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Federico Diaz Kalan, Ms. Adina Popescu, and Julien Reynaud
There is evidence that fiscal rules, in particular well-designed rules, are associated with lower sovereign spreads. However, the impact of noncompliance with fiscal rules on spreads has not been examined in the literature. This paper estimates the effect of the Excessive Deficit Procedure (EDP) on sovereign spreads of European Union member states. Based on a sample including the 28 European Union countries over the period 1999 to 2016, sovereign spreads of countries placed under an EDP are found to be on average higher compared to countries that are not under an EDP. The interpretation of this result is not straight-forward as different channels may be at play, in particular those related with the credibility and the design of the EU fiscal framework. The specification accounts for typical macroeconomic, fiscal, and financial determinants of sovereign spreads, the System Generalized Method of Moments estimator is used to control for endogeneity, and results are robust to a range of checks on variables and estimators.

engagement with other creditors. The reform agenda in key sectors (e.g., energy, transportation and health) was guided by the EC and World Bank expertise and, as in other programs, the authorities’ commitment to adhere to EU targets under the EDP framework helped anchor the fiscal consolidation plan. However, the larger than projected pro-cyclical impact of fiscal adjustment is a reminder of the need for constant flexibility in adjusting program targets and conditionality to the country’s evolving circumstances. ©International Monetary Fund. Not for

International Monetary Fund
This paper discusses ex-post evaluation of Romania’s exceptional access under the 2009 Stand-By Arrangement. Concerns about Romania’s external and fiscal sustainability have triggered significant increase in external borrowing costs as sovereign yields jumped to 9 percent. Banks also came under increasing pressure, with liquidity drying up from the interbank market. Rollover risks also increased as the maturity structure gradually deteriorated, and reserves coverage of shorter-term external debt declined. The large and front-loaded financing along with upfront fiscal actions has helped quickly to restore market confidence, with a successful return to private financial markets during the program period.
International Monetary Fund. Fiscal Affairs Dept.
This 2004 Article IV Consultation on Romania highlights commendable progress under its home-grown IMF-supported program. Economic activity is picking up after a four-year slump, inflation remains low, the financial sector is stable, and the fiscal and external positions are improving. The 2014 budget aims to protect the gains under the program, continue the downward debt-to-GDP trajectory, and advance the reform agenda. Debt has fallen considerably owing to completion of a large part of the debt-land swap, but remains high. The authorities have taken welcome steps to strengthen the nonbank financial institutions supervisory framework.
International Monetary Fund. Fiscal Affairs Dept.
Malta meets a large number of the principles of the Fiscal Transparency Code at good or advanced level. Based on the assessment made in this report, Malta meets the good or advanced practice on 21 out of 35 principles in the Code. One principle, related to natural resources, was not relevant to Malta and therefore not assessed. Malta meets the basic practice on a further 12 principles (Table 0.1). Practices are stronger in the areas of fiscal reporting and fiscal forecasting and budgeting, where Malta is subject to and complies with the comprehensive reporting framework established by the European Union. Practices are generally weaker in the area of fiscal risk analysis and management, notably oversight of public corporations.
International Monetary Fund

, given that it contributed effectively to the financing package and allowed burden sharing. The authorities’ commitment to adhere to the EU targets under the convergence program and the EDP framework played a key role in ensuring that medium term goals under the EU’s Growth and Stability Pact remained on track, which also helped anchor the fiscal consolidation ( IMF, 2012 ). 29. The 2011 SBA was a successful case of collaboration between an RFA and IMF, involving an effective division of labor with the EC focused on structural reforms. The objectives of the program

Federico Diaz Kalan, Ms. Adina Popescu, and Julien Reynaud

-transparence increase uncertainty about future fiscal policies and outcomes. The paper is structured as follows. In section II , we review the existing literature on the impact of fiscal rules on sovereign spreads. Section III presents stylized facts on noncompliance with the EU fiscal rules and the EDP framework. In section IV , we discuss the methodology and present the main results. Robustness checks are performed in Section V . Section VI exposes possible interpretations and policy implications. II. Literature Review A rich econometric literature documents that

International Monetary Fund

and the Fund . 14 Support from the EU contributed effectively to the financing package and allowed burden sharing. The authorities commitment to adhere to EU targets under the convergence program and the EDP framework played a key role in ensuring that Romania’s medium-term goals under the EU’s Growth and Stability Pact remained on track, which also helped anchor the fiscal consolidation. 46. Post-program engagement with the Fund appropriately continues with a successor precautionary SBA . The successor SBA was approved upon completion of the seventh review in

International Monetary Fund. Fiscal Affairs Dept.

accounts and fiscal statistics . The Treasury prepares the monthly “Comparative Statements” that compare budget outturns with the estimates by using the same administrative and economic classifications. The budget outturns shown in the December “Comparative Statements” are published every March after being fully reconciled with the annual financial statements. The cash-based Consolidated Fund deficit/surplus shown in the Treasury’s Financial Reports are reconciled with the accrual-based net lending/borrowing of the central government in accordance with the EDP framework