27 the pre-FRL period is measured as the difference between the debt/GSDP in year t-1 and the debt/GSDP in year t-5, before the passing of the FRL in year t. Similarly the growth of debt/GSDP in the post-FRL period is measured as the difference between the debt/GSDP in year t+5 and the debt in the year t when the FRL is passed. To leave out the impact of the global financial crisis of 2008-2009, the post-FRL data will cover up to end 2007.<sup>23</sup> In **Australia** , the growth of debt/GSDP is negative for all the states in the sample in the pre-FRL five-year period as well as in the post-FRL period (Table A3.1). The debt/GSDP of Western Australia and Northern Territory continued to decline at faster pace and that for Victoria, Queensland and New South Wales continued to decline, although at a slower pace in the post-FRL period. The states in the table passed FRLs from 2000-2005, but fiscal consolidation started in the 1990s (e.g., South Wales committing to long-term fiscal targets in 1994, and Victoria’s Financial Management Act in 1994). As noted before, the combined state and Commonwealth general government net debt had not exceeded 30 percent of GDP in the 1990s (Simes, 2003).

In **Brazil** , although the growth of debt/GDP for SNGs was positive for both the pre and post-FRL periods, the growth slowed down from 5.0 percent to 1.3 percent (Table A3.2). The slowdown also happened to the federal government.

In **Canada** , all the provinces had declining debt as share of GSDP after the passing of the FRLs (Table A3.3). In British Colombia and Nova Scotia, this decline reversed the trend of rising debt as share of GSDP in the pre-FRL period, with British Colombia experienced the largest turnaround. The other three provinces already had declining debt share of GSDP for the FRL. The debt/GSDP of Newfoundland and Labrador continued to decline in the post-FRL period at a faster speed, and of Alberta, Ontario and New Brunswick continued the reduction but at a slower pace.

In **Colombia** , the debt/GSDP ratio rose from 2 percent in 1996 (the year before the traffic light Law 358) to 3.5 percent in 2001. The ratio steadily declined to 1.5 percent by 2006 and stayed at this level since (Table A3.4, Figure A4.4).

In **Indian** states, the growth of debt /GSDP was slower in the post-FRL period than the pre-FRL period for 24 out of 26 states. Twenty one out of these 24 states had reversed the trend of increasing debt/GSDP in the pre-FRL period (Table A3.5).

From the above, FRL per se was not the pivotal moment for the turnaround of fiscal deterioration in Australia and Canada. In fact, legislating and regulating subnational debt was well underway before the enactment of various subnational FRLs. As noted before, the fiscal consolidation grew out of policy debates in Australia in the 1990s, before various states passing FRLs from 2000-2006. In Canada, many SNGs adopted balanced-budget and/or debt reduction legislation in the 1990s (Millar 1997).<sup>24</sup> The entire country was seriously undertaking fiscal corrections after rating downgrades.

> 23 For a country with its fiscal year ending during the calendar year, the debt data will cover up to June 2008.

> 24 Alberta, Saskatchewan, Manitoba, Quebec, New Brunswick, Nova Scotia, Northwest Territories, the Yukon from 1993-1996.