Role of Fiscal Rules and Institutions on Fiscal Sustainability and Growth: Policy Options for Zimbabwe
Noell Machinjike & Wellington G. Bonga
Journal Title:Journal of Economics and Finance
The paper investigated the significance of fiscal rules and fiscal institutions, with the objective of achieving fiscal sustainability and growth in Zimbabwe. Zimbabwe is currently faced with unsustainable expenditures which have resulted in fiscal macroeconomic imbalances. To achieve the study goals, a case study approach has was employed. The study to strengthen its arguments for policy derivation reviewed the experiences of the United Kingdom, Australia, Japan, New Zealand, Canada, Chile, Sweden, Botswana, Cape Verde, Malaysia and Mauritius. The selected countries have achieved fiscal sustainability and growth, with sound fiscal policies through the use of fiscal rules. Fiscal rules in the form of overall budget balance rules, primary balance rules, debt rules and expenditure ceilings are key in achieving fiscal sustainability and overall economic growth. The study recommended that Zimbabwe should adopt a fiscal rule to attain fiscal stability and growth. The study also proposed that a rule be enacted to ensure successful and effective implementation of the fiscal rule.