The role of national fiscal bodies - State of play - February 2019 - Europa EU

 
The role of national fiscal bodies - State of play - February 2019 - Europa EU
IN-DEPTH ANALYSIS

The role of national fiscal bodies
State of play - February 2019
This briefing provides an overview of the role played by independent national fiscal
bodies in the preparations of forthcoming budgets of EU Member States.
The objective of the analysis is twofold:
1) to give an overview of the set-up and functioning of these independent fiscal bodies
based on the most recent assessments by the European Commission (the latest being
of November 2018).
2) to give and overview of the extent to which the latest Stability or Convergence
Programmes and the Draft Budgetary Plans contain information about the
involvement of independent national fiscal bodies in the preparation of these
programmes/plans.

Summary of the findings

The use of independent forecasts

The use of independent forecasts in the preparations of the 2019 Draft Budgetary Plans (DBP):

•   All euro area Member States have independent fiscal bodies in place (producing or endorsing the
    macro-forecasts used by the governments in the DBP). On the basis of the assessments by the European
    Commission and of existing national legal provisions, it seems that they are also operationally
    independent in the countries where they are formally attached to the government (Belgium,
    Luxembourg, Slovakia, Slovenia, the Netherlands and Finland).

•   In six eurea area countries, the forecasts were produced by the independant bodies: Belgium,
    Netherlands, Luxembourg, Austria, Slovenia and Finland. However, Belgium did not use the most recent
    forecast prepared by the independent body and did therefore, according to the Commission, not fully
    comply with EU Regulation 473/2013.

•   In 12 euro area countries , the forecasts were endorsed by the independent bodies: Germany, Estonia,
    Ireland, Greece, Spain, France, Cyprus, Latvia, Lithuania, Malta, Portugal and Slovakia. Within this group
    of countries, the endorsements were often accompanied by some critical comments on the forecasts,
    notably in Estonia, Greece, France, Portugal and Slovakia.

•   It is the first time that the official forecast of Germany has been endorsed by an independent body, since
    it was not in place before the previous DBP and the latest Stability Programme of Germany

                                Economic Governance Support Unit (EGOV)
                                            Author: J. Angerer
                                  Directorate-General for Internal Policies                              EN
                                        PE 634.386 - February 2019
IPOL | Economic Governance Support Unit

•   The Italian independent body did not endorse the macro-economic forecast used in the revised 2019
    DBP; it, however, endorsed the forecast used inthe final budget law.

The use of independent forecasts in the preparations of the 2018 Stability Programmes (SP):

•   Nearly all euro area Member States have used macro-economic forecasts prepared or endorsed by
    independent fiscal bodies according to Commission assessments and existing legal national provisions,
    the only exception being Germany, where the independent body was not yet in place 1. However, as for
    the preparation/endorsement of the forecasts underlying the 2019 DBP, the bodies preparing/endorsing
    the macro-economic forecasts of the 2018 SP, were formally attached to the government in Belgium,
    Luxembourg, Slovakia, Slovenia, the Netherlands and Finland. In Finland, the body was/is even located
    in the Ministry of Finance. 2

•   In six eurea area countries, the forecasts were produced by the independant bodies: Belgium,
    Netherlands, Luxembourg, Austria, Slovenia and Finland.

•   In 11 euro area countries the forecasts were endorsed by the independent bodies: Estonia, Ireland,
    Italy, Spain, France, Cyprus, Latvia, Lithuania, Malta, Portugal and Slovakia. Within this group of countries,
    the endorsements were often accompanied by some critical comments on the forecasts, notably in
    Estonia and Portugal.

•   Since Greece was still under a programme, no SP was prepared by the country.

The use of independent forecasts in the preparations of the 2018 Convergence Programmes (CP):

•   Poland is the only EU Member State that has not established and does not have plans to establish an
    independent fiscal council.

•   The UK is the only non-euro area Member State whose independent body has produced the macro-
    economic forecast used in its CP.

