evidence suggests that FCs providing assessment generally contribute more to fiscal discipline than those
limited to pure analysis.
The desirable form of fiscal agencies is country specific. It would depend on the nature of the fiscal
problem and on the country’s political environment, including the constitutional setup, the legal tradition,
and policymaking customs. Fiscal agencies can complement the role played by existing institutions,
including the Fund, and enhance their effectiveness. As part of the IMF’s mandate, consideration could
be given to exploring the development of specific types of fiscal councils.
Both theory and experience suggest that fiscal agencies can improve the quality of fiscal policy. In
particular, they can help improve fiscal discipline and policy credibility, and serve a useful signaling role
conducive to morestable expectations and less uncertainty. But institutions of whatever shape are not a
panacea: their effectiveness ultimately rests on a government’s commitment to the mandate assigned to
them.
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