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The Return to Fiscal Rules

by Andresa Lagerborg , Anh D. M. Nguyen , Carlos Goncalves , Francesca Caselli , Hamid Davoodi , Jiae Yoo , Mr. Gee Hee Hong , Mr. Hamid R Davoodi , Mr. Paulo A Medas , Paulo Medas

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📖 The Scoop

Governments face difficult policy trade-offs with record debt levels, tightening monetary policies, and urgent demands, including food and energy crises, the climate agenda, and population aging. Governments need to communicate fiscal plans to reduce debt sustainability risks and promote consistent macroeconomic policies. Many envisage a return to fiscal rules that had been suspended during the pandemic to strengthen credibility. This situation offers an opportunity to rethink fiscal rules and determine how governments can make fiscal policy more agile, including in responding to crises, without undermining fiscal sustainability. A risk-based medium-term fiscal framework that combines standards, rules, and strengthened institutions would strike a better balance between flexibility and credibility.

Genre: Business & Economics / Exports & Imports (fancy, right?)

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