Fiscal Rules and the Behavior of Public Investment in Costa Rica and Panama: Towards Growth-Friendly Fiscal Policy?

2021 ◽  
Author(s):  
Eliécer Arce ◽  
Edgar A. Robles
Keyword(s):  
Costa Rica ◽  
Financial Management ◽  
Capital Expenditure ◽  
Public Investment ◽  
Fiscal Rules ◽  
Public Financial Management ◽  
Rule Compliance ◽  
Pile Up ◽  
Fiscal Rule

This paper aims to provide evidence on the effects of fiscal rules on public investment, fiscal results and growth in Costa Rica and Panama. First, we find that the budget formulation process and the political economy behind the adoption and compliance of fiscal rules explain that Panama has a bias to create and sequentially pile up rules, while Costa Rica has a tendency not to comply with them. Second, a retrospective analysis of the 2018 fiscal rules in both nations finds asymmetric effects on the fiscal results. In Panama it is difficult to separate the effect of fiscal rule designs on public investment; and, in Costa Rica, the application of the fiscal rule will decrease public investment, if the debt to GDP ratio exceeds 60 percent and current expenditure crowds out capital expenditure. Two lessons emerge. First, an effective fiscal rule compliance requires time consistent institutions, solid monitoring, enforcement schemes and improving the quality of public financial management systems. Second, it is necessary to review the design of fiscal rules in both countries to ensure they are investment and growth friendly.

scholarly journals 5.6. QUALITY ASSESSMENT OF FINANCIAL MANAGEMENT IN THE public sector: METHODICAL ASPECTS

2020 ◽  
Author(s):  
Л.И. Ткаченко
Keyword(s):  
Public Finance ◽  
Public Sector ◽  
Quality Assessment ◽  
Financial Management ◽  
Federal Budget ◽  
Operational Efficiency ◽  
The Public ◽  
Public Financial Management ◽  
Methodological Aspects

В статье обоснована актуальность оценки качества управления государственными финансами с целью повышения эффективности их использования. Проанализировано развитие методики оценки качества финансового менеджмента главными администраторами средств федерального бюджета за период с 2008 по 2019 гг. Исследованы методические аспекты определения итоговой оценки качества финансового менеджмента. В частности, проанализирован расчет некоторых показателей операционной эффективности расходов бюджета и дана их интерпретация. Представлен авторский взгляд на расчет и интерпретацию проанализированных показателей. The author in this article substantiates the relevance of assessing the quality of public financial management in order to increase the efficiency of use of public finance. The development of the methodology for assessing the quality of financial management by the chief administrators of the federal budget for the period from 2008 to 2019 is analyzed. Methodological aspects of determining the final assessment of the quality of financial management are investigated. In particular, it analyzes the calculation of some indicators of the operational efficiency of budget expenditures and gives their interpretation. The author's view on the calculation and interpretation of the analyzed indicators is presented.

Fiscal Rules and the Behavior of Public Investment in Latin America and the Caribbean: Towards Growth-Friendly Fiscal Policy?: The case of Argentina

2021 ◽  
Author(s):  
Daniel Artana ◽  
Cynthia Moskovits ◽  
Jorge Puig ◽  
Ivana Templado
Keyword(s):  
Capital Expenditure ◽  
Previous Analysis ◽  
Public Investment ◽  
National Level ◽  
Political Support ◽  
Fiscal Rules ◽  
Negative Effects ◽  
The Caribbean ◽  
Economic Boom ◽  
High Level

This paper analyzes the implementation of Fiscal Rules (FR) in Argentina. Several clear attempts to establish a FR at the national level are identified. The analysis suggests that the environment matters. The only FR that was binding in the period was approved in 2004 during an economic boom, with the country under a program with the IMF and with high political support. During the world financial crisis the expenditure ceilings were relaxed, however, and current primary expenditures soared. Simulations show that a countercyclical fund could have been implemented even after reducing highly distorting taxes at the federal and provincial levels, and at the same time securing a high level of capital expenditure as a share of GDP, had Argentina complied with the 2004 FR. Moreover, an econometric exploration of the link between flexible FRs and public investment finds that a flexible FR helps to mitigate the negative effects of fiscal consolidations on provincial public investment. Based on the previous analysis, guidelines for a proposal for a FR in Argentina are provided.

Public Financial Management and Systems of Accountability in Sub-National Governance in Developing Economies

2017 ◽  
pp. 193-217
Author(s):  
Christopher Boachie
Keyword(s):  
Financial Management ◽  
Public Services ◽  
Developing Economies ◽  
Local Institutions ◽  
Fiscal Management ◽  
Accountability System ◽  
Public Financial Management ◽  
Subnational Government ◽  
International Donors

There is an increasing focus worldwide on improving the quality of public financial management, with many countries in both the developed and the developing world making important and impressive achievements in strengthening public financial management and governance. This chapter explores how subnational government financial management can be improved and capacity strengthened in developing economies. Using Ghana's subnational financial management and accountability system as illustration, this study shows that improving public financial management leads to better quality of public services. The subnational government landscape is rapidly changing, with increasing emphasis on fiscal management and discipline, prioritization of expenditure, and value for money. It is even more important that international donors, governments, and national and local institutions, including regulators and professional accountancy bodies, work together in partnership to achieve long-lasting improvements, transparency, and accountability in public financial management.

scholarly journals Growth-friendly fiscal rules? Safeguarding public investment from budget cuts through fiscal rule design

