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2021 | OriginalPaper | Buchkapitel

11. The Impact of the EU on National Fiscal Governance Systems

verfasst von : László Jankovics, Leire Ormaetxea Igarzabal, Ştefan Ciobanu

Erschienen in: Does EU Membership Facilitate Convergence? The Experience of the EU's Eastern Enlargement - Volume II

Verlag: Springer International Publishing

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Abstract

National fiscal frameworks (NFFs) represent a set of domestic arrangements to enhance the predictability and transparency of public finances. This chapter looks into a specific aspect of institutional convergence: the development of NFFs in the EU-11 countries following their EU accession. The turning point for the region was the emergence of supranational provisions in the context of the economic governance reforms between 2011 and 2013. These set in motion a comprehensive revamp of EU-11 NFFs, covering, most notably, the design of domestic numerical rules, medium-term budgetary frameworks and the set-up of national independent fiscal institutions (IFIs). This process has led to a broadly similar state of advancement compared to the ‘old’ Member States as corroborated by the various indices of the Commission’s Fiscal Governance Database. This chapter devotes special attention to EU-11 IFIs by discussing the observable patterns of their six main functions. It concludes that IFIs’ watchdog role has generally strengthened the public scrutiny over fiscal policy-making, partly reflecting the spread of good practices across the EU during the institution-building phase. Nonetheless, further efforts could be made so that fiscal councils would be able to play an even stronger role in budgetary planning and oversight.

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Vorheriges Kapitel Climate Change and EU Membership: The Journey of Central and Eastern Europe Towards a Carbon-Free World

Nächstes Kapitel Towards Sustainable and Adequate Pension Systems: Old-Age Pension Reforms After Economic Transition and EU Accession in Central-Eastern and South-Eastern Europe

For a recent survey of the related political economy models, see Alesina and Passalacqua (2015).

See, for example Turrini (2008) for the euro area evidence.

See the detailed explanation of the FRI and its evolution for the regional countries in the next section.

The authors stress that even significantly positive correlations should not be interpreted as a causal relation as these may simply reflect deeper, often unobservable factors. Moreover, the limited time span for many of the IFIs in the database may also affect the empirical results.

Council Directive 2011/85/EU of 8 November 2011 on requirements for budgetary frameworks of the Member States – OJ of 23.11.2011, L306/41.

The Fiscal Compact is Title III of the intergovernmental Treaty on Stability, Coordination and Governance in the Economic and Monetary Union, signed in March 2012. It requires euro area countries to introduce in the national legislation a balanced budget rule in structural terms, an automatic correction mechanism and an independent fiscal institution to monitor the rule. Bulgaria, Denmark and Romania are also bound by the same requirements on a voluntary basis.

Communication from the Commission: Common principles on national fiscal correction mechanisms (COM/2012/0342 final). Web: https://eur-lex.europa.eu/legal-content/EN/TXT/HTML/?uri=CELEX:52012DC0342&from=EN

Regulation (EU) No 473/2013 of the European Parliament and of the Council of 21 May 2013 on common provisions for monitoring and assessing draft budgetary plans and ensuring the correction of excessive deficit of the Member States in the euro area – OJ L 140, 27.5.2013.

See Kopits and Symansky (1998).

Fiscal Governance in the EU Member States: Numerical Fiscal Rules. Web: https://ec.europa.eu/info/business-economy-euro/indicators-statistics/economic-databases/fiscal-governance-eu-member-states/numerical-fiscal-rules-eu-member-countries_en

See European Commission (2019) for a detailed explanation on the SGP requirements.

Communication from the Commission: The Fiscal Compact: Taking Stock (C(2017) 1200 final). Web: https://ec.europa.eu/info/sites/info/files/1_en_act_part1_v3_0.pdf

See Sherwood (2015) for a detailed overview in EU Member States.

Fiscal Governance in the EU Member States: Medium-term budgetary frameworks. Web: https://ec.europa.eu/info/business-economy-euro/indicators-statistics/economic-databases/fiscal-governance-eu-member-states/medium-term-budgetary-framework_en

It is instructive to take stock of the IFIs in the candidate and potential candidate countries in the Western Balkans (Albania, Montenegro, Serbia, the Republic of North Macedonia, Bosnia and Herzegovina and Kosovo): as of mid-2019, one IFI was in place (the Serbian Fiscal Council established in 2011) and there was also a plan to found one in the Republic of North Macedonia.

‘Attached’ means that the IFI has financial and organisational links with the host institution (e.g. the Romanian Fiscal Council is attached to the National Academy), whereas ‘embedded’ signifies that the IFI is a section of the host institution (e.g. the Lithuanian Budget Policy Monitoring Department is embedded in the National Audit Office). It should be noted that some of the standalone institutions (e.g. the Bulgarian and the Hungarian Fiscal Councils) also receive administrative support from existing public bodies.

