## _wp12273 - 2009. The Deficit Reduction and Budgetary Expenditure Limitation Laws (2010) make spending growth a function of

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### Deficit Reduction and Budgetary Expenditure Limitation Laws (2010): formula and cap
- Spending growth is made a function of:
  - public debt—rising, as the gap falls between actual debt and the objective of reducing it to 60 percent of GDP;
  - rising with trend GDP—measured as a 10 year moving average; and
  - rising with projected inflation.
- The formula caps real spending growth in 2011 at 2.6 percent.

### Budget Balance Rule (BBR) and deficit ceilings history
- The DRL sets ceilings for the central government fiscal deficits for the near term.
- Budget deficit ceilings set in 2006: 2, 1.5, and 1 percent of GDP for 2007-09.
- Ceilings relaxed in the biannual budget adopted in July 2009 to allow a budget deficit of 6 and 5.5 percent of GDP for 2009 and 2010.
- The Deficit Reduction and Budgetary Expenditure Limitation Laws (2010) set a path to 2014 (1 percent of GDP deficit).
- In July 2012, the government revised the deficit targets as follows:
  - 3 percent (2013)
  - 2.75 percent (2014)
  - 2.5 percent (2015)
  - 2 percent (2016)
  - 1.5 percent (2019)
- The DRL specifies that the more restrictive of the expenditure and deficit rules applies when there is a divergence between the two.

### Constitutional amendment (April 2012) and fiscal monitoring
- A constitutional amendment approved in April 2012:
  - introduces the principle of a balanced budget in structural terms;
  - requires details and implementation principles to be specified in secondary legislation by end-February 2013, in line with requirements under the "fiscal compact."
  - calls for the establishment of an independent parliamentary body for monitoring fiscal developments and compliance with the fiscal rule.

### Jamaica: fiscal responsibility framework (March 2010)
- Framework includes two rules:
  - BBR (since 2010): to reduce the fiscal balance to nil by the end of the financial year ending on March 31, 2016.
  - DR (since 2010): to reduce the total debt to one hundred percent or less of the gross domestic product by the end of the financial year ending on March 31, 2016.
- Additional target:
  - reduce the ratio of wages paid by the government as a proportion of the gross domestic product to nine percent or less by the end of the financial year ending on March 31, 2016 (not classified as an expenditure rule in the database).
- The framework envisages maintaining or improving on the targets beyond March 31, 2016.
- Targets may be exceeded on grounds of national security, national emergency, or other exceptional grounds, as the Minister may specify in an order subject to affirmative resolution.

### Headline figure
- 2.5 percent of GDP per year.

### Panama: statutory design and numeric limits
- Statutory basis: Budget balance rules (2002, 2009, 2012); Debt rules (2002, 2009).
- Coverage: General government.
- Key characteristics:
  - BBR (from 2012): "Adjusted balance" of the non-financial public sector (NFPS) defined as NFPS balance minus annual deposits into the Savings Fund of Panama (FAP). Statutory limit set for adjusted balance. From 2015, yearly contributions of the Panama Canal Authority to the budget in excess of 3.5 percent of GDP are to be transferred into the FAP. If deposits fall short of 3.5 percent but are higher than 3 percent of GDP, the government can borrow the difference. From 2012-14, the rule applies to the non-adjusted balance since the FAP accumulates funds only from 2015.
  - New budget deficit limits:
    - 2.9 percent of GDP for 2012
    - 2.8 percent for 2013
    - 2.7 percent for 2014
    - 2.0 percent for 2015
    - 1.5 percent for 2016
    - 1.0 percent for 2017
    - 0.5 percent from 2018 onwards
  - New escape clauses: state of emergency and economic slowdown.
  - BBR (mid-2009 to mid-2012) and DR (since mid-2009): FRL set deficit limit for NFPS (excluding Panama Canal Authority) at 1 percent of GDP and target public debt of 40 percent of GDP by 2015; escape clauses: (i) natural disaster, (ii) national state of emergency, (iii) economic recession. Deficit target adjusted in June 2009 to a deficit ceiling of 2-2.5 percent of GDP, with gradual transition period extended to 4 years. NFPS ceiling relaxed if U.S. GDP grows by 1 percent or less for two consecutive quarters and the monthly index of economic activity in Panama grows at 5 percent or less on average over a six-month period. Target date to reduce public debt-to-GDP ratio below 40 percent moved from 2014 to 2017.
  - BBR, DR (since 2002): NFPS deficit ceiling of 1 percent of GDP (excluding Panama Canal Authority), waiver if real GDP growth < 1 percent, in which case deficit ceiling adjusted to 3 percent of GDP in the first year then gradual transition to original ceiling within 3-year period. Debt-to-GDP target of 40 percent by 2014. Rule suspended from September 2004-05. Law replaced by Social and Fiscal Responsibility Law adopted June 2008, effective January 2009 and modified June 2009.

