Daianu, Daniel
A icle
Na ional Independen Fiscal Ins i u ions Need o Be
S onge o Pe o m E ec i ely
In e economics
Sugges ed Ci a ion: Daianu, Daniel (2024) : Na ional Independen Fiscal Ins i u ions Need o Be
S onge o Pe o m E ec i ely, In e economics, ISSN 1613-964X, Sciendo, Wa saw, Vol. 59, Iss. 2,
pp. 112-118,
h ps://doi.o g/10.2478/ie-2024-0023
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In e economics 2024 | 2
112
Economic Go e nance
and o he cen al banks we e eminded ha p ice s abil-
i y is no synonymous wi h inancial s abili y. This is he
main eason o he in oduc ion o mac op uden ial ules
and egula ions, he se ing up o he Eu opean Banking
Au ho i y, he Eu opean Secu i ies and Ma ke s Au ho -
i y, and he Eu opean Insu ance and Occupa ional Pen-
sions Au ho i y as Eu opean egula o y au ho i ies. While
mac op uden ial egula ions we e enac ed p omp ly and
ha e unde gone e inemen s o e ime, iscal ules a he
EU le el s ayed basically he same o e he yea s.
The Eu opean Commission (EC) encou aged public de-
ba e on he e o m o he EU economic go e nance ame-
wo k, including i s iscal ules, and issued documen s o
his end. Such a documen is he EC communica ion o
9 No embe 2022 (he ea e e e ed o as he “commu-
nica ion”), which was ollowed by a di ec i e p oposal in
Ap il 2023 (EC, 2022, 2023). This di ec i e p oposal says
ha he Eu opean Fiscal Boa d (EFB) and he na ional in-
dependen iscal ins i u ions (IFIs) ha e a signi ican ole
o play in he EU iscal amewo k. The EC di ec i e p o-
posal seems o scale down he asks o he na ional IFIs
as compa ed o he communica ion. In a key ega d, in-
s ead o asking he na ional IFIs o make assessmen s o
na ional medium- e m iscal-s uc u al plans, he di ec i e
p oposal alks abou assessmen s o policies ha ha e
an impac on iscal sus ainabili y (EC, 2023, 16). Bu his
wo ding is ague as i can imply ha na ional IFIs a e in-
ol ed in assessing medium- e m iscal-s uc u al plans.
The Council’s di ec i e p oposal o Decembe 2023 has
Agains he backg ound o an incomple e design o he
eu o a ea (Bu i and Co se i, 2024), he so e eign deb c i-
sis highligh ed inadequacies o he EU iscal ules, which
we e p o-cyclical and paid insu icien a en ion o la ge
di e ences in he mac oeconomic and s uc u al condi-
ions o membe s a es. These condi ions also ela e o
la ge di e ences in S abili ä skul u philosophies in he
membe s a es, in he ein o he old ules s. disc e-
iondeba e (B unne meie e al., 2016). The iscal ules un-
de es ima ed spillo e e ec s, which made hings wo se
o he eu o a ea as a whole in he absence o s abilising
ins umen s, such as a join iscal capaci y, and o ools o
deal wi h he doom loops be ween so e eign deb s and
bank balance shee s. The Eu opean Cen al Bank (ECB)
u ned ou o be he de ac o escue o he single cu -
ency a ea ia uncon en ional ope a ions.
The so e eign deb c isis made clea ha i s oo causes
we e bo h public and p i a e o e -bo owing, and he ECB
DOI: 10.2478/ie-2024-0023
In e economics, 2024, 59(2), 112-118
JEL: E62, F15, H61
Daniel Daianu*
Na ional Independen Fiscal Ins i u ions Need o
Be S onge o Pe o m E ec i ely
In Ap il 2023, he Eu opean Commission issued a di ec i e p oposal on EU economic
go e nance e o m. The Council cu some asks o Independen Fiscal Ins i u ions (IFIs)
ha we e in he Commission di ec i e p oposal; whe he his cu ing is jus i ied is an open
ques ion. Ea ly his yea , he Council and he Pa liamen eached a p o isional ag eemen on
he p oposed e o m o he EU economic go e nance amewo k. The ision o he Commission
ha would in ol e IFIs in he assessmen o iscal-s uc u al plans is no g oundless. Bu
s uc u al e o ms and in es men analysis demand expe ise ha ha dly exis s in mos na ional
IFIs, and hei in ol emen in policy design could be pe cei ed as a echnoc a ic in oad in o
democ a ic decision-making. In o de o play a mo e signi ican and e ec i e ole, na ional IFIs
need adequa e esou ces and enhanced analy ical capaci y; hei ac i i y depends hea ily on
he policy design o he EU economic go e nance. Na ional IFIs should iew hei ole om a
mac op uden ial pe spec i e, oo. The ole o IFIs should no go beyond wha mos o hem can
deli e e ec i ely, so ha hei s a us and epu a ion a e no ha med.
