Abstract
Legal limitations on government deficit and debt exist at all levels of the legal hierarchy, international, regional, constitutional, and statutory. The International Monetary Fund imposes conditionality upon the loans that it supplies. The European Union and its monetary group, the Eurozone, impose quite specific numerical caps on governmental deficits and debts, with significant sanctions for states that violate the standards. A few national constitutions include so-called “debt-brakes” that limit deficits and borrowing. Every state has laws that regulate the preparation and presentation of the budget and its review; some of these also seek to control deficits or borrowing. Ordinary laws are, however, susceptible to change by simple amendment or suspension if economic or political objectives seem to require disregard of a previously established standard.
Recent experience has shown an increasing use of supranational limits on national deficit and debt, with implementation by the IMF or the EU institutions. It also shows an increase in the use of objective measures (e.g., debt or deficit limits expressed in percentage of GNP) rather than the subjective standard previously used.
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Notes
- 1.
This passage is normally attributed to Juvenal, appearing in the Satires. It may, however, originally have been a marginal annotation by someone else in the margin of the original text. If the master of a house hires a watchman to protect his valuables, who makes certain that the watchman himself does not take them?
- 2.
The national reporters are:
Belgium: Dimitri Yernault, “Les Limitations de la dette et du déficit en droit constitutionel belge”;
Czech Republic, Hana Marková, with the assistance of Martin Kopecký and Radovan Suchánek, “The Process of Budgeting and Issues of Indebtedness in the Czech Republic”;
Germany: Hermann Pünder, “Budgetary Planning and ‘Debt Brakes’ in the Federal Republic of Germany”;
Greece: Athanasius Tsevas, “Limitations on National Debt and Deficits—National Report: Greece”;
Italy: Edmondo Mostacci, “Debt and Deficit: the Position under the Italian Constitution and its Recent Amendments”;
Netherlands: Mical Diamant, Michel van Emmerik, and Gert Jan Geertes, “Limitations on Government Debt and Deficit”;
Poland: Teresa Dębowska, “Legal Frames of the Financial System in Poland”;
Romania: Simina Elena Tănăsescu and Simona Gherghina, “Limitations on Government Debt and Deficits”;
Switzerland: Agata Zielneiwicz, “National Report: Switzerland”;
United Kingdom: Tony Prosser, “Limitations on Government Debt and Deficits: the UK”; and
United States: Ved Nanda, “Limitations on Government Debt and Deficits in the United States”. These national reports, together with the special report on European Union law and this general report were also published in Morrison, Fiscal Rules – Limits on Governmental Deficits and Debt, Springer, 2016.
- 3.
Belgium, Germany, Greece, Italy, and the Netherlands.
- 4.
The Czech Republic, Poland, Romania, and the United Kingdom.
- 5.
Switzerland.
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United States.
- 7.
Michal Tomášek, “The Crisis of the Economic and Monetary Union and its Solution (or Dissolution?)”. This contribution will also be published in the separate volume with the national reports.
- 8.
Article 115 of the original text of the Basic Law, adopted in 1949, limited the use of debt to unusual circumstances, but included no numerical maximum.
- 9.
German Basic Law (Grundgesetz), art. 109 III and 115 II).
- 10.
Id., art. 109 III.
- 11.
Id.
- 12.
Swiss Federal Constitution, art. 126.
- 13.
Constitution of the Republic of Poland, art. 216, para. 5.
- 14.
U.S. Constitution, art. I, sec. 8.
- 15.
Budget Control Act of 2011, Public Law 112-25, 125 Stat. 240.
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Morrison, F.L. (2017). Fiscal Rules: Legal Limits on Government Deficit and Debt. In: Schauer, M., Verschraegen, B. (eds) General Reports of the XIXth Congress of the International Academy of Comparative Law Rapports Généraux du XIXème Congrès de l'Académie Internationale de Droit Comparé. Ius Comparatum - Global Studies in Comparative Law(), vol 24. Springer, Dordrecht. https://doi.org/10.1007/978-94-024-1066-2_22
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