A Framework for credible external reviews of Independent Fiscal Institutions

A Network position paper

Article 8a(4)(e) of Council Directive (EU) 2024/1265 makes external evaluations a legal obligation for all EU national independent fiscal institutions (IFIs) for the first time. Yet the Directive specifies only that reviews be regular and performed by independent evaluators, leaving the details to national implementation, in line with the greater national ownership implied by the new EU economic governance framework.

This position paper tries to address some of the issues that may arise with this new requirement. Drawing on the OECD Principles for Independent Fiscal Institutions, the collective experience of Network members, and the body of existing external reviews conducted since 2017, the paper sets out six key guidelines for the design and conduct of credible external reviews. Each guideline addresses a distinct dimension of the review; the credibility of the exercise depends on all six being given operational effect:

1. Evaluators must be independent, with strong credibility and reputation, operational knowledge of IFIs, and an awareness of diverse national contexts.
2. Robust Terms of Reference must clearly define, at a minimum, six elements: the scope, methodology, deliverables, timeline, team and financing.
3. External reviews should have a common minimum scope across IFIs to enable benchmarking and comparison, covering context (including mandate), inputs, outputs and impact.
4. Legislation should mandate regular external reviews, every five to eight years or once per leadership term.
5. A secure, multi-annual financing mechanism free from structural conflicts of interest should be established to ensure independent and high-quality external reviews.
6. The external review should be published, along with a formal 'comply or explain' response and a structured plan for implementing and tracking recommendations.

The guidelines are addressed to national authorities, to IFIs preparing for their first or subsequent review, and to the wider European fiscal policy community.