IMF (2013: 35–36) outlines some broad principles for determining the size of the support staff: it argues that a mandate consisting of macro-fiscal assessments could properly be carried out with a staff of less than 10 analysts, the production of a fully fledged independent forecasts would necessitate a staff of at least 20, while the preparation of regular policy costings would demand the work of another 20 professionals.

In the concerned region, the Fiscal Compact currently binds five euro area countries (Estonia, Latvia, Lithuania, Slovakia, Slovenia) and, on a voluntary basis, Bulgaria and Romania (c.f. footnote 4).

See a systematic overview in the report of the European Commission (2017) assessing compliance of national legal provisions with the Fiscal Compact.

It is worth recalling that the first incarnation of the Hungarian Fiscal Council (2009–2010) was tasked with an extensive mandate in policy costing: equipped with its own staff of around 30 analysts, it was obliged to prepare budgetary impact assessments for all planned changes in the tax code and in the social benefit system (besides, it had an optional mandate for costing all other legislative initiatives). The Council’s set-up was fundamentally revised in late 2010 in a controversial way, and became essentially an advisory panel with a much narrower analytical remit focusing on the annual budget bill and supported by a small secretariat.

Available at (English version): http://simtask.rozpoctovarada.sk/

Alesina, A., & Passalacqua, A. (2015). The Political Economy of Government Debt (NBER Working Paper, No. 21821).

Debrun, X., & Kinda, T. (2014). Strengthening Post-Crisis Fiscal Credibility: Fiscal Councils on the Rise – A New Dataset (IMF Working Paper, No. 14/58).

Debrun, X., Moulin, L., Turrini, A., Ayuso-i-Casals, J., & Kumar Manmohan, S. (2008). Tied to the Mast? National Fiscal Rules in the European Union. Economic Policy, 23(4), 297–362.CrossRef

European Commission. (2007). “How to Stick to Medium-Term Budgetary Plans”, in “Public Finances in EMU”. In Public Finances in EMU – 2007 (European Economy No. 3) (pp. 147–192). Brussels: European Commission.

European Commission. (2017). Report from the Commission Presented Under Article 8 of the Treaty on Stability, Coordination and Governance in the Economic and Monetary Union – C(2017)1201, Brussels.

European Commission. (2019). Vade Mecum on the Stability and Growth Pact (European Economy, No. 101), European Commission, Brussels.

Fabrizio, S., & Mody, A. (2006). Can Budget Institutions Counteract Political Indiscipline? Economic Policy, 21(48), 689–739.CrossRef

Horvath, M. (2018). EU Independent Fiscal Institutions: An Assessment of Potential Effectiveness. Journal of Common Market Studies, 56(3), 504–519.CrossRef

IMF. (2013). The Functions and Impact of Fiscal Councils (IMF Policy Paper). Washington, DC: International Monetary Fund.

IMF. (2017). A Greater Role for Fiscal Policy. In Fiscal Monitor – April. Washington, DC: International Monetary Fund.

Jankovics, L., & Sherwood, M. (2017). Independent Fiscal Institutions in the EU Member States: The Early Years (European Economy Discussion Papers No. 67), Brussels: European Commission.

Kalsone, D., & Platais, J. (2018). Report on Political Parties Survey on Fiscal Discipline Issues in 2018 (Latvian Fiscal Discipline Council, Research Papers, No. 3).

Kopits, G., & Symansky, S. (1998). Fiscal Policy Rules (IMF Occasional Paper, No. 162). Washington, DC: International Monetary Fund.

Nerlich, C., & Reuter, W. H. (2013). The Design of National Fiscal Frameworks and Their Budgetary Impact (ECB Working Paper Series, No. 1588). Frankfurt: European Central Bank.

Sherwood, M. (2015). Medium-Term Budgetary Frameworks in the EU Member States (European Economy, No. 21). Brussels: European Commission.

Turrini, A. (2008). Fiscal Policy and the Cycle in the Euro Area: The Role of Government Revenue and Expenditure (Economic Papers, No. 323). Brussels: European Commission.

Titel: The Impact of the EU on National Fiscal Governance Systems
verfasst von: László Jankovics
Leire Ormaetxea Igarzabal
Ştefan Ciobanu
Verlag: Springer International Publishing
Buch: Does EU Membership Facilitate Convergence? The Experience of the EU's Eastern Enlargement - Volume II
Print ISBN: 978-3-030-57701-8

Electronic ISBN: 978-3-030-57702-5

Copyright-Jahr: 2021
DOI: https://doi.org/10.1007/978-3-030-57702-5_11