### Peru: BBR and ER numeric ceilings and suspension mechanics
- Statutory basis: Budget balance rule (2000); Expenditure rule (2000).
- Coverage: Central government (Expenditure rule); Central government for budget balance rule labeled statutory.
- Key characteristics:
  - BBR (since 2000): Deficit ceiling for the non-financial public sector: 2.0 percent of GDP for 2000 and 2003, 1.5 percent of GDP for 2001 and 2004, and 1.0 percent in 2002 and since 2005.
  - ER (since 2000): Real growth current expenditure ceiling of 2 percent (2000-02), 3 percent (2003-08) and 4 percent since 2009.
  - Suspension: Application of fiscal rules may be suspended for up to three years when (a) real GDP is declining, with the ceiling on the deficit raised up to 2.5 percent of GDP, with a minimum annual reduction of 0.5 percent of GDP until the 1 percent deficit ceiling is reached; and (b) in other emergencies declared by Congress at the request of the Executive. Executive must specify ceilings during exception period; minimum annual reduction of 0.5 percent of GDP on the deficit applies.

### Poland: temporary ER, constitutional DR and triggers
- National rules: Expenditure rule (2011); Budget balance rule (2006-07 nominal anchor); Debt rule (1999) constitutional.
- Coverage: Central government and general government for debt rule.
- Key characteristics:
  - ER (since 2011): Overall increase in central government (CG) discretionary spending and all newly enacted spending cannot exceed 1 pps in real terms (based on CPI inflation). Defined in the Public Finance Act as temporary, envisaged to be replaced by a permanent rule once the excessive deficit procedure is abrogated.
  - BBR (2006-07): 4-year nominal anchor of 30 billion PLN deficit for the CG budget. PFA requires local governments to have balanced current budget starting from 2011.
  - DR (since 1999): Debt ceiling for general government (GG) of 60 percent of GDP established in Constitution and Public Finance Act. Public Finance Act includes triggers for corrective actions when debt ratio reaches thresholds of 50, 55, and 60 percent of GDP.
  - Under "fiscal compact" signed March 1, 2012, government commits to adopt a structural budget balance rule in its constitution or durable legislation, and an automatic correction mechanism.

### Portugal and Romania: structural balance commitments and expenditure limits
- Portugal:
  - New budgetary framework law (May 2011) approved a fiscal rule establishing that the general government structural balance cannot be less than the medium-term objective in the Stability and Growth Pact. Requires correction of multiannual plan when deviations occur. Rule to come into effect in 2015.
  - Since 2002 a balanced budget rule for services with financial and administrative autonomy covering about 13 percent of general government finances.
  - Independent Fiscal Council established end-2011 to assess compliance when rule implemented.
  - Under "fiscal compact" (March 1, 2012) commit to adopt structural budget balance rule in constitution or durable legislation and an automatic correction mechanism by 2014.
- Romania:
  - ER (since 2010): Total general government expenditure growth should not exceed projected nominal GDP for next three years until budget balance is in surplus. Personnel expenditure limits binding for two years as set out in MTBF. Fiscal Council established mid-2010 to issue opinions and assess compliance.
  - Expenditure rule (2010) statutory for general government, with independent body monitoring implementation and well-specified escape clauses.
  - Under "fiscal compact" commitments same as Portugal.

### Russia and Senegal: non‑standard implementation
- Russia:
  - BBR (2007-08): Legal fiscal framework relies on non-oil balance. Long-term non-oil deficit target of 4.7 percent of GDP. Suspended in April 2009 through end-2014 due to global financial crisis.
- Senegal:
  - Supranational rules: West African Economic and Monetary Union (2000) apply. No national entries provided in the excerpt.

### Serbia: formula-based BBR and debt cap
- Statutory: Budget balance rule (2011); Debt rule (2011).
- Coverage: General government.
- Key characteristics:
  - Fiscal responsibility law provisions introduced in Budget System Law (2009) in October 2010 including numerical fiscal rules and a fiscal council.
  - BBR (since 2011): Maximum fiscal deficit-to-GDP ratio in year t calculated as d(t)=d(t-1) - 0.3 [d(t-1)-d*] - 0.4[g(t) - g*], where d* is medium-term deficit set at 1 percent of GDP, g is real GDP growth rate, and g* is medium-term GDP growth set at 4 percent. Rule corrects for past deficit deviations and allows partial operation of automatic fiscal stabilizers.
  - DR (since 2011): General government debt, excluding liabilities from restitution, cannot exceed 45 percent of GDP.
  - Fiscal Council decision adopted March 2011 to assess credibility and compliance.

### Slovak Republic: constitutional DR with automatic sanctions and thresholds
- Statutory: Debt rule (2012) constitutional for general government.
- Key characteristics:
  - DR (since 2012): Constitutional bill effective March 1, 2012 caps public debt at 60 percent of GDP (Eurostat debt concept).
  - Automatic sanctions when debt-to-GDP reaches:
    - 50 percent: Minister to clarify and suggest measures;
    - 53 percent: cabinet to trim debt and freeze wages;
    - 55 percent: expenditures cut automatically by 3 percent and next year's budgetary expenditures frozen (except EU co-financing);
    - 57 percent: cabinet to submit a balanced budget;
    - 60 percent: cabinet faces confidence vote in parliament.
  - Legal numerically defined escape clauses: major recession, banking system bailout, natural disaster, international guarantee schemes.
  - After 2017 debt limit lowered to 50 percent of GDP; debt brakes start when debt-to-GDP approaches 40 percent of GDP.
  - Under "fiscal compact" (March 1, 2012) commit to adopt structural budget balance rule and automatic correction mechanism by 2014.

