Paraguay: Technical Assistance Report-Establishing a Structural Balance Rule and a Public Debt Objective

International Monetary Fund

No 2017/067, IMF Staff Country Reports from International Monetary Fund

Abstract: This Technical Assistance Report discusses measures to establish a structural balance rule and a public debt objective in Paraguay. The analysis suggests that the authorities’ structural balance formula should be more conservative and—to mitigate the risk of unwarranted expenditure growth—should assume that future structural revenues will grow at the same pace as trend GDP. Under this assumption, the structural balance rule is broadly equivalent to an expenditure rule, constraining spending to grow at trend GDP—a formula that is simpler to implement and easier to communicate to the public. Moreover, the formula should account for new revenue measures more explicitly, provided there are safeguards to ensure that they are estimated fairly.

Keywords: ISCR; CR; debt limit; debt anchor; SBR formula; trend GDP; structural revenue; expenditure rule; Fiscal stance; Debt limits; Public investment and public-private partnerships (PPP); Europe; West Africa; Global; Western Europe (search for similar items in EconPapers)
Pages: 67
Date: 2017-03-15
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