Statement on the draft government proposal on the management of public finances in Finland

The Network of EU Independent Fiscal Institutions (‘EU IFI Network’) notes Finland’s draft proposal for an Act on the Management of Public Finances, which entails a reorganisation of the tasks that usually constitute the mandate of IFIs between the two existing institutions — namely, the National Audit Office of Finland (NAOF) and the Finnish Economic Policy Council (EPC). 

We welcome the strong commitment to ensure an effective transposition of Council Directive 2024/1265 on the requirements for budgetary frameworks of the Member States. While recognising the intention to clarify institutional responsibilities, the Network underlines the need to ensure that this redistribution of tasks does not result in a loss of resources, a reduction of functional autonomy, or any weakening of the independent oversight capacity that lies at the core of the IFIs mandate. In particular, the EPC’s financial, institutional, and personnel connection – albeit effectively independent – to the Finnish Ministry of Finance may weaken this capacity.

Ahead of this Act, and in the context of the transposition of the Directive, the Network strongly reaffirms the importance of strengthening institutional safeguards that are essential for credible, effective, and independent fiscal oversight. 

The Network has consistently advocated for the provision of strong minimum standards to institutionally and robustly support Independent Fiscal Institutions (‘IFIs’) in meeting their diverse mandates and, more importantly, ensuring they can perform their core function, with functional autonomy, as national fiscal watchdogs. The Network has stressed the need for a full transposition of this Directive across the EU-27 on several occasions, including with the European Commissioner for the Economy and Productivity, Valdis Dombrovskis.

Indeed, the European Commission has recognised the value of IFIs and envisioned an enlarged IFI role within the EU and national fiscal frameworks. It has equally recognised the necessity of strengthening IFIs to meet this role, in particularly in terms of the minimum standards that the Network has advocated for. Articles 8a(4)(a), 8a(4)(c), and 8a(4)(d) of the Directive stress the importance of legislation safeguarding independence, adequate resources, and adequate and timely access to information. 

In this context, it is imperative that national legislation transposes the Directive fully and ensures that IFIs are able to provide independent fiscal oversight effectively. Legislation should also guarantee that this function is safeguarded from potential future interference, particularly regarding independence, resources, and access to information.

The Network of EU Independent Fiscal Institutions thus strongly urges all concerned parties to fully maintain the minimum standards for effective IFI functioning throughout the transposition process and with regard to this draft government proposal on the management of public finances (VN/33009/2023), as described by the Network and the European Commission. It calls for the full — personal, institutional, and financial — independence of the new IFI from the government. Any new arrangement must not result in lower standards than the current framework, under which certain IFI tasks are carried out by the NAOF.

We remain ready to engage constructively in defining and periodically reviewing the minimum standards necessary to meet both national and EU legal obligations in practice.

* The Swedish Fiscal Policy Council has chosen not to take a position on the issues involved