## Back to the Future: Fiscal Rules for Regaining Sustainability

_IMF Working Papers, November 7, 2019_

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## Bibliographic details
- Authors: Serhan Cevik
- Published: November 7, 2019
- Series: IMF Working Papers
- DOI: https://doi.org/10.5089/9781513519128.001

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### Empirical assessment of Belize's fiscal policy
- 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 simulation results and projections
- 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.

### Policy recommendations
- 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.

### Subject areas and analytical focus
- 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.

*Source: Back to the Future: Fiscal Rules for Regaining Sustainability, Serhan Cevik, November 7, 2019 (IMF Working Paper).*

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- **Working Paper**
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_Source: https://www.imf.org/en/publications/wp/issues/2019/11/08/back-to-the-future-fiscal-rules-for-regaining-sustainability-48790_