### Slovenia: historical debt cap and 2011 expenditure framework
- Statutory: Debt rule (2000) coalition agreement for general government.
- Key characteristics:
  - DR (2000-2004): Debt-to-GDP ratio of general government and non-financial public entities cannot exceed 40 percent of GDP.
  - 2011: New expenditure framework for general government in cash terms with rolling expenditure ceilings limiting growth to potential GDP growth (nominal) and additional restraints while primary deficit and general government debt exceed targets. Ceilings fixed for first two years and indicative for following two years; set by end of April of year t-1. For dataset, these ceilings not included as a rule since binding for less than three years.

### Spain: constitutional amendment and multi-tiered rules
- Statutory: Expenditure rule (2011) statutory for central and local governments; Budget balance rules (2003, 2006) statutory for general government.
- Key characteristics:
  - Constitutional amendment (September 2011) and new Organic Budget Law introduced new structural deficit, debt, and expenditure rules.
  - ER (since 2011): Nominal expenditure growth for central and local governments shall not exceed Spain's nominal medium-term GDP growth. Interest and non-discretionary unemployment benefits excluded.
  - BBR (from 2020): Structural deficits for central government and regional governments cannot exceed limits set by EU; balanced budgets for local governments; rules come into force from 2020 (constitutional amendment from Sept. 2011).
  - BBR (2006-11): Budgetary objectives account for cycle with lower and upper threshold of real GDP growth. In "normal" conditions balanced budget; weak times (below 2 percent GDP growth) deficit must not exceed 1 percent of GDP (2 percent in 2007-09); strong times (above 3 percent) budget should be in surplus. Deficit up to 0.5 percent of GDP allowed to finance public investment under certain conditions. Exceptional deficits require medium-term financial plan to correct within next 3 fiscal years; provisions activated in 2008 and corrective plan timelines were put on hold without specific time frame.
  - DR (from 2020): Not higher than 60 percent of GDP (constitutional amendment from Sept. 2011).

### Sri Lanka and Eastern Caribbean members: statutory rules and supranational coverage
- Sri Lanka:
  - BBR (since 2003): Deficit targets over a multiyear horizon.
  - DR (since 2003): Falling debt ceilings over a multiyear horizon. Fiscal Management (Responsibility) Act early 2003 aimed to contain overall budget deficit to 5 percent and debt to 85 percent by end of 2006; targets repeatedly postponed.
- St. Kitts and Nevis; St. Lucia; St. Vincent and the Grenadines:
  - Subject to Eastern Caribbean Currency Union supranational rules (1998). No national rule details provided in the excerpt.

### Sweden: cycle-based surplus target and expenditure ceilings
- Statutory: Budget balance rule (2000) statutory (2010) for general government; Expenditure rule (1997) statutory (2010) for central government and social security.
- Key characteristics:
  - BBR (since 2000): Surplus target for general government over the cycle. From 2000-07 target was 2 percent of GDP; since 2007 target is 1 percent of GDP. Fulfillment measured by several indicators including average GG balance since adoption, seven-year moving average, and annual structural balance.
  - ER (since 1997): Nominal expenditure ceiling for CG and pension system set for three-year period with outer year added annually. Ceilings cannot be adjusted except for technical issues. Budgetary margin used as buffer. Interest expenditure excluded from ceiling.
  - Independent Fiscal Policy Council created in 2007.
  - Under "fiscal compact" commitments same as other signatories.

### Switzerland: structural balance constitutional rule with compensation and amortization accounts
- Statutory: Budget balance rule (2003) constitutional for central government.
- Key characteristics:
  - BBR (since 2003): Structural budget must be balanced. Operationally, one-year-ahead ex ante central government expenditure equals predicted revenues adjusted by cyclical factor. Deviations of actual spending from ex post spending ceiling accumulated in a "compensation account." If negative balance exceeds 6 percent of expenditure (about 0.6 percent of GDP) authorities must take measures to reduce balance within three years. Effective 2010 rule enhanced to cover deficits from "extraordinary expenditure and revenue" accumulating in an "amortization account" to be eliminated over next six years by running structural surpluses. Negative balance in amortization account needs reduction only once compensation account balanced or in surplus. Escape clause: Government can approve by supermajority a budget deviating from rule in "exceptional circumstances."

### United Kingdom: rolling five-year cyclically adjusted target and debt objectives
- Statutory: Budget balance rules (1997, 2009, 2010) statutory for public sector; Debt rule (1997, 2009, 2010) statutory for public sector.
- Key characteristics:
  - BBR (since May 2010): Achieve cyclically adjusted current balance by the end of the rolling, five-year forecast period (currently by FY2016/17).
  - BBR (2009-2010): Require year-on-year reduction in public sector net borrowing to FY2015/16 so that public sector net borrowing as a percentage of GDP is more than halved over the four years to FY2013/14 (from FY2009/10).
  - BBR (1997-2008): Golden rule over the cycle allowing GG borrowing only for investment, measured by average surplus on the current budget over the cycle.
  - DR (since 2010): Achieve a falling public sector net debt-to-GDP ratio by FY 2015/16.
  - DR (1997-2008): Sustainable investment rule aimed to keep net debt at a stable and prudent level over the cycle, target net debt below 40 percent of GDP over the cycle.
  - FRL supports these rules. From Nov 2008-Dec 2009 government departed temporarily from fiscal rules and adopted temporary operating rule to improve cyclically adjusted current budget each year once economy emerges from downturn. Office for Budget Responsibility established in 2010 provides forecasts and examines fiscal sustainability.

