INSTITUTIONALIZATION OF FISCAL RULES: INTERNATIONAL AND RUSSIAN EXPERIENCE

Abstract

Economic instability forces governments to urgently support businesses and the public at the expense of budgetary imbalances. Such circumstances test flexibility of fiscal rules - restrictions on the main budget parameters. They are often suspended, the limit values of their indicators are adjusted, temporary concessions for their use are introduced. Both the introduction of such instrument and its sustainability over time depend primarily on thegovernment and policymakers. At the same time world experience proves that budget restrictions supported by the authorities need a complementing system of adaptation and controlling conditions allowing for a better adaptation to economic challenges and following their original task - to ensure medium-term budget balance while maintaining a conditionally constant level of budget expenditures. The subject in the paper is the institutional conditions for fiscal rules’ functioning. The purpose of the study is to identify the institutional framework used to ensure proper performance of fiscal rules and assess its practical applicability in Russia. Using the methods of descriptive statistical and comparative analysis of international and Russian practice in applying fiscal rules, the authors identify and analyze the list of such institutional conditions as medium-term expenditure frameworks, fiscal councils, correction mechanisms, escape clauses. The results of the study consist in formulated required and sufficient institutional framework for effective fiscal rules. Due to the use of only medium-term budget planning in Russia the remaining three may serve as a guideline for implementing budget restrictions during the current reform .