2016年-IMF国际货币组织全球_Paraguay_Selected_Issues_52页_1mb

Summary of the Selected Issues Paper on Paraguay

Core Content

This paper analyzes Paraguay's Fiscal Responsibility Law (FRL), focusing on its implementation, design, and the trade-offs between fiscal discipline and the need for infrastructure investment. It draws lessons from international experience with fiscal rules and provides policy recommendations to improve the FRL framework.

Main Features of the FRL

• Deficit ceiling: The central government's deficit must not exceed 1.5% of GDP.
• Expenditure ceiling: Real current primary expenditure growth for the public sector must not exceed 4%.
• Escape clauses: Congress can approve a deficit of up to 3% of GDP in cases of national emergency, international crisis, or negative growth.
• Sanctions: Breaches are considered a dereliction of duty, with personal accountability for civil servants.

Compliance Assessment

• In 2015, the fiscal deficit exceeded the ceiling by 1.3 percentage points of GDP.
• The 2015 Budget Law introduced a one-off exclusion of capital expenditures (financed by sovereign bonds) from the deficit calculation.
• In 2016, the approved budget respected the deficit ceiling, but real current primary expenditure growth exceeded the 4% limit.
• Budget projections have historically been optimistic, leading to systematic errors in revenue and expenditure estimates.
• Realized revenues have been lower than budgeted, while expenditures have often been under-spent, particularly in capital investment and transfers.

Challenges in Implementation

• Legal ambiguity between the FRL and the congress's constitutional budget authority creates tensions.
• The FRL's implementation is complex due to the lack of clear procedural limits on legislative power.
• The Comptroller General, while independent, is not operationally suited to monitor compliance in real-time due to the delay in audit processes (up to 9 months).
• Institutional barriers include spending rigidities and weaknesses in tax administration.

International Experience and Lessons

• Effective fiscal rules typically have:

  • A clear and stable link to fiscal sustainability;
  • Sufficient flexibility to respond to shocks;
  • Transparency and a clear correction mechanism.

• Expenditure Rules (ERs):

  • Simple to implement and monitor;
  • Allow for automatic stabilizers;
  • Lack long-term policy anchoring and may lead to undesirable expenditure shifts.

• Budget Balance Rules (BBRs):

  • Provide a direct link to fiscal sustainability;
  • Can be procyclical if applied in headline terms;
  • Vulnerable to off-budget operations.

• Debt Rules (DRs):

  • Provide a clear medium-term anchor;
  • Lacking short-term operational guidance;
  • Vulnerable to external shocks and contingent liabilities.

• Golden Rules:

  • Protect public investment by excluding it from fiscal targets;
  • May complicate implementation and weaken fiscal sustainability;
  • Can lead to overreporting of expenditures through creative accounting.

Reform Options and Trade-offs

• Paraguay faces a trade-off between maintaining fiscal credibility and allowing for necessary infrastructure investment and countercyclical spending.
• The paper evaluates five reform alternatives, highlighting the potential impacts on fiscal sustainability and economic development.
• The introduction of an independent fiscal council is seen as a positive step, but its effectiveness depends on independence, adequate staffing, and media impact.

Simulations and Analysis

• Simulations of four different fiscal rules under a baseline and three shock scenarios show varying impacts on debt trajectories and capital expenditures.
• The results indicate that more flexible fiscal rules may better accommodate economic shocks and infrastructure needs without compromising fiscal sustainability.

Policy Recommendations

• Strengthen fiscal institutions and improve tax administration to enhance revenue collection and control current expenditures.
• Introduce institutional sanctions and administrative measures to enforce compliance with the FRL.
• Consider revising the FRL to provide more flexibility for countercyclical policies and infrastructure investment.
• Establish an independent fiscal council with clear mandates, sufficient resources, and autonomy to enhance fiscal accountability and transparency.

Conclusion

• The FRL has contributed to improving fiscal discipline and transparency in Paraguay.
• However, its current design is too rigid, limiting the ability to respond to economic shocks and infrastructure needs.
• Reforms should aim to balance fiscal credibility with the flexibility required for sustainable development and macroeconomic stability.