### United States: discretionary caps, sequester, and PAYGO
- Statutory: Expenditure rules (1990, 2011) statutory for central government; Budget balance rule (1986) statutory for central government.
- Key characteristics:
  - ER (from 2011): August 2011 Congress enacted discretionary spending caps, saving about $900 billion over the next decade. If Congress does not act, automatic spending cuts (sequester) scheduled to take effect from January 2013 to produce savings of US$1.2 trillion over a decade with one-half from defense and one-half from domestic programs, excluding Social Security, Medicaid, parts of Medicare, and certain other entitlement programs.
  - ER (1990-2002): Annual appropriations limit under Budget Enforcement Act (BEA) of 1990 for discretionary spending (lapsed end of FY 2002). Rule not adhered to from 1998 onwards under large budget surpluses.
  - BBR (1986-90): Gramm-Rudmann-Hollings (GRH) specified series of annual deficit targets with balanced budget to be achieved in 1991 (later moved to 1993). Automatic "sequestration" enforcement process if deficit target missed; modified in 1987 after Supreme Court decision.
  - PAYGO (1990-2002): Adopted under BEA and lapsed end FY 2002; applied to newly legislated entitlement spending or tax changes to be budget neutral.
  - PAYGO (from 2010): Statutory Pay-As-You-Go Act of 2010 requires deficit-raising policies to be financed over specified period; exemptions exist (e.g., "emergency" designation, Social Security, Bush tax cuts for middle class). Pay-as-you-go rules considered procedural and not included in dataset coding.

### Supranational fiscal rules: selected unions and numeric constraints
- Central African Economic and Monetary Community (CEMAC)
  - BBR (from 2008): Basic structural fiscal balance in percent of nominal GDP should be in balance or surplus; derived by replacing actual oil revenue with its three-year moving average.
  - BBR (since 2002): Basic fiscal balance (total revenue net of grants minus total expenditure net of foreign-financed capital spending) should be in balance or surplus.
  - DR (since 2002): Stock of external plus domestic public debt should be kept below 70 percent of GDP.
- Eastern Caribbean Currency Union (ECCU)
  - DR (from 1998): Member countries aim at reducing public debt to 60 percent of GDP by 2020.
  - BBR (1998-2005): Overall deficit target of 3 percent of GDP.
- European Union (EU)
  - BBR (from 1992): Maastricht criteria include limit of 3 percent of GDP for fiscal deficit; 2005 reform introduced country-specific MTOs not to be less than 1 percent of GDP deficit (structural terms). 2011 governance reform added flexibility and compliance mechanisms, including an annual fiscal effort benchmark of at least 0.5 percent of GDP in structural terms and potential sanctions for euro area members.
  - DR (from 1992): Maastricht criteria include limit of 60 percent of GDP for general government debt. November 2011 governance reform introduced required annual pace of debt reduction based on 1/20th of the distance to 60 percent threshold, starting three years after leaving EDP.
  - ER (from 2012): Annual growth of primary expenditure—excluding unemployment benefits and subtracting discretionary revenue increases—should not exceed long-term nominal GDP growth when a country is not in EDP; rule used in assessing progress toward MTO with possible sanctions for euro area members.
- West African Economic and Monetary Union (WAEMU)
  - BBR (since 2000): Overall fiscal balance (excluding foreign-financed capital expenditures) should be balanced or in surplus.
  - DR (since 2000): Public debt should not exceed 70 percent of GDP.

*Source: Excerpted content from the provided IMF PDF chapter.*

### 2009. The Deficit Reduction and Budgetary Expenditure Limitation Laws (2010) make spending growth a function of

### _wp12273 - 2009. The Deficit Reduction and Budgetary Expenditure Limitation Laws (2010) make spending growth a function of

### Deficit Reduction and Budgetary Expenditure Limitation Laws (2010): formula and cap
- Spending growth is made a function of:
  - public debt—rising, as the gap falls between actual debt and the objective of reducing it to 60 percent of GDP;
  - rising with trend GDP—measured as a 10 year moving average; and
  - rising with projected inflation.
- The formula caps real spending growth in 2011 at 2.6 percent.

### Budget Balance Rule (BBR) and deficit ceilings history
- The DRL sets ceilings for the central government fiscal deficits for the near term.
- Budget deficit ceilings set in 2006: 2, 1.5, and 1 percent of GDP for 2007-09.
- Ceilings relaxed in the biannual budget adopted in July 2009 to allow a budget deficit of 6 and 5.5 percent of GDP for 2009 and 2010.
- The Deficit Reduction and Budgetary Expenditure Limitation Laws (2010) set a path to 2014 (1 percent of GDP deficit).
- In July 2012, the government revised the deficit targets as follows:
  - 3 percent (2013)
  - 2.75 percent (2014)
  - 2.5 percent (2015)
  - 2 percent (2016)
  - 1.5 percent (2019)
- The DRL specifies that the more restrictive of the expenditure and deficit rules applies when there is a divergence between the two.

