{ "title": "Fiscal Rules and Fiscal Councils: Recent Trends and Performance during the COVID-19 Pandemic", "publication": "IMF Working Papers, January 27, 2022", "sourceUrl": "https://www.imf.org/en/publications/wp/issues/2022/01/21/fiscal-rules-and-fiscal-councils-512128", "canonical": "https://www.imf.org/en/publications/wp/issues/2022/01/21/fiscal-rules-and-fiscal-councils-512128", "overlayPath": "/en/publications/wp/issues/2022/01/21/fiscal-rules-and-fiscal-councils-512128/index.md", "summary": "Adoption of fiscal rules and fiscal councils continued to increase globally over the last decades based on two new global datasets. During the pandemic, fiscal frameworks were put to test.", "sections": [ { "heading": "Key findings and evidence", "content": "- Adoption of fiscal rules and fiscal councils continued to increase globally over the last decades based on two new global datasets.\n- During the pandemic, fiscal frameworks were put to test.\n- The widespread use of escape clauses was one of the novelties in this crisis, which helped provide policy room to respond to the health crisis.\n- The unprecedented fiscal actions have led to large and widespread deviations from deficit and debt limits.\n- The evidence shows that fiscal rules, in general, have been flexible during crises but have not prevented a large and persistent buildup of debt over time.\n- Experience shows that deviations from debt limits are very difficult to reverse.\n- The paper presents evidence on the benefits of a good track record in abiding by the rules.\n- These findings highlight difficult policy choices ahead and the need to further improve rules-based fiscal frameworks." }, { "heading": "Themes and analysis", "content": "- Trends in institutional adoption:\n - Continued global increase in adoption of fiscal rules and fiscal councils (based on two new global datasets).\n- Crisis response and institutional design:\n - Escape clauses were widely used during the COVID-19 pandemic to create policy room for health-related spending.\n - Flexibility of rules during crises allowed large fiscal actions but undermined adherence to deficit and debt limits.\n- Debt dynamics and reversibility:\n - Large and persistent buildup of debt occurred despite the existence of fiscal rules.\n - Deviations from debt limits are very difficult to reverse, implying long-term fiscal implications.\n- Track record and credibility:\n - A good historical record of abiding by fiscal rules provides measurable benefits (evidence presented in the paper)." }, { "heading": "Implications and policy considerations", "content": "- Policy choices ahead are difficult given the trade-off between crisis responsiveness and long-term debt sustainability.\n- There is a demonstrated need to further improve rules-based fiscal frameworks to enhance resilience while preserving fiscal credibility.\n- Strengthening the track record of compliance with fiscal rules can yield benefits for fiscal governance and outcomes.\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/2022/01/21/fiscal-rules-and-fiscal-councils-512128" } ], "bullets": [ "[Markdown version](/en/publications/wp/issues/2022/01/21/fiscal-rules-and-fiscal-councils-512128/index.md)", "[Structured JSON version](/en/publications/wp/issues/2022/01/21/fiscal-rules-and-fiscal-councils-512128/index.json)", "[Bundle manifest](/en/publications/wp/issues/2022/01/21/fiscal-rules-and-fiscal-councils-512128/bundle-manifest.json)", "Authors: Hamid R Davoodi, Paul Elger, Alexandra Fotiou, Daniel Garcia-Macia, Xuehui Han, Paulo A Medas", "Published: January 27, 2022", "Series: IMF Working Papers", "DOI: https://doi.org/10.5089/9798400200472.001", "Adoption of fiscal rules and fiscal councils continued to increase globally over the last decades based on two new global datasets.", "During the pandemic, fiscal frameworks were put to test.", "The widespread use of escape clauses was one of the novelties in this crisis, which helped provide policy room to respond to the health crisis.", "The unprecedented fiscal actions have led to large and widespread deviations from deficit and debt limits.", "The evidence shows that fiscal rules, in general, have been flexible during crises but have not prevented a large and persistent buildup of debt over time.", "Experience shows that deviations from debt limits are very difficult to reverse.", "The paper presents evidence on the benefits of a good track record in abiding by the rules.", "These findings highlight difficult policy choices ahead and the need to further improve rules-based fiscal frameworks.", "Trends in institutional adoption:", "Crisis response and institutional design:", "Debt dynamics and reversibility:", "Track record and credibility:", "Policy choices ahead are difficult given the trade-off between crisis responsiveness and long-term debt sustainability.", "There is a demonstrated need to further improve rules-based fiscal frameworks to enhance resilience while preserving fiscal credibility.", "Strengthening the track record of compliance with fiscal rules can yield benefits for fiscal governance and outcomes.", "**Working Paper**" ], "related": [ { "title": "Working Paper", "role": "paper", "sourceUrl": "https://www.imf.org/-/media/files/publications/wp/2022/english/wpiea2022011-print-pdf.pdf", "summary": { "path": "/-/media/files/publications/wp/2022/english/wpiea2022011-print-pdf.pdf.md", "mime": "text/markdown" }, "binary": { "path": "/-/media/files/publications/wp/2022/english/wpiea2022011-print-pdf.pdf", "mime": "application/pdf" } } ], "alternates": { "markdown": "/en/publications/wp/issues/2022/01/21/fiscal-rules-and-fiscal-councils-512128/index.md", "json": "/en/publications/wp/issues/2022/01/21/fiscal-rules-and-fiscal-councils-512128/index.json", "bundleManifest": "/en/publications/wp/issues/2022/01/21/fiscal-rules-and-fiscal-councils-512128/bundle-manifest.json" }, "generatedAtUtc": "2026-09-16T20:35:30.533Z" }