•   In no single non-euro area Member State, the CP is entirely based on macroeconomic and budgetary
    forecasts which have been, in accordance with EU Directive 2011/85, “compared with the most updated
    forecasts of the Commission and, if appropriate, those of other independent bodies. (...)”. However, in the
    Bulgarian CP contains at least “assumptions about key indicators of the external environment provided by
    the International Monetary Fund, the World Bank, the European Commission and the Ministry of Finance of
    the Republic of Bulgaria, as of mid-March 2018“.

A further result of the screening (as presented in the overleaf annex) is that Austria, Belgium, Luxembourg,
the Netherlands, Slovenia and Slovakia have several national independent bodies. The main division of
tasks for each of these countries is that one body is responsble for producing/endorsing the macro-
economic forecast underlying the Stability or Convergence Programme (SCP) or DBP while another body is
responsible for the assessment of the national fiscal rules.

1
  In Germany, the official macroeconomic forecasts were produced by the Inter-departmental Macroeconomic Forecasting Group
under the direction of the Federal Ministry for Economic Affairs and Energy, without being submitted for a formal endorsement by
an independent body. However, a legal amendment, addressing this deficiency, was in the process of parliamentary adoption (see
p. 7 of this briefing).
2
   In Finland, the only euro area member where the independent body is located in the Ministry of Finance, the head of the
department responsible for the forecasting has the final say on the macroeconomic projections and cannot be overruled by the
Minister of Finance (Law No 79/2015).

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The role of national fiscal bodies - State of play - February 2019

Capacity of the independent bodies

The information provided in the most recent relevant Commission assessments (see later sub-section on
sources used) indicates that the implementation of the relevant legal framework and the actual capacities
of these independent fiscal bodies are heterogeneous throughout Europe:

•   Poland was - as per May 2018 - the only TSCG Member State that had no fully fledged and operational
    independent fiscal council in place. Poland has even not adopted a legal basis establishing a dedicated
    fiscal council or assigned such a role to an existing body. Note that as per Feburary 2019 Poland is the
    only EU country that has no member in the EU network on independent fiscal institutions.

•   Three countries have set up their independent fiscal body since early 2017: Germany, Slovenia and the
    Czech Republic: The German body has been set up in July 2018 and has endorsed the 2019 DBP in
    October 2018; the fiscal council of Slovenia was formally set up in March 2017 and has been active since
    then; and the members of the Czech Committee for Budgetary Forecasts have been appointed in spring
    2018.

•   Concrete information on actual own staff numbers or budgets is often not provided, making it is
    unclear how a proper functioning of independent work can be ensured. If such concrete information is
    provided, the resources are often rather limited, which raises questions over whether independent
    work can be carried out in a thorough and comprehensive manner 3. This is the case for at least the
    following nine Member States: Belgium 4, Croatia, Greece, Hungary, Luxembourg, Finland, Sweden,
    Germany and Estonia.

•   There is frequent contracting-out of technical expertise in a number of Member States, potentially to
    compensate for a shortage of permanent staff, e.g. in Estonia, France, Latvia, Lithuania and Bulgaria.

•   Eleven Member States have independent fiscal bodies that seem to be better equipped (in terms
    of staff numbers and/or budget): France, Ireland, Italy, Malta, the Netherlands, Spain, Slovakia, Austria,
    Portugal, Denmark and the UK. This does however not prejudge a more comprehensive analysis on the
    real effectiveness of these institutions.

•   The national legal framework in Spain significantly restricts the scope of information to which the
    Spanish monitoring institution can have access, and there are insufficient legal safeguards to ensure
    functional autonomy of the Belgian monitoring institution. 5

For further country specific information, please see the annex overleaf.