### Constitutional amendment (April 2012) and fiscal monitoring
- A constitutional amendment approved in April 2012:
  - introduces the principle of a balanced budget in structural terms;
  - requires details and implementation principles to be specified in secondary legislation by end-February 2013, in line with requirements under the "fiscal compact."
  - calls for the establishment of an independent parliamentary body for monitoring fiscal developments and compliance with the fiscal rule.

### Jamaica: fiscal responsibility framework (March 2010)
- Framework includes two rules:
  - BBR (since 2010): to reduce the fiscal balance to nil by the end of the financial year ending on March 31, 2016.
  - DR (since 2010): to reduce the total debt to one hundred percent or less of the gross domestic product by the end of the financial year ending on March 31, 2016.
- Additional target:
  - reduce the ratio of wages paid by the government as a proportion of the gross domestic product to nine percent or less by the end of the financial year ending on March 31, 2016 (not classified as an expenditure rule in the database).
- The framework envisages maintaining or improving on the targets beyond March 31, 2016.
- Targets may be exceeded on grounds of national security, national emergency, or other exceptional grounds, as the Minister may specify in an order subject to affirmative resolution.

### Selected national rule types and examples (excerpted characteristics)
- Statutory Basis / Coverage / Formal Enforcement / Independent Body roles / Escape clauses are listed for multiple countries in the source; examples include:
  - Japan:
    - Expenditure rules (2006, 2010): political commitment; central government coverage; No for Independent Body roles and escape clauses.
    - PAYGO (since 2011): introduced pay-as-you-go rule (procedural, not included in dataset).
  - Kosovo:
    - DR (since 2010): debt limit of 40 percent of GDP in Law on Public Debt (2010), not operational since debt ratio far below that ratio.
    - ER (2006-2008): ceiling on current expenditure growth of 0.5 percent per year in real terms; not adhered to; from 2009 formally in force only for municipalities.
  - Latvia and Lithuania:
    - Commitments under the "fiscal compact" signed March 1, 2012: adopt a structural budget balance rule in Constitution or durable legislation, and an automatic correction mechanism.
  - Malta:
    - DR (since 2008): PDMA legally mandates ceiling of 60 percent on the debt-to-GDP ratio; expected to be 50 percent of GDP starting in 2013 but date changed to 2018.
  - Mexico:
    - BBR (since 2006): balanced budget on a cash basis for federal public sector; escape clause used in 2010, 2011 and 2012; changes to treatment of Pemex investment from 2009.
  - Netherlands:
    - ER (since 1994): real expenditure ceilings fixed for total expenditure and sectoral expenditure for each year of government's four-year office term; coverage and definitions changed in recent years; Central Planning Bureau provides independent macroeconomic assumptions.
  - New Zealand:
    - BBR (since 1994): operate surpluses annually until "prudent" debt levels achieved; planned April 26, 2012 amendment to Public Finance Act to limit spending growth to rate of inflation and population.
  - Norway:
    - BBR (since 2001): Non-oil structural deficit of central government should equal long-run real return of Government Pension Fund - Global assumed to be 4 percent.
  - Pakistan:
    - Fiscal Responsibility Law (2005): numerical targets laid out but not adhered to in practice; BBR (since 2005) and DR (since 2005) targets specified.

*Source: Excerpted content from the provided IMF PDF chapter.*

### 2.5 percent of GDP per year.

### _wp12273 - 2.5 percent of GDP per year.

### Panama
- Statutory basis: Budget balance rules (2002, 2009, 2012); Debt rules (2002, 2009).
- Coverage: General government.
- Key characteristics:
  - BBR (from 2012): Revised Fiscal Social Responsibility Law (June 2012) and Savings Fund of Panama Law (2012) introduce "adjusted balance" of the non-financial public sector (NFPS) defined as NFPS balance minus annual deposits into the Savings Fund of Panama (FAP). Statutory limit set for adjusted balance. Starting in 2015, yearly contributions of the Panama Canal Authority to the budget in excess of 3.5 percent of GDP are to be transferred into the FAP. Should deposits fall short of the 3.5 percent but are higher than 3 percent of GDP, the government can borrow the difference. From 2012-14, the rule applies to the non-adjusted balance since the FAP accumulates funds only from 2015.
  - New budget deficit limits: 2.9 percent of GDP for 2012, 2.8 percent for 2013, 2.7 percent for 2014, 2.0 percent for 2015, 1.5 percent for 2016, 1.0 percent for 2017, and 0.5 percent from 2018 onwards.
  - New escape clauses: state of emergency and economic slowdown.
  - BBR (mid-2009 to mid-2012) and DR (since mid-2009): FRL set deficit limit for NFPS (excluding Panama Canal Authority) at 1 percent of GDP and target public debt of 40 percent of GDP by 2015; escape clauses: (i) natural disaster, (ii) national state of emergency, (iii) economic recession. Deficit target adjusted in June 2009 to a deficit ceiling of 2-2.5 percent of GDP, with gradual transition period extended to 4 years. NFPS ceiling relaxed if U.S. GDP grows by 1 percent or less for two consecutive quarters and the monthly index of economic activity in Panama grows at 5 percent or less on average over a six-month period. Target date to reduce public debt-to-GDP ratio below 40 percent moved from 2014 to 2017.
  - BBR, DR (since 2002): Adopted as part of FRL. NFPS deficit ceiling of 1 percent of GDP (excluding Panama Canal Authority), but waiver if real GDP growth < 1 percent, in which case deficit ceiling adjusted to 3 percent of GDP in the first year then gradual transition to original ceiling within 3-year period. Debt-to-GDP target of 40 percent by 2014. Rule suspended from September 2004-05. Law replaced by Social and Fiscal Responsibility Law adopted June 2008, effective January 2009 and modified June 2009.

