Fiscal Councils: Evidence, Common Features and Lessons for the Caribbean
Fiscal councils are among the most recent innovations in terms of the architecture of fiscal institutions. This paper provides an overview of the history and evolution of these institutions, research regarding their effectiveness, and a detailed survey of their key characteristics across countries. Emerging evidence suggests that fiscal councils that are well insulated from government or political influence, adequately resourced and funded, with clear mandates and quantitative objectives anchored in fiscal rules, and able to effectively influence public opinion are most effective in strengthening fiscal outcomes. Conversely, poorly designed or inadequately resourced fiscal councils may not improve fiscal outcomes at all. Caribbean countries are just the latest frontier in the expansion of fiscal councils globally. As these and other small and/or developing countries begin to design and activate such entities, it will be important for their architects to optimize them to country-specific needs and constraints. Not doing so risks compromising credibility and progress to date on institutional reform.