Calibrating Fiscal Rules: A Consideration of Natural Disaster Risks

Technical Notes and Manuals, July 31, 2023

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Calibrating Fiscal Rules: A Consideration of Natural Disaster Risks

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Bibliographic details

• Authors: Olusegun Ayodele Akanbi, William Gbohoui, Waikei R Lam
• Published: July 31, 2023
• Series: Technical Notes and Manuals
• DOI: https://doi.org/10.5089/9798400237508.005

Summary and purpose

• Authors: Olusegun Ayodele Akanbi, William Gbohoui, Waikei Raphael Lam
• Date: July 31, 2023
• This technical note assesses how large shocks from natural disasters are a key source of vulnerabilities for public finances.
• It extends the IMF Fiscal Affairs Department calibration toolkit by developing a methodology to calibrate fiscal rules in the event of natural disaster shocks and the possibility of implementing climate adaptation and mitigation measures.
• The features incorporated enable:
  • calibration of a prudent medium-term fiscal anchor; and
  • calibration of annual budgetary limits that ensure the sustainability of public finances.

Methodology and toolkit features

• Develops a methodology to calibrate fiscal rules accounting for natural disaster shocks and climate adaptation/mitigation measures.
• Accompanied by a set of toolkits that provide instructions on:
  • calibrating a medium-term debt anchor in the presence of natural disaster risks; and
  • designing corresponding operational rules that account for climate investment and other mitigation mechanisms.

Key thematic focus areas

• Climate finance
• Environment
• Expenditure
• Fiscal consolidation
• Fiscal policy
• Fiscal rules
• Fiscal stance
• Natural disasters
• Revenue administration

Keywords and geographic focus

• Keywords: Caribbean, climate adaptation investment, Climate finance, climate investment, climate resilience, debt anchor, debt limit, Fiscal consolidation, fiscal risks, Fiscal rules, Fiscal stance, IMF Library, mitigation, natural disaster, natural disaster risk, natural disaster shock, Natural disasters

Content in this bundle

• Calibrating Fiscal Rules: A Consideration of Natural Disaster Risks; TNM/2023/02
  • Calibrating Fiscal Rules: A Consideration of Natural Disaster Risks; TNM/2023/02 (Markdown version)
  • Calibrating Fiscal Rules: A Consideration of Natural Disaster Risks; TNM/2023/02 (PDF)