### Peru
- Statutory basis: Budget balance rule (2000); Expenditure rule (2000).
- Coverage: Central government (Expenditure rule); Central government for budget balance rule labeled statutory.
- Key characteristics:
  - BBR (since 2000): Deficit ceiling for the non-financial public sector: 2.0 percent of GDP for 2000 and 2003, 1.5 percent of GDP for 2001 and 2004, and 1.0 percent in 2002 and since 2005.
  - ER (since 2000): Real growth current expenditure ceiling of 2 percent (2000-02), 3 percent (2003-08) and 4 percent since 2009.
  - Suspension: Application of fiscal rules may be suspended for up to three years when (a) real GDP is declining, with the ceiling on the deficit raised up to 2.5 percent of GDP, with a minimum annual reduction of 0.5 percent of GDP until the 1 percent deficit ceiling is reached; and (b) in other emergencies declared by Congress at the request of the Executive. Executive must specify ceilings during exception period; minimum annual reduction of 0.5 percent of GDP on the deficit applies.

### Poland
- National rules: Expenditure rule (2011); Budget balance rule (2006-07 nominal anchor); Debt rule (1999) constitutional.
- Coverage: Central government and general government for debt rule.
- Key characteristics:
  - ER (since 2011): Overall increase in central government (CG) discretionary spending and all newly enacted spending cannot exceed 1 pps in real terms (based on CPI inflation). Defined in the Public Finance Act as temporary, envisaged to be replaced by a permanent rule once the excessive deficit procedure is abrogated.
  - BBR (2006-07): 4-year nominal anchor of 30 billion PLN deficit for the CG budget. PFA requires local governments to have balanced current budget starting from 2011.
  - DR (since 1999): Debt ceiling for general government (GG) of 60 percent of GDP established in Constitution and Public Finance Act. Public Finance Act includes triggers for corrective actions when debt ratio reaches thresholds of 50, 55, and 60 percent of GDP.
  - Under "fiscal compact" signed March 1, 2012, government commits to adopt a structural budget balance rule in its constitution or durable legislation, and an automatic correction mechanism.

### Portugal and Romania (summary for Portugal and Romania entries)
- Portugal:
  - New budgetary framework law (May 2011) approved a fiscal rule establishing that the general government structural balance cannot be less than the medium-term objective in the Stability and Growth Pact. Requires correction of multiannual plan when deviations occur. Rule to come into effect in 2015.
  - Since 2002 a balanced budget rule for services with financial and administrative autonomy covering about 13 percent of general government finances.
  - Independent Fiscal Council established end-2011 to assess compliance when rule implemented.
  - Under "fiscal compact" (March 1, 2012) commit to adopt structural budget balance rule in constitution or durable legislation and an automatic correction mechanism by 2014.
- Romania:
  - Expenditure rule (2010) statutory for general government, with independent body monitoring implementation and well-specified escape clauses.
  - ER (since 2010): Total general government expenditure growth should not exceed projected nominal GDP for next three years until budget balance is in surplus. Personnel expenditure limits binding for two years as set out in MTBF. Fiscal Council established mid-2010 to issue opinions and assess compliance.
  - Under "fiscal compact" commitments same as Portugal.

### Russia and Senegal
- Russia:
  - Budget balance rule (2007) statutory for general government.
  - BBR (2007-08): Legal fiscal framework relies on non-oil balance. Long-term non-oil deficit target of 4.7 percent of GDP. Suspended in April 2009 through end-2014 due to global financial crisis.
- Senegal:
  - Supranational rules: West African Economic and Monetary Union (2000) apply. No national entries provided.

### Serbia
- Statutory: Budget balance rule (2011); Debt rule (2011).
- Coverage: General government.
- Key characteristics:
  - Fiscal responsibility law provisions introduced in Budget System Law (2009) in October 2010 including numerical fiscal rules and a fiscal council.
  - BBR (since 2011): Maximum fiscal deficit-to-GDP ratio in year t calculated as d(t)=d(t-1) - 0.3 [d(t-1)-d*] - 0.4[g(t) - g*], where d* is medium-term deficit set at 1 percent of GDP, g is real GDP growth rate, and g* is medium-term GDP growth set at 4 percent. Rule corrects for past deficit deviations and allows partial operation of automatic fiscal stabilizers.
  - DR (since 2011): General government debt, excluding liabilities from restitution, cannot exceed 45 percent of GDP.
  - Fiscal Council decision adopted March 2011 to assess credibility and compliance.