Daniel Daianu, Romanian Fiscal Council, Bucha-
es , Romania.
© The Au ho (s) 2024. Open Access: This a icle is dis ibu ed unde he
e ms o he C ea i e Commons A ibu ion 4.0 In e na ional License
(h ps://c ea i ecommons.o g/licenses/by/4.0/).
Open Access unding p o ided by ZBW – Leibniz In o ma ion Cen e
o Economics.
* The a icle builds on Daianu (2023). The au ho bea s sole esponsibil-
i y o he ex .
ZBW – Leibniz In o ma ion Cen e o Economics 113
Economic Go e nance
Some o hese guidelines a e ound in he EC (2023) di-
ec i e p oposal on he e o m o he EU economic go -
e nance amewo k. A he same ime, his p oposal ad-
oca es mo e “na ional owne ship o polices”. The EFB
has been qui e ocal in ad oca ing he e ision o iscal
ules and s essed epea edly he need o a join iscal
capaci y and a sa e asse ; i also asked o he p o ec ion
o g ow h-enhancing in es men (Thygesen e al., 2020).
The IMF (A nold e al., 2022) also s essed he need o
iscal capaci y, as did many o he expe s. No leas , he
ECB, in i s opinion o 5 July 2023 on he EC di ec i e p o-
posal o economic go e nance e o m, a gues in a ou
o an “app op ia ely designed pe manen cen al iscal
capaci y” (ECB, 2023, 18).
Na ional IFIs ha e suppo ed a e ision o iscal ules and
ha e exp essed conce ns, in e alia, abou access o good
and imely in o ma ion, sa egua ds o independence, he
possibili y o make hei own assessmen s, he e ec i e
implemen a ion o he “comply o explain” p inciple and,
las bu no leas , he exis ence o a legal obliga ion a he
EU le el o conside na ional IFI assessmen s in a ious
a eas (Ne wo k o Independen Fiscal Ins i u ions, 2021).
Na ional IFIs also ask o mo e consul a ion wi h he EC
and wi h o he EU au ho i ies, in o de o a oid ha m ul
di e ences in assessmen s. Es ablishing minimum s and-
a ds o IFIs a he EU le el is iewed as a p e equisi e o
hei e ec i eness (Ba nes, 2022).
Bu he e has been less ag eemen among IFIs in a ou
o a join iscal capaci y and o isk-sha ing ins umen s. I
gi es ood o hough ha iews on his ollow he o icial
posi ions o he espec i e membe s a es, i.e. mi o ing
he well-known di ide be ween “ ugal” membe s a es
and o he coun ies.
Opinions wi hin he IFI ne wo k ha e a ied also on
whe he o judge he adequacy o he iscal amewo k
and ules in conjunc ion wi h he adequacy o he EU
economic go e nance amewo k. A equen non-
commi al iew is ha he o e haul o he EU economic
go e nance is a poli ical decision pa excellence.2 The
eluc ance o ackle undamen al issues is in ellec ually
uncom o able, hough i s o igin is no ha d o comp e-
hend. This p o ides a s a k con as o he EFB, which
ackles he big issues and does no e ain om making
p oposals on key ma e s.
2 This is s a ed in a posi ion pape o he Ne wo k o Independen Fiscal
Ins i u ions (2023, 1): “The Ne wo k akes no posi ion on he Commis-
sion’s o e all p oposal as his aises undamen al ques ions beyond
he scope o he wo k o he Ne wo k o EU IFIs and he IFI manda es
ha need o be add essed on a poli ical le el.”
d opped any e e ence o such in ol emen . Tha same
Decembe , a poli ical deal was eached among EU go -
e nmen s ega ding he iscal ules. And ea ly his yea he
Council and he Pa liamen eached a p o isional poli ical
ag eemen on he p oposed e o m o he EU economic
go e nance amewo k.
