EU Fiscal and Economic Governance Review: Contribution from the Network of Independent EU Fiscal Institutions
The European Commission is currently undertaking a review of the EU economic governance framework, and is seeking the views of the EU IFIs. National IFIs have substantial experience and expertise in monitoring fiscal policy in EU countries and in the application of the EU fiscal rules. This paper draws on those experiences as a contribution to the wider debate.
- There is a need to clarify the fiscal governance framework that will be applicable as of 2023, while addressing shortcomings in the existing framework.
- The current EU governance framework suffers from three main interrelated problems: weak compliance, procyclicality and excessive complexity.
- A simple and transparent multi-year approach to enforceable numerical fiscal rules should be prioritised.
- The focus should be narrowed to fewer numerical rules, while detailed implementation should be streamlined.
- The role of national IFIs in supporting sound fiscal policy should be enhanced. National IFIs are well-placed to carry out assessments of fiscal developments and sustainability at national level, taking into account domestic economic conditions.
- There should be an obligation on the EU institutions to take these assessments into account, as an input, when taking decisions on the application of the EU fiscal framework. National IFIs should retain their independence, receive timely access to information and receive an adequate level of resources in order to continue providing the objective and well-founded assessments required.
- The effective functioning of IFIs should therefore be supported by minimum national framework standards in EU Member States. This may require a broadening of national IFI mandates in some cases.
- Fiscal rules should be supported by better data and other information.
An executive summary of the study can be read here.