IMF国际货币组织全球-Iceland_Selected-Issues_24页_623kb

Summary of ICLAND: Scope for Improving Iceland's Fiscal Framework

Core Content

This paper, prepared by the International Monetary Fund (IMF) for periodic consultation with Iceland, examines the country's fiscal framework and explores ways to enhance its resilience to economic fluctuations. It reviews the current fiscal rules, their implications for fiscal sustainability, and evaluates alternative fiscal policies that could reduce procyclicality.

Main Points

A. Overview of the Fiscal Rules

• Iceland has a rules-based fiscal framework, which includes a five-year fiscal strategy and medium-term planning.
• The framework is legally grounded and reflects political consensus.
• It covers all public sector institutions and is supported by sound budget management and accounting concepts.
• The rules set a lower bound on general government balances and an upper bound on public debt, both expressed as a percentage of GDP.
  • The five-year average of balances must be above zero.
  • Any annual deficit must not exceed 2.5% of GDP.
  • Net public debt must remain below 30% of GDP, and any excess must decline by at least 5% annually over three years.
• The framework also includes contingency reserves and escape clauses to allow for flexibility in case of unexpected shocks.

B. Implications for Fiscal Sustainability

• The current fiscal rules ensure fiscal sustainability and create fiscal space.
• A balanced budget rule results in a declining public debt-to-GDP ratio when nominal GDP growth is positive.
• Fiscal space refers to the ability to increase spending or reduce taxes without risking market access or debt sustainability.
• The rules allow for some flexibility, but the five-year average smoothing may not be sufficient to handle large and persistent shocks.
• Procyclicality is a concern, as fiscal balances tend to move with GDP and the output gap, limiting countercyclical responses.

C. Fiscal Policies to Reduce Procyclicality

• The paper evaluates alternative fiscal policies within the existing framework, including:
  • Balanced Budget Rule: Maintains a zero overall balance, leading to a decline in public debt but still results in procyclical behavior.
  • Regime Switching Rule: Switches between a balanced budget and a 1% GDP surplus depending on the output gap, reducing procyclicality but not eliminating it.
  • Acyclical Fiscal Rule: Aligns real spending with potential GDP, making it independent of the output gap, and thus countercyclical.
  • Debt Stabilizing, Countercyclical Fiscal Policy: Once public debt reaches a desired safe level, the fiscal rule could be adjusted to maintain a stable debt level while keeping a countercyclical stance.
• These policies are consistent with the current fiscal rules, and the escape clause may be invoked to adjust fiscal balances in response to shocks.

D. GIMF Simulations

• The Global Integrated Monetary and Fiscal Model (GIMF) is used to simulate the effects of alternative fiscal policies.
• The simulations consider various assumptions, such as:
  • Potential GDP growth at 2%.
  • Inflation at 2.5%.
  • Real interest rates declining from 3.44% to 2%.
  • Primary spending and revenue ratios that are constant.
• The results show that countercyclical policies can lead to larger fiscal space, faster debt reduction, and better resilience to economic shocks.
• However, the paper also notes that procyclicality remains a challenge, and the five-year average may not provide enough flexibility for large shocks.

Key Information

• Fiscal rules are designed to ensure sustainability and fiscal space.
• Procyclicality in real primary spending is a concern, as it intensifies economic fluctuations.
• Countercyclical policies (such as the acyclical and debt-stabilizing rules) can reduce procyclicality and improve fiscal resilience.
• The escape clause allows for temporary deviations from the rules in case of unexpected shocks, but it must be justified annually.
• GIMF simulations provide a more comprehensive analysis of the interaction between fiscal and monetary policies, showing that countercyclical fiscal policies can be beneficial in reducing output volatility.

Conclusions and Recommendations

• Iceland's fiscal framework is robust but not fully countercyclical.
• Fiscal space is created through the rules, but procyclicality remains a risk.
• Countercyclical fiscal rules (e.g., acyclical and debt-stabilizing rules) could help reduce output fluctuations and improve resilience.
• The escape clause is useful but should be used judiciously.
• Revisions to the fiscal rules may be necessary to better accommodate large and persistent shocks.

References

• IMF (2016): Fiscal framework for general government.
• Statistics Iceland and IMF's World Economic Outlook database.
• Central Bank of Iceland's Quarterly Macroeconomic Model (QMM) database.

Annex

• Annex I discusses the reasons to expect a falling interest rate burden in Iceland, including the declining real interest rates and the structure of public debt.

Figure Highlights

• Figure 1: Overall General Government Balance and Net Public Debt (2016–2018).
• Figure 2: Correlation between Real GDP and Real Primary Spending (1990–2018).
• Figure 3: Real GDP and Primary Spending Growth (1990–2018) for Iceland and other European OECD countries.
• Figure 4: Primary Spending to GDP - Output Gap (1990–2018).
• Figure 5–15: Counterfactual simulations under different fiscal rules, including balanced budget, regime switching, acyclical, and countercyclical policies.
• Figure 9: Finland's countercyclical structural primary spending as a benchmark.

Conclusion

Iceland's fiscal framework is a strong foundation for fiscal sustainability, but it has room for improvement to address procyclicality and large economic shocks. Implementing countercyclical fiscal rules could help stabilize the economy and reduce the impact of output fluctuations. The escape clause provides flexibility, but its use should be carefully managed. The GIMF model offers a useful tool for analyzing the implications of alternative fiscal policies and supports the case for more countercyclical approaches.