I is wo hwhile men ioning ha bo h di ec i e p oposals
do no deal wi h basic missing elemen s o he design o
he eu o a ea and o he EU economic go e nance – o
example, a iscal capaci y, a collec i e deposi insu ance
scheme and a sa e asse .
This pape akes a look a he EU economic go e nance
amewo k and he ole o na ional IFIs. I a gues ha he
ole o IFIs has o be wisely calib a ed and no go beyond
wha mos o hem can deli e e ec i ely. Na ional IFIs’
e ec i eness depends on adequa e esou ces, epu a ion
and in ol emen in public deba e; i also hinges hea ily on
he design o he EU economic go e nance amewo k.
Na ional IFIs should iew hei ole om a mac op uden-
ial pe spec i e as well.
A new EU iscal amewo k has long been o e due
The ex eme e en s o ecen yea s ha e delayed he e i-
sion o iscal ules and o he EU economic go e nance
amewo k; wi hin his ex ao dina y con ex , nume ical
iscal ules we e suspended. Ne e heless, se e al guide-
lines ha e de eloped o e he yea s:
• make o e all ules mo e anspa en , and educe hei
complexi y
• do no abandon he nume ical e e ences o 3% o GDP
o budge de ici and 60% o GDP o public deb ,1 e en
i he la e is con es ed in iew o he big ises in public
deb s due, p ima ily, o s ong ad e se shocks
• adap he ules o ake in o accoun na ional ci cum-
s ances, which will encou age compliance and make
he adjus men o imbalances easible
• use ne expendi u e (excluding one-o s and deb se -
ice paymen s) as he single ope a ional ool in pu su-
ing deb sus ainabili y
• c ea e ools o deal wi h asymme ic shocks, such as
a iscal capaci y and a sa e asse as an ins umen o
isk-sha ing, ha should ope a e in conjunc ion wi h
isk- educ ion measu es
• pu deb sus ainabili y a he o e on o conce ns
• p o ec in es men o cope wi h u u e challenges
• s eng hen he ole o he EFB and o he na ional IFIs.
1 Howe e c i icised nume ical ules a e by some, hei elimina ion
would be like ha ing he eu o a ea, in pa icula , udde less wi h ensu-
ing augmen ing unce ain ies; nume ical benchma ks a e needed.
In e economics 2024 | 2
114
Economic Go e nance
medium- e m planning o endo sing hose used by he
budge a y au ho i ies
d) moni o ing compliance wi h coun y-speci ic nume ical
iscal ules unless pe o med by o he bodies in acco d-
ance wi h A icle 6
e) unde aking asks in acco dance wi h he p e en i e
a m o he SGP and he co ec i e a m o he SGP
) assessing he consis ency, cohe ence and e ec i e-
ness o he na ional budge a y amewo k
g) upon in i a ion, pa icipa ing in egula hea ings and
discussions a he na ional Pa liamen .
Does his clash o p oposals ( he EC and he Council) im-
ply a se back o he ac i i y o IFIs? Yes and no. On he
one hand, one could say ha ha ing ewe asks den s
he capaci y o IFIs o p omo e iscal esponsibili y. On he
o he hand, ac ual e ec i eness depends, undamen ally,
on he quali y o assessmen s, epu a ion, and he in ol e-
men o IFIs in public deba e. In addi ion, na ional IFIs a y
a lo when i comes o hei manda es and esou ces – as
Kopi s (2023) igh ly highligh s. This si ua ion, he a gues,
diminishes he ele ance o da a ha co e IFIs and ha
a e no compa able ac oss coun ies, no amenable o
quan i ica ion, and include en i ies ha do no necessa ily
con o m o minimum s anda ds o good p ac ice. And, as
Thygesen e al. (2021) a gue, “In a b oad sense, na ional
IFIs emain oo he e ogeneous in he EU o consis en ly
shape he conduc o iscal policy… Absen a conscious
e o o ha monise he ole and unc ions o hese en i-
ies, he Commission and he Council oles in moni o ing
pe o mance and o mula ing ecommenda ions will e-
main essen ial”. IFIs ha e a signi ican ole o play in his
espec , bu one should no exagge a e i .