### Slovak Republic
- Statutory: Debt rule (2012) constitutional for general government.
- Key characteristics:
  - DR (since 2012): Constitutional bill effective March 1, 2012 caps public debt at 60 percent of GDP (Eurostat debt concept). Calls for Fiscal Council. Automatic sanctions when debt-to-GDP reaches 50 percent (Minister to clarify and suggest measures), at 53 percent cabinet to trim debt and freeze wages, at 55 percent expenditures cut automatically by 3 percent and next year's budgetary expenditures frozen (except EU co-financing), at 57 percent cabinet to submit a balanced budget, at 60 percent cabinet faces confidence vote in parliament.
  - Legal numerically defined escape clauses: major recession, banking system bailout, natural disaster, international guarantee schemes.
  - After 2017 debt limit lowered to 50 percent of GDP; debt brakes start when debt-to-GDP approaches 40 percent of GDP.
  - Under "fiscal compact" (March 1, 2012) commit to adopt structural budget balance rule and automatic correction mechanism by 2014.

### Slovenia
- Statutory: Debt rule (2000) coalition agreement for general government.
- Key characteristics:
  - DR (2000-2004): Debt-to-GDP ratio of general government and non-financial public entities cannot exceed 40 percent of GDP.
  - 2011: New expenditure framework for general government in cash terms with rolling expenditure ceilings limiting growth to potential GDP growth (nominal) and additional restraints while primary deficit and general government debt exceed targets. Ceilings fixed for first two years and indicative for following two years; set by end of April of year t-1. For dataset, these ceilings not included as a rule since binding for less than three years.

### Spain
- Statutory: Expenditure rule (2011) statutory for central and local governments; Budget balance rules (2003, 2006) statutory for general government.
- Key characteristics:
  - Constitutional amendment (September 2011) and new Organic Budget Law introduced new structural deficit, debt, and expenditure rules.
  - ER (since 2011): Nominal expenditure growth for central and local governments shall not exceed Spain's nominal medium-term GDP growth. Interest and non-discretionary unemployment benefits excluded.
  - BBR (from 2020): Structural deficits for central government and regional governments cannot exceed limits set by EU; balanced budgets for local governments; rules come into force from 2020 (constitutional amendment from Sept. 2011).
  - BBR (2006-11): Budgetary objectives account for cycle with lower and upper threshold of real GDP growth. In "normal" conditions balanced budget; weak times (below 2 percent GDP growth) deficit must not exceed 1 percent of GDP (2 percent in 2007-09); strong times (above 3 percent) budget should be in surplus. Deficit up to 0.5 percent of GDP allowed to finance public investment under certain conditions. Exceptional deficits require medium-term financial plan to correct within next 3 fiscal years; provisions activated in 2008 and corrective plan timelines were put on hold without specific time frame.
  - DR (from 2020): Not higher than 60 percent of GDP (constitutional amendment from Sept. 2011).

### Sri Lanka; St. Kitts and Nevis; St. Lucia; St. Vincent and the Grenadines
- Sri Lanka:
  - Budget balance rule (2003) statutory central government.
  - Debt rule (2003) statutory central government.
  - BBR (since 2003): Deficit targets over a multiyear horizon.
  - DR (since 2003): Falling debt ceilings over a multiyear horizon. Fiscal Management (Responsibility) Act early 2003 aimed to contain overall budget deficit to 5 percent and debt to 85 percent by end of 2006; targets repeatedly postponed.
- St. Kitts and Nevis; St. Lucia; St. Vincent and the Grenadines:
  - Subject to Eastern Caribbean Currency Union supranational rules (1998). No national rule details provided in the excerpt.

### Sweden
- Statutory: Budget balance rule (2000) statutory (2010) for general government; Expenditure rule (1997) statutory (2010) for central government and social security.
- Key characteristics:
  - BBR (since 2000): Surplus target for general government over the cycle. From 2000-07 target was 2 percent of GDP; since 2007 target is 1 percent of GDP. Fulfillment measured by several indicators including average GG balance since adoption, seven-year moving average, and annual structural balance.
  - ER (since 1997): Nominal expenditure ceiling for CG and pension system set for three-year period with outer year added annually. Ceilings cannot be adjusted except for technical issues. Budgetary margin used as buffer. Interest expenditure excluded from ceiling.
  - Independent Fiscal Policy Council created in 2007.
  - Under "fiscal compact" commitments same as other signatories.

### Switzerland
- Statutory: Budget balance rule (2003) constitutional for central government.
- Key characteristics:
  - BBR (since 2003): Structural budget must be balanced. Operationally, one-year-ahead ex ante central government expenditure equals predicted revenues adjusted by cyclical factor. Deviations of actual spending from ex post spending ceiling accumulated in a "compensation account." If negative balance exceeds 6 percent of expenditure (about 0.6 percent of GDP) authorities must take measures to reduce balance within three years. Effective 2010 rule enhanced to cover deficits from "extraordinary expenditure and revenue" accumulating in an "amortization account" to be eliminated over next six years by running structural surpluses. Negative balance in amortization account needs reduction only once compensation account balanced or in surplus. Escape clause: Government can approve by supermajority a budget deviating from rule in "exceptional circumstances."

### Togo
- Subject to West African Economic and Monetary Union supranational rules (2000). No national rule details provided in the excerpt.

