Strengthening Chile's Rule-Based Fiscal Framework

 
Author/Editor: Dabán Sánchez, Teresa
 
Publication Date: January 01, 2011
 
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Disclaimer: This Working Paper should not be reported as representing the views of the IMF. The views expressed in this Working Paper are those of the author(s) and do not necessarily represent those of the IMF or IMF policy. Working Papers describe research in progress by the author(s) and are published to elicit comments and to further debate
 
Summary: The cornerstone of Chile’s impressive fiscal performance has been its structural balance rule. By insulating public spending from short-term copper price fluctuations and the business cycle, the rule has helped preserve fiscal discipline. However, the implementation of the rule in recent years has revealed certain challenges, and in May 2010, the government established a high-level commission to recommend reforms that could make the rule even more effective. This paper assesses the scope for improving the design and implementation of the structural balance rule in light of best practices and OECD country experience with fiscal rules. This assessment suggests several options to strengthen Chile’s fiscal rule, including by simplifying the calculation of the structural balance; enhancing the rule’s flexibility, transparency and accountability; and complementing it with a medium-term fiscal framework.
 
Series: Working Paper No. 11/17
Subject(s): Chile | Commodity prices | Copper | Cross country analysis | External shocks | Fiscal policy | OECD

Author's Keyword(s): Fiscal rules | structural balance | resource revenue management | resource curse | public financial management | transparency | accountability | resource-producing countries.
 
English
Publication Date: January 01, 2011
Format: Paper
Stock No: WPIEA2011017 Pages: 26
Price:
US$18.00 (Academic Rate:
US$18.00 )
 
 
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