The logic of pursuing a fixed budget adjustment target (rather than a ratio to GDP) was reiterated by Craig Beaumont in last week’s IMF conference call. From the transcript:
MR. BEAUMONT: On the budget, the Fund’s position is that we should allow the automatic fiscal stabilizers to work, which means that you adopt a consolidation path, and then if growth is stronger or weaker, you don’t change the amount of measures that are already working through the system. If, for example, growth is weaker, you don’t adopt more measures because you’ll make the economy even weaker still. Similarly, on the upside, if growth is stronger, you don’t cut back measures, you maintain the same effort as planned.
So that’s the preferred approach to fiscal policy–we would rather adopt a plan and implement it consistently, and then allow some flexibility on the headline deficit if growth turned out to be substantially weaker than expected.