Survey
* Your assessment is very important for improving the workof artificial intelligence, which forms the content of this project
* Your assessment is very important for improving the workof artificial intelligence, which forms the content of this project
Fiscal Rules Applied in OECD Countries, 2010 Characteristics of the Set of Rules Euro Area Fiscal Rule a) Budget Target Expenditure Target Rule to Deal with Revenue Windfalls Golden b) Rule Summary Austria Yes Stability and Growth Pact (1997) Domestic Stability Pact (2000) Yes Yes No No Domestic Stability Pact Law • Negotiated floors on the budget balance for each government level (a surplus of 0.74% of GDB for the Länder, zero for municipalities and the federal government balance should be such that the Stability Programme target is met). Outcomes are assessed by an independent auditor. The law embodies financial sanctions in case of non-compliance. Belgium Yes Stability and Growth Pact (1997) National budget rule (2000) Yes Yes Yes No Cooperation agreement • Permissible deficits are established for the federal government plus Social Security on the one hand, and for the regions and the local government on the other. Czech Republic No Stability and Growth Pact (2004) Law on budgetary rules (2004) Yes Yes No No Denmark No Medium-term fiscal strategy (1998) Yes Yes No No A medium-term fiscal strategy for the period until 2010 • Structural general government surpluses of around 2% of GDP. • A "tax freeze" covering both central and sub-national government (introduced in 2002). Finland Yes Stability and Growth Pact (1997) Multiyear spending limits (since 1991) Yes Yes No No Medium-term objectives • Balanced central government finances in structural terms by 2007. • Central government expenditure (excluding interest payments, unemployment benefits and a few other items) is subject to a cap over the period 2004 to 2007. France Yes Stability and Growth Pact (1997) Central government expenditure ceiling (1998) Yes Yes Yes No Germany Yes Stability and Growth Pact (1997) Constitutional Rule (2009) Yes Yes No No Domestic Stability Pact • Golden rule: the budgeted deficit of the federal government must not exceed federal investment spending. Most Länder constitutions have a similar law. • Both the central government and sub-national governments should aim at balanced budgets Page 1 of 4 Fiscal Rules Applied in OECD Countries, 2010 Characteristics of the Set of Rules Euro Area Fiscal Rule a) Budget Target Expenditure Target Rule to Deal with Revenue Windfalls Golden b) Rule Summary Greece Yes Stability and Growth Pact (1997) Yes No No No Hungary No Stability and Growth Pact (2004) Fiscal Responsibility law (2008) Yes Yes No No Ireland Yes Stability and Growth Pact (1997) Yes Yes No No Italy Yes Stability and Growth Pact (1997) Domestic Stability Pact (since 1999) Yes No No No Luxembourg Yes Stability and Growth Pact (1997) Coalition agreement on expenditure ceiling (since 1999) Yes No No No Netherlands Yes Stability and Growth Pact (1997) Coalition agreement on multiyear expenditure targets (since 1994) Yes Yes Yes No Multi-year expenditure agreements • Separate expenditure ceilings on central government, social security, and labour market and health spending. • Automatic stabilisers are allowed to work fully on the revenue side, except if the deficit came close to the Maastricht Treaty's 3% ceiling. Poland No Stability and Growth Pact (2004) Act on Public Finance (1999) Yes No No No Act on Public Finance • The Constitution sets a limit of 60% of GDP for total public debt. Portugal Yes Stability and Growth Pact (1997) Yes No No No Slovak Republic Yes Stability and Growth Pact (2004) Yes Yes Yes No Page 2 of 4 Fiscal Rules Applied in OECD Countries, 2010 Characteristics of the Set of Rules Euro Area Fiscal Rule a) Budget Target Expenditure Target Rule to Deal with Revenue Windfalls Golden b) Rule Summary Spain Yes Stability and Growth Pact (1997) Fiscal Stability Law (since 2001) Yes Yes No No Fiscal Stability Law • Accounts should balance or show a surplus at all levels of government (central, social, territorial and local) as well as for public enterprises and corporations. • A cap is put on central government expenditure and a contingency fund (2% of expenditure) is set up to cover unscheduled non discretionary expenditure. Sweden No Fiscal Budget Act (since 1996) Yes Yes No No Fiscal Budget Act • Set nominal expenditure limits for the subsequent three years on 27expenditure areas (including social security). • Maintain a general government surplus of 2% of GDP on average over the business cycle. United