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Strengthening Chile's Rule-Based Fiscal Framework


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  • Teresa Dabán Sánchez
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    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.

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    Bibliographic Info

    Paper provided by International Monetary Fund in its series IMF Working Papers with number 11/17.

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    Length: 26
    Date of creation: 01 Jan 2011
    Date of revision:
    Handle: RePEc:imf:imfwpa:11/17

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    Postal: International Monetary Fund, Washington, DC USA
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    Keywords: Commodity prices; Copper; External shocks; OECD; fiscal policy; fiscal rules; fiscal rule; expenditures; expenditure; medium-term fiscal framework; fiscal framework; public spending; fiscal responsibility; fiscal performance; fiscal indicators; public debt; fiscal discipline; fiscal responsibility law; expenditure growth; fiscal objectives; tax revenues; fiscal accounts; fiscal system; government expenditures; mtff; fiscal frameworks; fiscal response; public financial management; fiscal tightening; government spending; fiscal transparency; government expenditure; expansionary fiscal; fiscal surpluses; increase in expenditures; tax collections; fiscal policy rules; fiscal outcomes; fiscal balances; key fiscal indicators; fiscal impact; growth of expenditures; expenditure level; national budget; fiscal reports; fiscal policy rule; expansionary fiscal policy; public spending programs; expenditure frameworks; fiscal position; fiscal stance; tax ratios; fiscal affairs department; higher expenditure; fiscal targets; fiscal reporting; fiscal actions; budget law; expenditure ceiling; fiscal management; fiscal planning; prudent fiscal management; fiscal policy framework; central government budget; fiscal affairs; government budget; fiscal issues; fiscal stability; fiscal responsibility act; expansionary fiscal stance; fiscal sustainability; discretionary fiscal policy; budget balance; public finances; fiscal council; budget deficit; fiscal analysis; fiscal powers; tax rates; fiscal responsibility laws; fiscal variables; budget process; fiscal adjustment; total expenditures; annual budget; fiscal impulse;

    This paper has been announced in the following NEP Reports:


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