discussion points are: What features of fiscal rules were most effective and what are the side effects? Has good international practice evolved since the crisis? What is the room for tailoring national fiscal frameworks to country-specific circumstances? What is the risk of “rules overhang” ? What are the tradeoffs between simple and transparent rules and flexible ones?

Chair: Yuko Kinoshita (Deputy Head of Office, Regional Office for Asia and the Pacific, IMF)

Presentations:

  • Sahoko Kaji (Professor, Faculty of Economics, Department of Economics, Keio University, Japan)
    Presentation
  • Markus Brueckner (Associate Professor, Singapore National University)
    Presentation
  • Xavier Debrun (Deputy Division Chief, Fiscal Policy and Surveillance, Fiscal Affairs Department, IMF)
    Presentation

Floor discussion

11:00 - 11:15

Coffee Break

11:15-12:45

Fiscal Councils: Advancing Credibility through Accountability and Transparency

The session focuses on the role and the design of “fiscal councils” – independent watchdogs— in promoting sound fiscal policies. Case studies on the international experience with fiscal councils will be discussed as well as other possible institutional structures. The main questions are: What is the rationale for fiscal councils? Are they complementary or substitutes to fiscal policy rules? Are there common features to effective fiscal councils? What are the channels through which they can encourage sound policies? To what extent can they be customized to country needs and institutional setup?

Chair: Keiko Takahashi (Deputy Director, Research Division, Budget Bureau, Ministry of Finance)

Presentations:

  • Phil Bowen (Parliamentary Budget Officer, Australia)
    Presentation
  • Juergen von Hagen (Professor, University of Bonn, Germany)
    Presentation
  • Thurgha Govindasamy (Head, External Sector, Macro Section, Fiscal & Economics Division, Treasury, Malaysia)
    Presentation

Floor discussion

12:45-14:30

Lunch

Keynote address: Juergen von Hagen (Professor, University of Bonn, Germany)

14:30-16:00

Making Fiscal Rules Enforceable

The session discusses the key design elements in support of enforcement of fiscal rules. The main questions are as follows: what determines compliance with fiscal policy rules? What are prominent cases of success and failure of fiscal policy rules in Asia and elsewhere? What specific enforcement mechanism can be envisaged: automatic correction mechanisms, formal sanctions and reputational mechanisms? What can be the role of a fiscal council in this context?

Chair: Phil Bowen (Parliamentary Budget Officer, Australia)

Presentations:

  • Mohamad Ikhsan (Special Advisor to the Vice President, Office of Vice President, Republic of Indonesia)
    Presentation
  • Barry Anderson (Deputy Director, National Governors Association, USA)
    Presentation
  • Xavier Debrun (Deputy Division Chief, Fiscal Policy and Surveillance, Fiscal Affairs Department, IMF)
    Presentation

Floor discussion

16:00 - 16:25

Photo Session & Coffee Break

16:25-17:40

Panel Discussion: Fiscal Rules and Fiscal Councils — Prospects for Asia and the Pacific

Chair:Martine Guerguil (Deputy Director, Fiscal Affairs Department, IMF)

Panelists:

  • Barry Anderson (Deputy Director, National Governors Association, USA)
  • Mohamad Ikhsan (Special Advisor to the Vice President, Office of Vice President, Republic of Indonesia)
  • Phil Bowen (Parliamentary Budget Officer, Australia)
  • Shigeo Kashiwagi (Professor, Faculty of Business and Commerce, Keio University, Japan)

17:40-17:50

Concluding Remarks: Yuko Kinoshita (Deputy Head of Office, Regional Office for Asia and the Pacific)

18:00-19:30

Reception