- Info
3. Objectives
- The main objectives of a robust fiscal responsibility regime are to ensure that governments take into account and publicly discuss all of the relevant dimensions of fiscal policy. Most of the current principles of responsible fiscal management contained in section 26G of the Public Finance Act are focussed on the sustainability dimension of fiscal policy. While that is a critical dimension, it is not the only consideration. The analysis above highlights how, during the last cycle, governments reduced debt to a “prudent” level, apparently satisfying the sustainability dimension of fiscal policy. The principles, however, provided insufficient additional guidance about other factors governments should take into account in formulating fiscal policy.
- Thus any changes need to ensure that governments consider not only whether fiscal strategy is sustainable, but also whether it is consistent with macro-economic stability, promotes the effective and efficient management of resources, and is consistent with inter-generational equity.
- Such changes should therefore be:
- flexible - to enable governments to take into account the prevailing economic circumstances when setting fiscal policy, and;
- transparent - to enable the public to hold governments to account for their performance.
Page top