3
  According to the Commission publication Independent Fiscal institutions in the EU Member States: The early years” (July 2017),
the average 2016 budget was 1,6 million (median budget 0,7 million) for the independent fiscal councils. The institutions in Belgium
(Federal Planning Bureau), Spain, Italy, Netherlands and United Kingdom were assessed to have the largest budgets. As regards staff,
most institutions employ less than 10 persons. In more general terms, the Commission publication concludes that Member States
have retained significant freedom in terms of the set-up, the mandate, the resources of the respective independent fiscal bodies, as
long as the general requirements set out in EU law is respected.
4
  Belgium has two independent bodies: The High Council of Finance and the Federal planning Bureau. While the High Council of
Finance is assessed to have lacking provisions concerning the appropriate resourcing (see page 7 of this briefing), the Federal
Planning Bureau - which carries out the independent forecasts - is assessed in the Commission publication Independent Fiscal
institutions in the EU Member States: The early years” to have one of the largest budgets of independent bodies in the EU.
5
  Also the July 2017 Commission publication Independent Fiscal institutions in the EU Member States: The early years identified that
independent have uneven access to information; the most problematic areas being statistics on the non-central sub-sectors,
information on and costing of planned new measures, and EU fiscal surveillance issues (the latter concerning both national and EU
institutions).

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Sources used for the country-specific screening
The country specific screening of the role played by national fiscal councils presented in this document (see
annex overleaf) is based on the information provided by the Member States themselves in their 2018 SCP
and 2019 DBP (only for Euro Area Member States) and on the Commission assessments of these
programmes. In addition, it is based on Fiscal Compact country assessments of 2017, as foreseen by Art. 8(1)
of the TSCG. The Fiscal compact country assessments contain country specific information on resources and
access to information by each independent fiscal body (such as concrete information on its allocated
budget and the size and skills of its staff), which indicates its capacity to properly discharge its specific tasks,
while the Commission assessments of the SCP/DBP contain recent information, notably on the
preparation/endorsement of the latest SCP and DBP.

In those cases where the SCP and DBP do not provide information on whether the macro-economic forecasts
have been approved or endorsed by independent bodies (euro area Member States) or compared with the
most updated forecasts from the Commission or independent fiscal bodies (non-euro area Member States),
the screening in this document is supplemented by any information available on websites of the respective
independent bodies.

However, it is worth noting that the below screening of available information do not as such provide
substantial information on the actual effectiveness of a given independet fiscal body.

Other sources on independent fiscal bodies include:

•   A screening of the SCP and DBP of the years 2016 and 2017 as presented in a EGOV briefing of April
    2018;

•   European Commission paper (July 2017) on “Independent Fiscal institutions in the EU Member States:
    The early years” (László Jankovics and Monika Sherwood, Discussion paper 067)” which looks more into
    the various aspects of the roles and functions of the independent bodies;

•   The 2018 annual report of the European Fiscal Board which analysed more in-depth the role
    independent fiscal bodies played in selected Member States in 2017.

•   Publications of the EU network of independent fiscal bodies (see e.g. the following publications of
    January 2019: “Network Statement on the Need to Reinforce and Protect EU independent fiscal bodies” and
    “Good times are not used to build fiscal buffers”).

•   An index on the scope of independent fiscal bodies that aims to measure the breadth of tasks discharged
    by the bodies; it based on information reported by the bodies themselves. The latest vintage of the index
    refers to the year 2016 (the first vintage refers to 2015).

The current legal framework
In accordance with the EU legal framework for budgetary surveillance (Article 121 TFEU and relevant
secondary law), Member States of the Euro Area submit to the European Commission SP during the spring
and DBP during the autumn, while non-Euro Area Member States only submit CP during the spring. The aim
of the annual submission and assessment of these Stability or Convergence Programmes SCP and DBP is
to ensure a smooth functioning of the EU fiscal framework on the basis of regularly updated data on the
national budgetary situations and plans. In order to enhance the reliability of the underlying forecast figures
used by the Member States, the EU legal bases require that the macro-economic forecasts of the SCP and
DBP are to be produced or endorsed by independent bodies.