### United Kingdom
- Statutory: Budget balance rules (1997, 2009, 2010) statutory for public sector; Debt rule (1997, 2009, 2010) statutory for public sector.
- Key characteristics:
  - BBR (since May 2010): Achieve cyclically adjusted current balance by the end of the rolling, five-year forecast period (currently by FY2016/17).
  - BBR (2009-2010): Require year-on-year reduction in public sector net borrowing to FY2015/16 so that public sector net borrowing as a percentage of GDP is more than halved over the four years to FY2013/14 (from FY2009/10).
  - BBR (1997-2008): Golden rule over the cycle allowing GG borrowing only for investment, measured by average surplus on the current budget over the cycle.
  - DR (since 2010): Achieve a falling public sector net debt-to-GDP ratio by FY 2015/16.
  - DR (2009-2010): Ensure public sector net debt as a percentage of GDP is falling in FY2015-16.
  - DR (1997-2008): Sustainable investment rule aimed to keep net debt at a stable and prudent level over the cycle, target net debt below 40 percent of GDP over the cycle.
  - FRL supports these rules. From Nov 2008-Dec 2009 government departed temporarily from fiscal rules and adopted temporary operating rule to improve cyclically adjusted current budget each year once economy emerges from downturn. Office for Budget Responsibility established in 2010 provides forecasts and examines fiscal sustainability.

### United States
- Statutory: Expenditure rules (1990, 2011) statutory for central government; Budget balance rule (1986) statutory for central government.
- Key characteristics:
  - ER (from 2011): August 2011 Congress enacted discretionary spending caps, saving about $900 billion over the next decade. If Congress does not act, automatic spending cuts (sequester) scheduled to take effect from January 2013 to produce savings of US$1.2 trillion over a decade with one-half from defense and one-half from domestic programs, excluding Social Security, Medicaid, parts of Medicare, and certain other entitlement programs.
  - ER (1990-2002): Annual appropriations limit under Budget Enforcement Act (BEA) of 1990 for discretionary spending (lapsed end of FY 2002). Rule not adhered to from 1998 onwards under large budget surpluses.
  - BBR (1986-90): Gramm-Rudmann-Hollings (GRH) specified series of annual deficit targets with balanced budget to be achieved in 1991 (later moved to 1993). Automatic "sequestration" enforcement process if deficit target missed; modified in 1987 after Supreme Court decision.
  - PAYGO (1990-2002): Adopted under BEA and lapsed end FY 2002; applied to newly legislated entitlement spending or tax changes to be budget neutral.
  - PAYGO (from 2010): Statutory Pay-As-You-Go Act of 2010 requires deficit-raising policies to be financed over specified period; exemptions exist (e.g., "emergency" designation, Social Security, Bush tax cuts for middle class). Pay-as-you-go rules considered procedural and not included in dataset coding.

### Supranational fiscal rules: key characteristics (selected unions)
- Central African Economic and Monetary Community (CEMAC) — Member States: Cameroon, Central African Republic, Chad, Republic of Congo, Equatorial Guinea, Gabon
  - BBR (from 2008): Basic structural fiscal balance in percent of nominal GDP should be in balance or surplus; derived by replacing actual oil revenue with its three-year moving average.
  - BBR (since 2002): Basic fiscal balance (total revenue net of grants minus total expenditure net of foreign-financed capital spending) should be in balance or surplus.
  - DR (since 2002): Stock of external plus domestic public debt should be kept below 70 percent of GDP.
- Eastern Caribbean Currency Union (ECCU) — Member States: Antigua and Barbuda, Dominica, Grenada, St. Kitts and Nevis, St. Lucia, St. Vincent and Grenadines
  - DR (from 1998): Member countries aim at reducing public debt to 60 percent of GDP by 2020.
  - BBR (1998-2005): Overall deficit target of 3 percent of GDP.
- European Union (EU)
  - BBR (from 1992): Maastricht criteria include limit of 3 percent of GDP for fiscal deficit; 2005 reform introduced country-specific MTOs not to be less than 1 percent of GDP deficit (structural terms). 2011 governance reform added flexibility and compliance mechanisms, including an annual fiscal effort benchmark of at least 0.5 percent of GDP in structural terms and potential sanctions for euro area members.
  - DR (from 1992): Maastricht criteria include limit of 60 percent of GDP for general government debt. November 2011 governance reform introduced required annual pace of debt reduction based on 1/20th of the distance to 60 percent threshold, starting three years after leaving EDP.
  - ER (from 2012): Annual growth of primary expenditure—excluding unemployment benefits and subtracting discretionary revenue increases—should not exceed long-term nominal GDP growth when a country is not in EDP; rule used in assessing progress toward MTO with possible sanctions for euro area members.
- West African Economic and Monetary Union (WAEMU) — Member States: Benin, Burkina Faso, Côte d’Ivoire, Guinea-Bissau, Mali, Senegal, Togo
  - BBR (since 2000): Overall fiscal balance (excluding foreign-financed capital expenditures) should be balanced or in surplus.
  - DR (since 2000): Public debt should not exceed 70 percent of GDP.

*Source: Excerpt from _wp12273 - 2.5 percent of GDP per year.*

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_Source: https://www.imf.org/-/media/websites/imf/imported-full-text-pdf/external/pubs/ft/wp/2012/_wp12273.pdf_