2021 ◽  
Vol 111 ◽  
pp. 102319
Author(s):  
Martín Ardanaz ◽  
Eduardo Cavallo ◽  
Alejandro Izquierdo ◽  
Jorge Puig
Keyword(s):  
Public Investment ◽  
Fiscal Rules ◽  
Budget Cuts ◽  
Fiscal Rule

scholarly journals Factors determining the forecast errors of market analysts for fiscal variables in Brazil

2020 ◽  
pp. 1-22
Author(s):  
Francisca Aparecida de Souza ◽  
César Augusto Tibúrcio Silva ◽  
Karla Roberta Castro Pinheiro Alves
Keyword(s):  
Financial Management ◽  
Forecast Error ◽  
Percentage Error ◽  
Forecast Errors ◽  
Forecasting Error ◽  
Public Financial Management ◽  
Net Revenue ◽  
Temporal Horizon ◽  
Substantial Change

The objective of this study is to investigate determinant factors the forecast errors of market analysts for Brazilian fiscal variables. The data for conducting the research was obtained in the Prisma Fiscal, the Ministry of Economy's system of collecting and disclosure of market expectations for fiscal variables. The data collected refer to collection, net revenue and total expenditure, in the period from November 2015 to December 2018. The Mean Absolute Percentage Error (MAPE) and z were used to measure the quality of the market analysts' forecast. The use of the z value as a measure of the forecast error is one of the contributions of this research. Among the results obtained, the hypothesis that the temporal horizon interferes in the quality of the forecast was not rejected for horizons of one and two years; the dispersion of forecasts did not show a substantial change; and the optimistic bias hypothesis was not confirmed. It can be concluded that for this sample the temporality is a determinant factor of the forecast error of the market analysts for fiscal variables. The research contributes to the discussion about forecasting error in the areas of Public Financial Management and Public Accounting.

scholarly journals Fiscal Reforms and Deficits in Tanzania: An Exploratory Review

2020 ◽  
Vol 30 (1) ◽  
pp. 57-75
Author(s):  
Joseph Mawejje ◽  
Nicholas M. Odhiambo
Keyword(s):  
Financial Management ◽  
Public Investment ◽  
Policy Reforms ◽  
Fiscal Deficits ◽  
Management Reform ◽  
Public Financial Management ◽  
Fiscal Reforms ◽  
Recent Trends ◽  
External Sector ◽  
Macroeconomic Environment

AbstractThis study provides an exploratory review of the trends, policy reforms, and determinants of fiscal deficits in Tanzania during the period 1980-2017. During this period, the country undertook various fiscal policy reforms intended to improve revenue mobilization and expenditure efficiency. The most significant of these reforms included the introduction of the semi-autonomous revenue authority and an extensive public financial management reform program. While the post-independence period was characterized by large fiscal deficits, recent trends show that fiscal deficits in Tanzania have been contained, even as some public investment management challenges exist. The review of trends and literature suggests that fiscal deficits are linked to the structure of the economy, low levels of development, donor aid and grants, as well as the overall macroeconomic environment. In particular, fiscal deficits are associated with growth cycles, inflationary episodes, and external sector developments.

scholarly journals Ukraine

2019 ◽  
Vol 2019 (355) ◽  
Author(s):  
Keyword(s):  
Financial Management ◽  
Armed Conflict ◽  
Public Investment ◽  
System Reform ◽  
Structural Reforms ◽  
Fiscal Consolidation ◽  
Medium Term ◽  
Critical Areas ◽  
Public Financial Management ◽  
Decisive Action

After a deep economic crisis caused by a difficult external environment, an armed conflict in the East, and delays in the implementation of structural reforms, Ukraine has been showing some signs of recovery. To achieve a more sustainable fiscal consolidation, the Ukrainian authorities have recently adopted a broad Public Financial Management (PFM) System Reform Strategy, paving the way to decisive action in critical areas including medium-term budgeting, analysis and management of fiscal risks, and public investment management (PIM).

Fiscal rules as an instrument of balanced budget policy

2017 ◽  
pp. 5-32 ◽  
Author(s):  
A. Kudrin ◽  
I. Sokolov
Keyword(s):  
Structural Changes ◽  
Federal Budget ◽  
Fiscal Rules ◽  
External Shocks ◽  
Current Version ◽  
Economic Cycle ◽  
Fiscal Rule ◽  
Budget Policy

In the article the authors attempt to understand the extent to which fiscal rules that were applied earlier in Russia and are in force at the present time are systemic and balanced, which requirements must be met by an effective fiscal rule in current conditions. So, according to the authors, fiscal rules should allow to adapt the budget to the requirements of financing structural changes in the economy and to maintain control over long-term budgetary sustainability. However, the new fiscal rules, introduced in July 2017, imposing excessively tight restrictions on the volume of federal budget expenditures, will not allow to provide the necessary amount of expenditures for economic development and financing of structural reforms. In this regard, a consistent transformation of the current version of fiscal rules to the framework on the basis of a zero structural balance is justified. The preparation of federal budget, balanced on a cyclical basis, can provide a relatively stable level of expenditure, regardless of the volatility of oil prices and the economic cycle, thereby realizing the countercyclical nature of fiscal policy and reducing the budget vulnerability to internal and external shocks. The effectiveness of the proposed fiscal rule is verified through modeling on data for 2007-2016. In particular, if we had used the proposed rule starting from the second half of the 2000s, it would have been possible to curb the growth of federal budget expenditures that began with the anti-crisis measures of 2009, halve the level of public debt and accumulate sovereign reserves in the amount of up to 25% of GDP. At the same time, the proposed rule requires high quality of macroeconomic and budgetary forecasting.

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