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The role of national fiscal bodies - State of play - February 2019

There are currently four legal bases stipulating that Member States should have independent fiscal bodies
in place:

•   EU Directive 2011/85 (part of the “6-pack”), which is applicable to all EU Member States (except the UK),
    stipulates (Art. 4 of the Directive) that the national “macroeconomic and budgetary forecasts shall be
    compared with the most updated forecasts of the Commission and, if appropriate, those of other independent
    bodies. (...)”. Furthermore, the Directive stipulates (in the recitals and Art. 6) that national budgetary
    frameworks should be based on fiscal rules and that the effective and timely monitoring of compliance
    with the rules shall be based on reliable and independent analysis carried out by independent bodies or
    bodies endowed with functional autonomy vis-à-vis the fiscal authorities of the Member States.

•   The amended EU Regulation 1466/97 governing the preventive arm of the Stability and Growth Pact
    stipulates that the SP (or the CP) shall be based on the most likely macrofiscal scenario or on a more
    prudent scenario and that the macroeconomic and budgetary forecasts shall be compared with the
    most updated European Commission forecasts “and, if appropriate, those of other independent bodies”.

•   EU Regulation 473/2013 (part of the “2-pack”) stipulates that Euro area Member States (1) should have
    in place independent bodies which produce or endorse national medium-term fiscal plans and draft
    budgets as well as their underpinning macroeconomic forecasts and (2) they should indicate whether
    those fiscal plans were produced or endorsed by independent fiscal bodies or not. In accordance with
    the same Regulation, the independent bodies shall be endowed with functional autonomy vis-à-vis the
    budgetary authorities of a Member State. The principles on the tasks and status of the monitoring
    institutions are included in recital 15 of the Regulation.

•   The intergovernmental Treaty on Stability, Coordination and Governance in the Economic and Monetary
    Union (TSCG) stipulates the existence of independent fiscal institutions monitoring compliance with
    national fiscal rules

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  Box: Potential revisions of the current legal framework on independent bodies in the EU

  1. Review of the existing EU legislation on independent bodies

  The amended EU Regulation 1466/97 (part of the so-called “6-pack”) and EU Regulation 473/2013 (part
  of the so-called “2-pack”) provide for a review (including possible proposals for amendements of the
  Regulations) by 14/12/2019. The reviews shall be submitted to the European Parlament and Council.
  In accordance with Art. 18 of EU Directive 2011/85, the Commission shall have published by 14
  December 2018 a review of the suitability of this Directive. in February 2019, the Commission has
  announced that the review of the Directive will be done by the end of 2019 together with the “overall
  review” of the Regulations of the 6- and 2 -packs.

  2. Integration of the substance of the “Fiscal Compact” into EU law

  On 6 December 2017, the European Commission made a proposal for a Council Directive in order to
  integrate the substance of the “Fiscal Compact” of the TSCG into the Union’s legal framework;
  the proposal consolidates national independent bodies as key institutions to promote
  responsible fiscal policies at the national level. At the time, the contracting parties of the TSCG
  agreed to seek integration of the core provisions of the TSCG into Union law at most within five years
  of the date of its entry into force, i.e. by 1 January 2018. The integration has not yet been agreed upon
  by the European Parliament nor the Council. Below is a summary of institutional statements and
  opinions issued since publication of the COM proposal:

  2.1 EU Network of independent fiscal bodies
  In a statement of February 2018, the network “welcomes the fact that the Commission Proposal
  introduces new obligations to Member States with respect to national independent fiscal
  institutions. In particular, according to the Proposal, Member States become obliged to ensure
  national independent fiscal institutuion’s effectively (and not only de iure) meet a set of minimum
  conditions to be able to effectively perform their tasks. The conditions spelled out in the Proposal seem
  mostly adequate but should be complemented with a clearer definition of minimum standards and an
  effective system for their safeguarding.” The network also requests that “independent fiscal instituions
  should also have complete, real-time and stable access to all information relevant for the fulfilment of their
  mandates, at no cost and in an accessible way. This should be clearly stated in national and EU legislation,
  and be enforceable(...) The Network is of the view that the Proposal should also envisage a specific and
  recurrent monitoring process at the EU level to verify periodically that Member States are effectively
  complying with these obligations. An EU institution with operative capacity should be tasked with this
  regular monitoring role.”