The IFIs should do wha hey can deli e e ec i ely
The EC communica ion’s ision was ha na ional IFIs
would ge in ol ed in he design o iscal-s uc u al plans,
while he p oposal o 26 Ap il 2023 alludes o i in ague
e ms (EC, 2022, 2023). The Council di ec i e p oposal o
Decembe 2023 d ops such a ask (Council o he Eu o-
pean Union, 2023).
The ision in he communica ion on he ole o IFIs in as-
sessing iscal-s uc u al plans has a a ionale, bu i also
aises signi ican ques ions. One could a gue ha i is no
wo hwhile o make commen s a e his idea was dis-
missed by he Council di ec i e p oposal. As a ma e o
ac , wha he communica ion p oposed is no some hing
s ange, and he e a e high-p o ile expe s who suppo i
A guably, one can ha dly judge he adequacy and e ec-
i eness o iscal ules unless he design o he economic
go e nance o he EU and o he eu o a ea, in pa icula ,
is add essed. I his design canno o e come majo laws
(as has been he case un il now), iscal ules can ope -
a e only subop imally. Economic go e nance design de-
mands s abilisa ion and isk-sha ing ins umen s, such
as a cen al iscal capaci y and a sa e asse , as well as
consis en implemen a ion o isk- educ ion measu es. I
is ai , howe e , o say ha he igh balance be ween isk-
sha ing and isk- educ ion measu es is no easy o de ine
because membe s a es ha e common bu also di e gen
in e es s.
The unc ioning o economies and he e ec i eness o
mac oeconomic policies depend on he s uc u e o he
global inancial sys em, in which capi al lows can be
des abilising. In addi ion, iscal and mone a y policies
need o be complemen ed by mac op uden ial ules and
policies, since excessi e p i a e deb can be no less dan-
ge ous han la ge public deb . One could e en conside he
need o an o e all mac op uden ial policy, which is cu -
en ly only in he oolbox o cen al banks. Fiscal and budg-
e policies may also need o ha e a mac op uden ial h us .
The EC communica ion no ices ha he abili y o s ee
he iscal s ance o he eu o a ea emains limi ed in he
absence o a “cen al capaci y wi h s abilisa ion ea u es”
(Eu opean Commission, 2022, 3). I is qui e elling ha
while he e seems o be an analy ical p e ailing ain o
hough in a ou o a cen al iscal capaci y, a poli ical
s alema e among membe s a es impedes i s c ea ion.
The same happens, p esumably, wi h he Eu opean De-
posi Insu ance Scheme (EDIS). I speaks olumes in his
ega d ha he EC di ec i e p oposal o Ap il 2023 no
longe e e s o a join iscal capaci y, whe eas he ECB
men ions i in i s opinion o July 2023.
The ole o na ional IFIs
The ole en isaged o IFIs in he new EU economic go -
e nance amewo k (A icle 8), as i is e lec ed in he
Council di ec i e p oposal o Decembe 2023, educes
he asks en isaged by he EC di ec i e p oposal. Thus,
ask b) p oducing deb sus ainabili y assessmen s unde -
lying he go e nmen medium- e m planning o endo sing
hose p o ided by he budge a y au ho i ies, and ask c)
p oducing assessmen s on he impac s o policies on is-
cal sus ainabili y and sus ainable and inclusi e g ow h o
endo sing hose p o ided by he budge a y au ho i ies,
a e elimina ed. Wha emains a e he ollowing asks:
a) p oducing he annual and mul iannual mac oeconomic
and budge a y o ecas s unde lying he go e nmen ’s
ZBW – Leibniz In o ma ion Cen e o Economics 115
Economic Go e nance
ules, as hese we e implemen ed du ing he so e eign
deb c isis and aus e i y measu es we e en o ced p o-cy-
clically, wi h neglec o spillo e e ec s. The p oc as ina-
ion o egula o y agencies in dealing wi h shadow bank-
ing, as well as wi h he c yp o ac i i y, is also un o una e.
Simila ly, he EU ene gy ma ke has laws ha ha e been
conspicuously highligh ed by he ene gy c isis.
Mac oeconomic models can ha dly cope wi h adical
unce ain y and non-linea i ies. In addi ion, economis s
hemsel es may ha e di e en heo e ical p opensi ies,
which in luence hei policy ecommenda ions. Inside he
IFIs, he e may also be opposing iews, wi h a bea ing
on hei public documen s. The e o e, cau ion should ac-
company policy p esc ip ions. Rigo is needed o a oid
majo policy blunde s, and na ional IFIs can help in luence
policy cons uc ion o his end and enhance good p ac-
ices. Bu one should no ake o g an ed ha independ-
ence secu es bes policies by i sel .
