{
  "title": "Back to the Future: Fiscal Rules for Regaining Sustainability",
  "publication": "IMF Working Papers, November 7, 2019",
  "sourceUrl": "https://www.imf.org/en/publications/wp/issues/2019/11/08/back-to-the-future-fiscal-rules-for-regaining-sustainability-48790",
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  "summary": "This paper assesses the cyclicality and sustainability of fiscal policy in Belize and applies a stochastic simulation model to determine the optimal set of fiscal rules.",
  "sections": [
    {
      "heading": "Empirical assessment of Belize's fiscal policy",
      "content": "- Fiscal policy in Belize has been significantly procyclical and unsustainable much of the period since 1976.\n- The government committed to maintain a primary surplus of at least 2 percent of GDP until 2021, which is supporting debt reduction.\n- Given Belize’s history of large economic shocks, past fiscal behavior has left debt dynamics vulnerable to adverse events."
    },
    {
      "heading": "Stochastic simulation results and projections",
      "content": "- Stochastic simulations indicate that the government’s current commitment (primary surplus of at least 2 percent of GDP until 2021) is insufficient by itself to reliably bring the debt-to-GDP ratio to a sustainable path.\n- Simulations point to the need for further improvement in the primary balance to achieve a reliable, sustainable debt trajectory under uncertainty."
    },
    {
      "heading": "Policy recommendations",
      "content": "- Design and adopt explicit fiscal rules tailored for countercyclical policy and debt sustainability, taking account of Belize’s exposure to large shocks.\n- Integrate these rules into a well-designed fiscal responsibility law to strengthen the legal framework for fiscal management.\n- Establish an independent fiscal council to improve accountability and transparency in fiscal policy implementation."
    },
    {
      "heading": "Subject areas and analytical focus",
      "content": "- Subjects: Expenditure, Fiscal policy, Fiscal rules, Fiscal stance, Public debt.\n- Keywords and focal topics include: budget constraint, Caribbean, cyclically-adjusted government expenditure, debt, debt accumulation equation, debt ratio, Fiscal policy, fiscal policy cyclicality, fiscal rules, Fiscal stance, government, government's fiscal policy, procyclicality, sustainability.\n\nSource: Back to the Future: Fiscal Rules for Regaining Sustainability, Serhan Cevik, November 7, 2019 (IMF Working Paper).\n\n---\n\n Content in this bundle\n\n- Working Paper\n  - Working Paper (Markdown version){rel=\"alternate\" type=\"text/markdown\"}\n  - Working Paper (PDF){rel=\"external\" type=\"application/pdf\"}\n\n---\n\nSource: https://www.imf.org/en/publications/wp/issues/2019/11/08/back-to-the-future-fiscal-rules-for-regaining-sustainability-48790"
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    "Authors: Serhan Cevik",
    "Published: November 7, 2019",
    "Series: IMF Working Papers",
    "DOI: https://doi.org/10.5089/9781513519128.001",
    "Fiscal policy in Belize has been significantly procyclical and unsustainable much of the period since 1976.",
    "The government committed to maintain a primary surplus of at least 2 percent of GDP until 2021, which is supporting debt reduction.",
    "Given Belize’s history of large economic shocks, past fiscal behavior has left debt dynamics vulnerable to adverse events.",
    "Stochastic simulations indicate that the government’s current commitment (primary surplus of at least 2 percent of GDP until 2021) is insufficient by itself to reliably bring the debt-to-GDP ratio to a sustainable path.",
    "Simulations point to the need for further improvement in the primary balance to achieve a reliable, sustainable debt trajectory under uncertainty.",
    "Design and adopt explicit fiscal rules tailored for countercyclical policy and debt sustainability, taking account of Belize’s exposure to large shocks.",
    "Integrate these rules into a well-designed fiscal responsibility law to strengthen the legal framework for fiscal management.",
    "Establish an independent fiscal council to improve accountability and transparency in fiscal policy implementation.",
    "Subjects: Expenditure, Fiscal policy, Fiscal rules, Fiscal stance, Public debt.",
    "Keywords and focal topics include: budget constraint, Caribbean, cyclically-adjusted government expenditure, debt, debt accumulation equation, debt ratio, Fiscal policy, fiscal policy cyclicality, fiscal rules, Fiscal stance, government, government's fiscal policy, procyclicality, sustainability.",
    "**Working Paper**"
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