fanfare, having an independent fiscal institution monitor and report on compliance can raise the quality of public debate on the subject.

**Second, the rules in place should ease accession to the EU.** National fiscal rules should be consistent with EU rules. But the rules do not need to be identical to the EU’s to be consistent with them. Debt limits should be less than 60 percent of GDP, and the total set of rules should be simpler than those of the EU. The focus should also be on changes that will not be regretted if accession to the EU is delayed.

**Third, the systems of public financial management that support fiscal rules should continue**

**to be improved** . These improvements are among those most likely to pass the no-regrets test. Being able to measure the government’s debt and deficit according to the rules of ESA 2010, for example, is necessary if the countries are to join the EU, but it will be valuable even if they do not. Being able to monitor debts and deficits according to these rules will, for example, make it easier to see if fiscal rules are being followed only at the expense of a build-up of arrears or the transfer of spending responsibilities to noncommercial state-owned enterprises. Once ESA data can be measured with sufficient reliability, they can be used for setting fiscal rules or targets. Ensuring that forecasts are unbiased is also valuable, and it will be useful to evaluate the success of attempts to get unbiased forecasts by establishing fiscal councils. Solving the problem of biased forecasts will also increase the prospects for making medium-term spending plans credible. Spending reviews of the kind used in many EU countries can ensure that across-theboard spending restraint is supplemented by periodic, in-depth examination of whether spending is efficient and well-targeted.

**Fourth, limits should not be mistaken for targets** . To adopt a debt limit of, say, 60 percent of GDP is not to say that government should aim to keep debt at or just below 60 percent of GDP. Most of the time, it may be prudent to aim for much less debt. One way of trying to distinguish rules from targets is to combine rules with clearly announced but nonbinding targets that are tighter than the rules. If the rule says that debt may not exceed 60 percent of GDP, for example, the government can announce a target of, say, 40 percent. Or, if the rule says the deficit can never exceed 3 percent of GDP, the government can announce that in good years it will aim for surpluses.

# **Fifth, the rules should both set a long-term objective and give clear short-term guidance.**

Recent work on fiscal rules (e.g., Eyraud and others 2018 and IMF 2018) notes that fiscal rules need to be considered collectively and suggests that the best approach is to combine a long-term fiscal objective with a rule that specifies minimum progress in the short term toward that objective. The long-term objective is typically specified in terms of a fiscal stock, most often gross debt. The long-term objective is chosen to promote fiscal sustainability and minimize the risk of a fiscal crisis. The rule that governs policy in the short term puts a limit on a flow variable, such as the overall deficit, in a way that ensures a degree of progress toward the longterm stock objective. Albania’s fiscal rules have this form, though the flow rule, as noted earlier, may not be the best. Probably better is a deficit or expenditure rule. While revenue matters as 30