Calibrating Fiscal Rules: A Consideration of Natural Disaster Risks

By Olusegun Ayodele Akanbi, William Gbohoui, Waikei R Lam

July 31, 2023

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Olusegun Ayodele Akanbi, William Gbohoui, and Waikei R Lam. Calibrating Fiscal Rules: A Consideration of Natural Disaster Risks, (USA: International Monetary Fund, 2023) accessed December 26, 2024

Disclaimer: This Technical Guidance Note should not be reported as representing the views of the IMF. The views expressed in this Note are those of the author(s) and do not necessarily represent the views of the IMF, its Executive Board, or IMF management.

Summary

This technical note assesses how large shocks from natural disasters are key source of vulnerabilities for public finances. It extends the IMF Fiscal Affairs Department calibration toolkit by developing a methodology to calibrate fiscal rules in the event of natural disaster shocks and the possibility of implementing climate adaptation and mitigation measures. The features incorporated in this technical note would allow the calibration of a prudent medium-term fiscal anchor as well as annual budgetary limits that ensure the sustainability of public finances. The note is accompanied by a set of toolkits that provides instructions on calibrating a medium-term debt anchor and corresponding operational rules in the presence of natural disaster risks, accounting for climate investment and other mitigation mechanisms.

Subject: Climate finance, Environment, Expenditure, Fiscal consolidation, Fiscal policy, Fiscal rules, Fiscal stance, Natural disasters, Revenue administration

Keywords: Caribbean, Climate adaptation investment, Climate finance, Climate investment, Climate resilience, Debt anchor, Debt limit, Fiscal consolidation, Fiscal risks, Fiscal rules, Fiscal stance, IMF Library, Mitigation, Natural disaster, Natural disaster risk, Natural disaster shock, Natural disasters

Publication Details

Pages:

22
Volume:

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DOI:

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Issue:

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Series:

Technical Notes and Manuals No. 2023/002
Stock No:

TNMEA2023002
ISBN:

9798400237508
ISSN:

2075-8669

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