A second aspec o na ional IFIs’ di ec o indi ec in ol e-
men in policy design e e s o an inescapable con lic o
in e es . I na ional IFIs a e in ol ed in he policy design
p ocess, hen a hi d pa y would p esumably ha e o
come in o he pic u e, as a genuinely neu al assessmen
en i y. Mo eo e , na ional IFIs canno u n in o iscal poli-
cy, o o e all policy a bi a o s; hei unc ion is essen ially
o ope a e as wa chdogs o iscal esponsibili y, and o
ad ise. Bee sma (2023) is igh when calling hem “inde-
penden ad iso y iscal ins i u ions”.
I is easy o unde s and why he Commission would like o
ha e independen assessmen s o he na ional eco e y
and esilience plan implemen a ion. Howe e , one needs
o be ca e ul in asking na ional IFIs o change hei man-
da es in ways ha may unnecessa ily expose hem pub-
licly, since epu a ional isks could ensue. The e is also
he isk o ein o cing he pe cep ion ha some people
ha e ha na ional IFIs a e en i ies imposed by Eu opean
au ho i ies. This could be coun e p oduc i e. Some may
e en see i as a su ep i ious “ echnoc a ic enc oach-
men ” on wha a e and should be democ a ic policymak-
ing p ocesses.
A ba ling a ie y o na ional IFIs
Wha some people seem o unde play a e implica ions o
he la ge a ie y o na ional IFIs in e ms o manda es and
capabili ies. The e a e na ional IFIs ha ope a e as la ge
hink anks (e.g. in Belgium, he Ne he lands, Spain and
Denma k), which unde ake a wide ange o analyses,
including economic pla o ms o poli ical pa ies – e.g.
in he Ne he lands. In Ge many, he e is a web o majo
economic esea ch ins i u es ha can pe o m he asks
(Blancha d e al., 2022; Ga icano, 2024). Bu how would
e o ms in a ious sec o s, in educa ion and heal hca e,
o ins ance, be e alua ed? A ew na ional IFIs may ha e
expe ise in such unde akings, bu mos do no . The
ou come o s uc u al e o ms and in es men s may ake
yea s o show up, whe eas na ional IFIs would be asked
o p o ide assessmen s on a egula basis. And “ he EFB
doub s whe he he p oposed me ge o iscal and s uc-
u al su eillance in ela ion o na ional plans is a ealis ic
ision o he u u e when he one-o NGEU [Nex Gen-
e a ionEU], in ol ing EU unding, ades ou ” (Thygesen,
2023, 2).
The conce ns o he EC a e ully jus i ied in iew o he
eno mous challenges ha he Union is acing: he ene gy
c isis, clima e change, digi alisa ion, he impac o a i icial
in elligence, an o e all p oduc i i y p oblem, secu i y con-
ce ns, e c. The e a e also wo ies ha he NGEU money
could be misused. On he o he hand, na ional IFIs ha e a
alida ed niche in iscal policy and ax egimes ha impac
budge s. They can also judge (and some o hem do i ) he
o e all mac o policy mix.
None heless, an analysis o s uc u al e o ms and pub-
lic in es men could become mission impossible – unless
p ope condi ions exis . One can examine he impac o
public in es men , as an agg ega e, on po en ial eco-
nomic g ow h, bu o ge in o an analysis o he composi-
ion o public in es men is a guably e y icky. Spending
e iews a e done by only a ew na ional IFIs, aside om
wha is equi ed on he pa o na ional go e nmen s.
None heless, ha ing na ional IFIs in ol ed in a de ailed
analysis o spending and in es men is ques ionable.
The communica ion en isioned na ional IFIs o be in-
ol ed in he design o policies: “Independen iscal in-
s i u ions could p o ide an ex-an e assessmen o ade-
quacy o he plans and hei unde lying o ecas s, which
would help na ional go e nmen in he design phase”
(Eu opean Commission, 2022, 16). Examining unde ly-
ing o ecas s sounds sensible, bu an in ol emen , al-
bei sub le, o na ional IFIs in he policymaking p ocess
is p oblema ic. The e a e a leas wo ele an aspec s
in ol ed in his ma e .
