Hard Budget Constraint

Hard Budget Constraint

A spending limit that cannot be exceeded without drastic consequences. For example, a country cannot exceed its debt ceiling without incurring panic in its bond markets. More commonly, however, this term refers to the requirement that a money manager or investment company at least break even and preferably meet some target profit for clients or shareholders. Companies that fail to meet hard budget constraints may see shake-ups in their management, perhaps with major executives losing their jobs.
References in periodicals archive ?
The focus on social inclusion, subject to a hard budget constraint, arose as a reaction to the country's historic inequality, the trauma of the 1964-85 authoritarian period, and 10 years of hyperinflation (1985-94).
This would make business rates a fully devolved tax and it would introduce a hard budget constraint into Welsh Government policymaking that is currently lacking.
The firm faces a hard budget constraint as long as it does not receive support from other organisations to cover its deficit.
The day it will happen a hard budget constraint will be enforced on the U.
But the IMF clarified that even Russia faced a hard budget constraint in international finance.
Parastatal reform, through the imposition of a hard budget constraint on public enterprises, and the privatization of about one-third of the 382 public enterprises, is beginning to generate important improvements in economic efficiency.
As hard budget constraints limit the scope for the Kyrgyz Government to increase social transfers, the uncertainties surrounding the economic fortunes of countries hosting Kyrgyz labor migrants put at risk these countries continued ability to absorb the migrants.
But, as the private sector develops, SOEs are subjected to hard budget constraints, and the external capital account is opened, this huge credit mountain will create increasing global financial vulnerability.
The stable Bulgarian lev and the Currency Board is an institution that puts hard budget constraints.
Fortunately, capital markets finally stepped in to impose necessary hard budget constraints on governments.
16) This difference shows that the decision makers in CD are not under hard budget constraints.