Fiscal Rules for the Western Balkans

39 Pages Posted: 21 Aug 2019

Date Written: August 20, 2019

Abstract

Policy toward fiscal rules is an important issue in the countries of the Western Balkans (Albania, Bosnia and Herzegovina, Kosovo, Montenegro, North Macedonia, and Serbia). According to a rough estimate, the countries with rules (all but North Macedonia) have complied with their debt and overall-deficit rules a little more than half the time. An online survey, conducted for this paper, suggests that public understanding of the rules is limited, which may reduce the political pressure for compliance. To get debt down to prudent levels, Albania and Montenegro will need a strong commitment to complying with their fiscal rules and will often have to do more than their deficit rules require. The following principles should guide future policy toward fiscal rules: more emphasis should be given to ensuring that fiscal rules are widely understood and enjoy the support of a broad range of stakeholders; policy toward the rules should be consistent with accession to the European Union, but the rules should be simpler than the European Union's and the debt limits lower; limits in rules should not be mistaken for targets; and public financial management should be improved to support the implementation of rules.

Keywords: Macroeconomics and Economic Growth, Economic Policy, Institutions and Governance, Fiscal & Monetary Policy, Macro-Fiscal Policy, Public Sector Economics, Public Finance Decentralization and Poverty Reduction, Economic Adjustment and Lending, Public Financial Management, Inflation

Suggested Citation

Kikoni, Edith and Madzarevic-Sujster, Sanja and Irwin, Tim and Jooste, Charl, Fiscal Rules for the Western Balkans (August 20, 2019). World Bank Policy Research Working Paper No. 8990. Available at SSRN: https://ssrn.com/abstract=3440366

Edith Kikoni (Contact Author)

World Bank ( email )

1818 H Street, NW
Washington, DC 20433
United States

Sanja Madzarevic-Sujster

World Bank ( email )

1818 H Street, NW
Washington, DC 20433
United States

Tim Irwin

World Bank

1818 H Street, NW
Washington, DC 20433
United States

Charl Jooste

World Bank ( email )

1818 H Street, NW
Washington, DC 20433
United States

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