One aspec pe ains o subs ance, in iew o a b oade
scope o assessmen s ha would be asked o na ional
IFIs. And he e, na ional IFIs may no necessa ily ha e he
bes iews, al hough hey a e p esumed o be an embodi-
men o “ echnoc acy” and “independen hinking”. “Inde-
pendence” does no au oma ically imply bes judgemen .
Fo ins ance, public en i ies ailed when hey p opounded
a ligh - ouch egula ion o inancial sys ems, which in i ed
a calami y. The same happened wi h subop imal iscal
In e economics 2024 | 2
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Economic Go e nance
a ec ax e enues. The Council di ec i e p oposal goes
a guably oo a in d opping he ask o p oducing deb
sus ainabili y analysis o endo sing hose p o ided by he
budge a y au ho i ies. I is ue, howe e , ha many IFIs
do no (ye ) ha e he capaci y o p oduce a deb sus ain-
abili y analysis; and he e is a di e ence be ween p oduc-
ing a o ecas and assessing/endo sing a o ecas , which
is p esumably ela ed o indi idual ins i u ional capaci y,
aside om wha na ional manda es say. As a su ey made
by he na ional IFIs ne wo k no ices, less han hal o he
hem ha e he capaci y o p o ide long- e m assess-
men s o public inances (EU Ne wo k o Independen Fis-
cal Ins i u ions, 2022).
The Council di ec i e p oposal alks abou he possibili y
o ha ing se e al IFIs in membe s a es. This idea can help
when i comes o asks ha exceed he analy ical capac-
i y o many IFIs, e.g. demog aphic analysis and spending
e iews.
Na ional IFIs’ esou ces should be seen in conjunc ion
wi h he aim o es ablishing minimum s anda ds o op-
e a ion. Bu his goal has become a so o a man a and
i needs a mo e conc e e de ini ion in o de o help mo e
IFIs o e come hu dles in hei ac i i y. Fo example,
when a na ional IFI canno hi e mo e s a owing o aus-
e i y measu es imposed by a go e nmen (as expe s
o he IFI a e classi ied as public sec o employees).
The sala y can also be a majo s umbling block in hi -
ing expe s. And hese a e no hypo he ical cases. How
o ansla e he gene al s a emen and p inciple o ade-
o IFIs. Bu such en i ies may be ha d o eplica e all o e
he EU.
Apa om IFIs’ cu en manda es and a ailable esou c-
es, he a ied cul u al, his o ical, poli ical and ins i u ional
se ings wi hin he EU membe s a es condi ion wha is
easible and, likely, desi able in upg ading hei manda es.
And wha ma e s, some imes, mo e han o mal as-
signmen s, is he le el o hei analy ical capabili ies and
epu a ion. I is in e es ing o see how many IFIs p oduce
mac oeconomic o ecas s (o deb sus ainabili y analysis)
hemsel es compa ed o how many make only assess-
men s o endo semen s; his would gi e a la ou o di e -
ences among IFIs wi h ega d o expe ise, capaci y and
emi (Figu e 1).
Howe e , na ional IFIs mus be s eng hened, and he
Commission and he EFB a e igh o emphasise ha
common minimum s anda ds ha e o exis o his end.
Bu e en common minimum s anda ds need o be de-
ined as wha may appea uni o m on he su ace could
hide big quali a i e di e ences.
The Council di ec i e p oposal’s d opping o na ional IFIs’
in ol emen in he assessmen o medium- e m iscal-
s uc u al plans is, a guably, ealis ic unde he ci cum-
s ances, bu i should no ha e elimina ed he IFIs’ o e all
ask o examining he impac o a ious policies on is-
cal sus ainabili y – e.g. changes in ax egimes and hei
in luence on economic ac i i y. IFIs a e en i led o make
judgemen s in his ega d as such changes can hea ily
Figu e 1
Independen Fiscal Ins i u ions’ capaci y by ype o ask
No e: This igu e is based on he su ey esponses o 29 IFIs om 25 EU coun ies. The ca ego y “s ong” includes IFIs ha epo ed ha ing su icien o
comple e capaci y, and he ca ego y “weak” includes all IFIs ha epo ed ha ing mino o no capaci y o ca y ou he p oposed asks.
Sou ce: EU Ne wo k o Independen Fiscal Ins i u ions (2022).
