the experiences of india pakistan and sri lanka with frls n.
Download
Skip this Video
Loading SlideShow in 5 Seconds..
The Experiences of India, Pakistan and Sri Lanka with FRLs PowerPoint Presentation
Download Presentation
The Experiences of India, Pakistan and Sri Lanka with FRLs

Loading in 2 Seconds...

play fullscreen
1 / 10

The Experiences of India, Pakistan and Sri Lanka with FRLs - PowerPoint PPT Presentation


  • 126 Views
  • Uploaded on

The Experiences of India, Pakistan and Sri Lanka with FRLs. Yang Hyun Jin Maldives , April 1, 2010. India. Fiscal Responsibility and Budget Management Act (FRBMA) of 2003 * fiscal deficit 9%; debt GDP ratio 87% Procedural rules and numerical targets .

loader
I am the owner, or an agent authorized to act on behalf of the owner, of the copyrighted work described.
capcha
Download Presentation

PowerPoint Slideshow about 'The Experiences of India, Pakistan and Sri Lanka with FRLs' - bandele


An Image/Link below is provided (as is) to download presentation

Download Policy: Content on the Website is provided to you AS IS for your information and personal use and may not be sold / licensed / shared on other websites without getting consent from its author.While downloading, if for some reason you are not able to download a presentation, the publisher may have deleted the file from their server.


- - - - - - - - - - - - - - - - - - - - - - - - - - E N D - - - - - - - - - - - - - - - - - - - - - - - - - -
Presentation Transcript
the experiences of india pakistan and sri lanka with frls

The Experiences of India, Pakistan and Sri Lankawith FRLs

Yang Hyun Jin

Maldives , April 1, 2010

india
India
  • Fiscal Responsibility and Budget Management Act (FRBMA) of 2003

* fiscal deficit 9%; debt GDP ratio 87%

  • Procedural rules and numerical targets
slide3
India’s experience with fiscal rules has been mixed
  • FRBMA contributed to India’s fiscal policy framework by strengthening the procedural rules
  • However, date for achieving current deficit target was postponed repeatedly; off-budget activities increased, and there were significant slippages with deficit target (even before the global crisis)

* current balance: -3.6% (2003), -4.0% (2009)

* government debt: 68.4% (2003), 64.1 (2008)

  • Focus on current balance target without clear accounting definition increases incentive for creative accounting
  • Reliance on reputational sanctions for noncompliance; this does not guarantee consistency between FRBMA and annual budget
pakistan
Pakistan
  • Fiscal Responsbility and Debt Limitation Act (FRDL) of 2005

* eliminate revenue deficit and reduce of government debt

  • Procedural rules and numerical targets
pakistan1
Pakistan
  • Pakistan’s experience with FRDL has been reasonably good.
  • Public debt target was achieved in 2009, which was earlier than the target year of 2013 (58.1% in 2009)
  • However, revenue deficit target was breached (-3.4% 2008, -1.7% 2009), and new guarantees slightly exceeded target by 2.07%
  • Annual “fiscal policy statement” and “debt policy statement” has provided clear review of performance target
  • Well defined sanctions contributed to accountability of fiscal policies
sri lanka
Sri Lanka
  • Fiscal Management Responsibilty Act (FMRA) of 2003

* overall balance -7.8%; public debt ratio 100.6%

  • Procedural rules and numeral targets
sri lanka1
Sri Lanka
  • Sri Lanka’s experience with FMRA has been less satisfactory
  • Overall deficit target set in FRMA already modified in 2005, and repeatedly postponed thereafter
  • Quasi-fiscal activities by commercial public corporations and banks have increased significantly
  • Reliance on reputational sanctions and loosely defined escape clauses have been proved problematic
key lessons from these three countries experiences
Key Lessons from these three countries’ experiences
  • Procedural rules should contain:
  • (ex ante) fiscal policy statements over a medium term period help ensure transparency
  • (ex post) reports to the parliament and public are needed, to ensure accountability
  • Numerical rules, if included, should be:
  • simple and transparent
  • well- defined and enforceable
  • Sanctions should be credible and enforceable
  • Escape clauses should be clear and narrowly defined
key lessons continued
Key Lessons(continued)
  • Sufficiently developed PFM systems are pre-requisites for credible FRL implementation
  • Numerical targets in law can not guarantee success of fiscal policies
  • Weak institutions and poor implementation capacity may undermine the FRL
  • Independent monitoring and oversight is necessary
  • FRLs require broad political consensus and support for prudent fiscal policy
slide10

Thank you

yjin@imf.org