International Monetary Fund

Workshop by IMF Fiscal Affairs Department and Offices in Europe on Enforceable Fiscal Rules

The IMF Fiscal Affairs Department and Offices in Europe are organizing a workshop on "Enforceable Fiscal Rules."

The "fiscal compact" agreed by the majority of EU members mandates national fiscal institutions that credibly ensure the sustainability of fiscal policies. For many member states this requires significant changes to existing frameworks, including the adoption of a structural budget balance rule. While the practical features will be decided by each member state, it will be key to find solutions that not only fit the country-specific circumstances but, importantly, ensure enforceability of the rulea key criterion to gain and sustain credibility.

To promote a wide discussion of these policy challenges and of alternative options to address them, the Fiscal Affairs Department and the Offices in Europe of the International Monetary Fund are organizing a workshop in Paris on May 2, 2012 on "Enforceable Fiscal Rules." We will bring together senior policymakers and leading academics and offer them a forum to interact, disseminate recent work on fiscal rules, and share their respective experiences. The workshop will be centered on four thematic sessions, where brief presentations will showcase country experiences with different design options, followed by a roundtable discussion.

Participation to the conference is by invitation only. Should you have any questions regarding the program, please do not hesitate to contact nmalikyar, jdyer, and lprado.

May 2, 2012
9:00–9:15am Introductory remarks, Emmanuel van der Mensbrugghe (Director, Offices in Europe, IMF) and Carlo Cottarelli (Director, Fiscal Affairs Department, IMF)
9:15–10:45am Introducing structural budget balance rules:

In a weak and uncertain growth environment, the implementation of structural budget balance rules will be challenging. How consistent and reliable can output gap measures and standard budgetary elasticities be? What are options for capturing the effect of the cycle on fiscal aggregates? How should one-off and temporary effects be treated? How quickly should the new rules be phased in?

Chair: Carlo Cottarelli (Director, Fiscal Affairs Department, IMF)

Presentations: G. Mourre (Revenue Management and Tax Policy Issues, Head of Unit, European Commission, DG ECFIN) and M. Houdebine (Deputy of Public Policies, Directorate General of Treasury - France)

10:45–11:00am Coffee break
11:00–12:30pm Automatic correction mechanisms:

A few countries have used debt brakes, others have used sequesters. How have they been designed and what have been their experiences? What are other options and how can they account for cyclical and other temporary factors (e.g., escape clauses)?

Chair: M. Guerguil (Assistant Director & Division Chief, Fiscal Affairs Department, IMF)

Presentations: C. Kastrop (Deputy Director-General, Federal Ministry of Finance - Germany) and F. Zurbrgg (Director, Federal Finance Administration - Switzerland)

12:30–1:45pm Lunch
1:45–3:15pm Sanctions and reputational costs:

Most countries have enshrined fiscal rules at the highest legal level to limit room for deviations; however, even constitutional rules can be missed. What elements of rules should usefully be enshrined in the constitution, what role can courts play in enforcement? Can fiscal councils or other mechanisms raise the reputational costs of deviations? What sanctions can be most effective?

Chair: X. Debrun (Deputy Division Chief, Fiscal Affairs Department, IMF)

Presentations: A. Iara (Economic Analyst, Programme Design and Support, European Commission, DG ECFIN), C. Wyplosz (Professor of Economics, The Graduate Institute, Geneva), and G. Kopits (Senior Scholar, European Studies, Woodrow Wilson International Center)

3:15–3:30pm Coffee break
3:30–5:00pm Coordination issues:

The increasing devolution of spending and taxing responsibilities to sub-national entities creates coordination issues, including for the compliance with a fiscal rule that must bind the general government. What mechanisms can ensure an adequate sharing of the compliance burden? What have been country experiences?

Chair: D. Sutherland (Senior Economist, Public Economics Division, OECD)

Presentations: P. Part (Deputy Director, Economic Policy Division, Federal Ministry of Finance - Austria), G. Langenus (Research Deparment, National Bank of Belgium - Belgium), and J. Iglesias (Deputy Director for Budgetary Policy, Ministry of Economy and Finance - Spain)

5:00–5:30pm Concluding remarks

M. Guerguil (Assistant Director & Division Chief, Fiscal Affairs Department, IMF) and L. Pench (Director, Fiscal Policy, European Commission, DG ECFIN)