26
57
82
52
78
65
65
39
26
18
17
22
30
22
35
17
30
4
13
0 10 20 30 40 50 60 70 80 90 100
Assess he ajec o y o he public inances and go e nmen
Assess ex an e/ex pos compliance wi h EU iscal ules
Assess one-o s, disc e iona y e enue measu es, e c.
Long- e m assessmen s o public inances
Assess/endo se medium- e m budge a y o ecas s
Assess/endo se sho - e m budge a y o ecas s
Assess/endo se mac o o ecas s
S ong Mode a e Weak
%
deb in he medium e m
ZBW – Leibniz In o ma ion Cen e o Economics 117
Economic Go e nance
ion mus conside he unc ioning o he global inancial
sys em as well, in which he Fed’s mone a y policy plays a
dominan ole. I is jus i ied o he EFB o conside o e all
sys emic isks, which go beyond he emi o judging is-
cal policies.
Na ional IFIs, oo, should judge na ional mac op uden ial
policy s ances as hey in luence ex e nal imbalances. Na-
ional IFIs should be conce ned abou he ise in p i a e
deb s, which, in wo s -case scena ios, may again o ce
na ional go e nmen s (and cen al banks) o s ep in and
ake o e some pa s o hose deb s; i is no su icien o
ha e only he EFB oice conce ns in his espec .
The e should be ins umen s a ailable o discou age ex-
cessi e p i a e deb s, which should complemen wha
cen al banks do wi h hei mac op uden ial ins umen s.3
Would go e nmen s in e e e wi h he unc ioning o ma -
ke s? Yes, bu his is no necessa ily bad in an en i on-
men in which specula i e beha iou is ampan and p o-
duc i e in es men is insu icien . Ra ing agencies ha e
always played a ole in his ega d, bu , as he inancial
c isis and o he episodes ha e shown, hei judgemen is
no aul less and may be biased.
Heads o na ional IFIs should a end he mee ings o na-
ional supe iso y bodies ha deal wi h o e all sys emic
isks. In his con ex , na ional IFIs should judge he ap-
p op ia eness o budge / iscal policies ela ed o o e all
sys emic isks.
Final ema ks
The EFB and na ional IFIs a e asked o play a signi ican
ole in he a chi ec u e o he EU economic go e nance
amewo k. The EC communica ion has ad oca ed o a
ole o he na ional IFIs in he e alua ion o iscal-s uc-
u al plans. The EC di ec i e p oposal scaled down ha
ision, which was u he diminished by he Council di ec-
i e p oposal, which d opped any e e ence o na ional
IFIs being in ol ed in he assessmen o policy impac s
on iscal sus ainabili y. In Janua y his yea , he Council
and he Pa liamen eached a p o isional ag eemen on
he p oposed e o m o he EU economic go e nance
amewo k.
Na ional IFIs ha e a niche o wo k ha conce ns iscal and
budge policies and ax egimes ha impac budge s and
compliance wi h iscal ules. They also judge mac oeco-
3 As banks a e asked o ha e adequa e capi al and liquidi y ese es,
simila equi emen s could ope a e o companies. Then, he ques ion
is who should be in cha ge o o mula ing and en o cing such equi e-
men s.
qua e esou ces in o a conc e e eali y is a p oblem ha
egula ly begs o solu ions.
IFIs may also ely on esou ces (human and ma e ial) p o-
ided by o he public en i ies, such as cen al banks, o
go e nmen s. While his could be help ul in a ansi ion
phase, allowing IFIs o g ow, i could also c ea e a de-
pendency, wi h ad an ages and disad an ages. The EFB
i sel elies on esou ces p o ided by he EC.
The Council p oposal elimina ed he ask on deb sus ain-
abili y analysis om he IFI manda es. Bu his should no
impede IFIs om unde aking such assessmen s, p o-
ided hey ha e analy ical capaci y. And, as A nold e al.
(2022) sugges , a common me hodology o deb sus ain-
abili y analysis should be used by he na ional IFIs.
In e alua ing deb sus ainabili y, i is necessa y o consid-
e he cos s o he wa in Uk aine and he p obable signi i-
can ise in de ence expenses in many EU membe s a es
in he yea s o come; he peace di idend has likely come
o an end. Agains he backd op o he ene gy c isis and
he wa in Uk aine, some economies a e becoming so
o sui gene is “wa economies” and esou ce alloca ion is
hea ily impac ed. And AI, despi e i s bene i s, could aug-
men inancial u bulences, make economies mo e agile
and en ail hidden liabili ies o public budge s.
