Role of Institutional Reform in Fiscal Consolidation: Sub-national Governments Fiscal Adjustment in Brazil by Murilo Portugal (2011).
“A few lessons, old and new
Correcting flows is more important than reducing debt stocks
Finance debt stocks with sufficiently long periods and financing costs that can be repaid given income prospects, but with strong, liquid guarantees
Be opportunistic: don’t let a crisis go without reforms; crises make possible what seemed impossible; use the politicians’ myopic view to your advantage
No borrowing, no deficit: controlling borrowing is the most critical variable; use hard rules for borrowers and financial regulation for lenders
Relying mostly on below-the-line controls may lead to low quality fiscal adjustment, penalizing investment and growth.”
