Proposed EU Directive is a right step towards stronger national oversight

In a statement responding to the EU Commission’s proposal for a Council Directive implementing the Fiscal Compact into EU law, the Network of EU Independent Fiscal Institutions (IFIs) welcomed the proposal as a right step forward towards the consolidation of national IFIs as key institutions to promote responsible fiscal policies at the national level.

The proposed Directive would introduce new obligations to Member States with respect to national IFIs. While the proposal is seen as adequate in this regard according to EU national watchdogs, it should be complemented with a clearer definition of minimum standards and an effective system for their safeguarding.

The Network stands ready to cooperate in the definition of standards that would ensure adequate and stable financial and human resources as well as complete, real-time and stable access to all information relevant for an effective exercise of fiscal oversight at the national level.

The EU national watchdogs also call for an ambitious implementation of detailed comply-or-justify procedures in national legislation to promote a constructive, transparent and public dialogue between IFIs and the relevant branches of public administration.

According to the statement, the intention to reinforce the role of more observable indicators to ensure annual structural balances remain or converge towards country-specific medium-term targets could ultimately benefit the credibility and legitimacy of fiscal surveillance both at the national and the EU level. In the Network’s view, the design of operational rules should remain – as much as possible – a responsibility of Member States.

If the Directive gets a green light in the relevant EU institutions, two sets of similar but not necessarily identical fiscal rules and two surveillance procedures would co-exist under EU law. The Network calls for a fluent and timely dialogue with the Commission on the methodological and practical application of fiscal rules during such a period. To improve information flow between the EU and the national level, and given that further reviews of the EU fiscal framework are foreseen in current EU legislation, representatives of the national IFIs should be given an “observer” status at the relevant meetings in the Council.

The Network of EU IFIs is a voluntary and inclusive institution, open to all independent fiscal oversight bodies operating in the EU. It provides a platform to exchange views, expertise and pool resources in areas of common concern. Since its formation, the Network of EU IFIs has been supporting the efforts to review and reinforce the EU fiscal framework, seeking better to exploit the synergies between rules and institutions, as well as across different levels of administration, whilst respecting the principle of subsidiarity and enhancing national ownership and accountability.