The ene gy c isis, wi h he ensuing high ise in he ela i e
p ice o ene gy (and o o he c i ical ma e ials), impac s
incomes and esou ce alloca ion hea ily, wi h massi e
dis ibu ional e ec s. Deb sus ainabili y analysis should
ake he impac o hese de elopmen s on public budge s
in o accoun .
Na ional ax egimes should be conside ed in iew o
e y low iscal e enues in some membe s a es; ax e -
enues in Romania, o example, including con ibu ions,
a e a ound 27% o GDP, 31% in Bulga ia, and 35% in
Hunga y, Czechia and Poland, while he a e age in he
EU is a ound 41%. This si ua ion should be judged as
agains he huge p essu e on public budge s in he com-
ing yea s. Na ional IFIs should ake a i m s and agains
ax e asion and ax a oidance, pa icula ly a a ime o
so much p essu e on public budge s.
Fiscal ules and mac op uden ial ules: An o e all
mac op uden ial policy?
The EFB’s e alua ion o he o e all iscal policy s ance
o he eu o a ea does make sense, bu i canno be done
wi hou examining he mac op uden ial policy s ance in
he eu o a ea, as p i a e sec o de ici s can ha m he eu o
a ea as much as public sec o de ici s. Such an e alua-
In e economics 2024 | 2
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nomic policy. Ge ing hem in ol ed in an assessmen o
s uc u al e o ms and public in es men could back i e
unless p ope condi ions exis . The in ol emen o na ion-
al IFIs in he policy design p ocess could be e en mo e
p oblema ic. The e a e a leas wo aspec s in ol ed he e.
Fi s , and ela ed o a b oade scope o assessmen s,
na ional IFIs may no necessa ily ha e he bes iews,
be hey p esumed o be an embodimen o independ-
en hinking. Second, na ional IFIs’ in ol emen in policy
design would en ail an inescapable con lic o in e es . I
could be pe cei ed as a echnoc a ic enc oachmen on a
democ a ic decision-making p ocess, and he e a e cas-
es in which “ echnoc a ic” go e nmen s ha e had modes
esul s, o e en ailed.
The Council di ec i e p oposal may ha e gone oo a
in lea ing ou he asks o p oducing deb sus ainabili y
assessmen s unde lying he go e nmen medium- e m
planning and p oducing assessmen s on he impac s o
policies on iscal sus ainabili y and sus ainable and inclu-
si e g ow h comple ely, wi hou quali ica ions, om he
EC di ec i e p oposal.
The Council di ec i e p oposal does no make p og ess
on add essing he undamen al weaknesses o he eu o
a ea design and o he EU economic go e nance. Nei he
does he EC p oposal. A common iscal capaci y, EDIS
and a sa e asse , emain in he ealm o wish ul hinking
due o seemingly in ac able poli ical cons ain s. I is
he e o e no su p ising ha he banking union and he
capi al ma ke s union can ha dly ad ance in he EU.
Na ional IFIs should con inue o s i e o be e access
o good and imely in o ma ion, sa egua ds o independ-
ence, he possibili y o make hei own assessmen s, he
e ec i e implemen a ion o he “comply o explain” p inci-
ple and, las bu no leas , he exis ence o a legal obliga-
ion a he EU le el o conside na ional IFIs, assessmen s
ac oss a ange o a eas. Es ablishing minimum s anda ds
o IFIs a he EU le el is s ill a dis an goal, bu i is a p e-
equisi e o hei e ec i eness.
Na ional IFIs can enhance hei con ibu ions o discou -
aging eg egious populis emp a ions and demagogue y,
help ins il public go e nance wi h common sense and i-
sion, enhance iscal esponsibili y and consolida e good
p ac ices. They should y o imbue hei ac i i y ame-
wo k wi h a mac op uden ial h us as well.
Re e ences
A nold, N., R. Balak ishnan, B. B. Ba kbu, H. R. Da oodi, A. Lage bo g,
W. R. Lam, P. A. Medas, J. O en, L. Rabie , C. Roehle , A. Shahmo-
adi, M. Spec o , S. Webe and J. Ze elmeye (2022), Re o ming he
