Reforming the Stability and Growth Pact

By Anthony M Annett, Jörg Decressin, Michael Deppler

February 1, 2005

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Anthony M Annett, Jörg Decressin, and Michael Deppler. Reforming the Stability and Growth Pact, (USA: International Monetary Fund, 2005) accessed November 8, 2024

Disclaimer: This Policy Dicussion 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

A rules-based fiscal framework, such as the EU’s Stability and Growth Pact (SGP), can be an important bulwark against short-sighted policies. Although policies have improved following the SGP’s adoption, shortcomings remain. These, however, are rooted in the policies rather than the rules, where few changes seem necessary. Specifically, the Excessive Deficit Procedure needs a stronger focus on policies rather than outcomes, while staying operationally simple and transparent. Furthermore, reforms are needed to foster time-consistent national policies, budgetary transparency, and ownership of the Pact. Accordingly, parliaments should debate national Stability Programs and national fiscal councils should review these programs for parliaments.

Subject: Data processing, Economic and financial statistics, Fiscal governance, Fiscal policy, Fiscal rules, Macrostructural analysis, Structural reforms

Keywords: CBS rule, Country ownership, Data processing, Deficit bias, Deficit target, Europe, Excessive deficit, Fiscal governance, Fiscal policy, Fiscal rules, PDP, Political economy, Reduction path, SGP reform debate, SGP regulation, Structural reforms

Publication Details

Pages:

28
Volume:

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DOI:

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Issue:

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Series:

Policy Discussion Paper No. 2005/002
Stock No:

PPIEA2005002
ISBN:

9781451975482
ISSN:

1564-5193

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