IMF Working Papers

Strengthening Chile's Rule-Based Fiscal Framework

By Teresa Daban Sanchez

January 1, 2011

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Teresa Daban Sanchez. Strengthening Chile's Rule-Based Fiscal Framework, (USA: International Monetary Fund, 2011) accessed December 23, 2024
Disclaimer: This Working Paper should not be reported as representing the views of the IMF.The views expressed in this Working Paper are those of the author(s) and do not necessarily represent those of the IMF or IMF policy. Working Papers describe research in progress by the author(s) and are published to elicit comments and to further debate

Summary

The cornerstone of Chile’s impressive fiscal performance has been its structural balance rule. By insulating public spending from short-term copper price fluctuations and the business cycle, the rule has helped preserve fiscal discipline. However, the implementation of the rule in recent years has revealed certain challenges, and in May 2010, the government established a high-level commission to recommend reforms that could make the rule even more effective. This paper assesses the scope for improving the design and implementation of the structural balance rule in light of best practices and OECD country experience with fiscal rules. This assessment suggests several options to strengthen Chile’s fiscal rule, including by simplifying the calculation of the structural balance; enhancing the rule’s flexibility, transparency and accountability; and complementing it with a medium-term fiscal framework.

Subject: Expenditure, Fiscal policy, Fiscal rules, Fiscal stance, Metal prices, Prices

Keywords: Accountability, Accountability mechanism, Authorities' effort, Authorities' willingness, Central government, Chilean government, Chile's authorities, Copper price, Delinquent government, Fiscal policy rule, Fiscal rules, Fiscal stance, Global, Government, Government's net, Metal prices, Price, Public financial management, Resource curse, Resource revenue management, Resource-producing countries, Revenues rule, Rule, Structural balance, Structural surplus, Transparency, WP

Publication Details

  • Pages:

    26

  • Volume:

    ---

  • DOI:

    ---

  • Issue:

    ---

  • Series:

    Working Paper No. 2011/017

  • Stock No:

    WPIEA2011017

  • ISBN:

    9781455211982

  • ISSN:

    1018-5941

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