Regulations on curbing budget deficits can assist governments in improving finances strained by the global economic crisis, emphasized the International Monetary Fund (IMF).
The IMF examined the "evolution" of fiscal regulations with the help of a new database for all member countries, considering possible fiscal frameworks for the period following the exit from the crisis. The study was conducted as part of the IMF’s ongoing analytical research on economic strategies that should be adopted after the crisis, in accordance with the requirements of the G20 group of the world’s most developed and emerging economies. In a separate report, the IMF found that at the beginning of 2009, national or supranational fiscal regulations aimed at improving fiscal performance and adopting wiser fiscal measures were in place in nearly 80 countries.
"In many cases, however, these regulations have been maximally strained by the need for protection from the ongoing global crisis," the IMF highlights in its latest report. A fiscal framework shaped according to established rules of fiscal discipline can help fix expectations related to fiscal sustainability, provided it reflects the circumstances of individual countries, the IMF believes. The shift towards the introduction of fiscal rules is likely to intensify as countries seek to develop strategies for withdrawing economic support measures in the context of the financial crisis. This crisis was triggered by the collapse of the U.S. mortgage market, forcing many countries to adopt fiscal stimulus programs worth trillions of dollars for their shaken economies. (H)