Kingdom No Code for fiscal stability (1998); superseded by multi-year fiscal mandate Yes No No No Code for Fiscal Stability • Golden rule: over the business cycle, the Government will borrow only to invest and not to fund current spending. • Sustainable investment rule: net debt as a proportion for GDP must be held stable over the business cycle at a prudent level (defined so far as net debt below 40% of GDP). Norway No Fiscal Stability guidelines (2001) Yes No Yes No Fiscal Stability Guidelines • Structural non-oil central-government budget deficit should not exceed 4% of the Government Petroleum Fund over the cycle. • In the event of major revaluations of the Fund's capital or statistical revisions of the structural deficit, corrective action should be spread over several years. Switzerland No Debt containment rule (2001, but in force since 2003) Yes Yes Yes No Debt Containment Rule • Sets a ceiling for expenditures which is equal to total revenues adjusted for the cycle and for ex post deviations of out-turns from the norm laid out in the rule. Australia No Charter of Budget Honesty (1998) Yes No No No Charter of Budget Honesty • No legislated numerical rules. The Charter requires the government to spell out objectives and targets but places no constraints on their nature. Page 3 of 4 Fiscal Rules Applied in OECD Countries, 2010 Characteristics of the Set of Rules Euro Area Fiscal Rule a) Budget Target Expenditure Target Rule to Deal with Revenue Windfalls Golden b) Rule Summary Canada No Debt repayment plan (1998) Yes No Yes No Debt Repayment Plan • There are no legislated rules at the federal level but the government has a "balanced budget or better" policy. Most provinces have some form of balanced budget legislation. Japan No Cabinet decision on the medium term fiscal perspective (2002) Yes Yes No No A Reform and Perspective programme (revised in 2003) • Maintain general government expenditures at or below the 2002 level of 38% of GDP. • Achieve primary budget surplus by early 2010s. New Zealand No Fiscal responsibility act (1994) Yes Yes No No United States No PAYGO rules (2010) Yes No No No Empty cells: No information was provided for these countries in the datasource. (a) Spending rules have been criticized for lowering the quality of public spending. This has led to the adoption of golden rules that specifically exclude investment spending from the cap on the grounds that there is a natural myopic bias towards cutting investment over current expenditure. This type of rule is, however, more difficult to monitor and easier to circumvent (Fatás, 2005). In practice, the distinction between current and investment spending is less than clear cut. Both the United Kingdom and Germany have abandoned golden rules. Moreover, all rules encourage “gimmickry”, including one-off measures and creative accounting, to circumvent them (Koen and van den Noord, 2005). This problem might be more serious with an ambitious expenditure rule has a wide ambit to include total expenditure (Price, 2010), applies to different levels of government and includes monitoring of tax expenditures (Anderson and Minarik, 2006). Anderson, B and J. J. Minarik (2006), “Design Choices for Fiscal Policy Rules”, OECD Journal on Budgeting, Vol. 5. Fatás, A. (2005), “Is there a Case for Sophisticated Balanced-Budget Rules?”, OECD Economics Department Working Papers, No. 466. Koen, V. and P. van den Noord (2005), “Fiscal Gimmickry in Europe: One-off Measures and Creative Accounting”, OECD Economics Department Working Papers, No. 417. Price, R. (2010), “Political Economy of Fiscal Consolidation”, OECD Economics Department Working Papers, No. 776. (b) The Golden Rule is a guideline for the operation of fiscal policy. The Golden Rule states that over the economic cycle, the Government will borrow only to invest and not to fund current spending. In layman's terms this means that on average over the ups and downs of an economic cycle the government should only borrow to pay for investment that benefits future generations. Day-to-day spending that benefits today's taxpayers should be paid for with today's taxes, not with leveraged investment. Therefore, over the cycle the current budget (i.e., net of investment) must balance or be brought into surplus. Source: OECD Economic Outlook, Volume 2010/2, OECD 2010, pp. 257-258. Canada and Japan: OECD, Economic Outlook, No. 81, Paris 2007, p. 221. For Summary: Joumard,J., Kongsrud, P.H., Nam, Y.-S., Price, R., Enhancing the effectiveness of public spending: Experience in OECD countries, OECD, Economics Department Working Paper No. 380, 2004. Page 4 of 4