  2.2 Opinion of the ECB
  On 1 May 2018, the ECB issued an opinion on the Commission proposal. It welcomed the proposed
  Directive , but considered necessary to make several amendments to it, in order to further
  strengthen fiscal responsibility in the Member States, simplify the legal framework and ensure more
  effective implementation and enforcement of fiscal rules at Union and national level; the amendments
  proposed by the ECB contain also elements how to make the draft Directive more. On national
  independent fiscal bodies, the opinion supported the provisions of the proposed directive, which aim
  to strengthen the role of independent bodies by assigning them a mandate that goes beyond their
  existing tasks under Regulation (EU) No 473/2013. Therefore, it suggested that the proposed Directive
  should rather only expand the tasks attributed to these independent bodies in order to ensure that
  they are able to cover the scope of the proposed directive.

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Annex: Country-specific screening of national fiscal bodies: Selected information on
their use and capacities

                2018 and 2017 Commission (COM) assessments:                    Information provided by the Member States in their:
                    - November 2018 (analyses of the 2019 DBP)                               - 2019 DBP, 2018 SP or CP
 MS

                      - May 2018 (assessments of the 2018 SCP)                (and in some cases - when indicated - by the independent
                 - February 2017 (Fiscal Compact country reports)                                bodies themselves)

                                                       EURO AREA MEMBER STATES

           COM analysis of the 2019 DBP                                       2019 DBP

           « (...) Therefore, it appears that the macroeconomic scenario      No English version of the DBP is available at the time of
           underlying the 2019 DBP did not fully use the most recently        publication of this overview. However, the French version
           available independently produced macroeconomic                     states the the macroeconomic parameters, used by the
           forecasts. Belgium therefore does not fully comply with the        Federal government in its 2019 DBP, have been
           requirement of Regulation (EU) No 473/2013 that the draft          established by the Federal Planning Bureau at the
           budget has to be based on independently produced                   request of the National Accounts Institute («Les prévisions
           macroeconomic forecasts.» (p.4)                                    macroéconomiques pour les années 2018 et 2019 ont été
                                                                              estimées par le Bureau fédéral du Plan à la demande de
           COM assessment of the 2018 SP                                      l’Institut des Comptes nationaux)») (p.4).

           «The macroeconomic forecast underlying the SP has been
           prepared by the Federal Planning Bureau (FPB). The FPB is          2018 SP
           a well-established institution positioning itself as
           independent, however formally attached to the                      No English version of the SP is available. The French version
           government. As stipulated in the Law of 21 December                states that the budgetary forecasts of the SP are based on
           1994, which constitutes the FPB in its current form, the           an assessment of the medium-term economic outlook for
           Prime Minister and the Minister of Economic Affairs                the 2018-2023 period by the Federal Planning Bureau
           supervise the institution, while the federal government            («La trajectoire budgétaire du présent programme de
           provides guidance on the FPB's proceedings. The Belgian            stabilité se fonde sur une préfiguration des perspectives
           Parliament and the Central Economic Council or the National        économiques à moyen terme pour la période 2018-2023
           Labour Council have the right to seek an evaluation by the FPB     du Bureau fédéral du Plan, effectuée en mars 2018.») (pp.7-
           of the federal government's economic, social and                   8).
           environmental policies. In line with the federal government
 Belgium

           commitment to reinforce the autonomy of the national Fiscal        Comment of EGOV: Belgium has two independent bodies:
           Council and the independence of its members, the imminent          The High Council of Finance is inter alia responsible to
           adoption of a Royal Decree is expected to strengthen the           propose a fiscal trajectory and the Federal Planning Bureau
           independence of the Public Borrowing Section of the High           is inter alia responsible for providing objective macro-
           Council of Finance.. » (p. 24)                                     economic forecasts for the budgetary planning of Belgium.

           Latest Fiscal Compact country report (2017)
           « The Belgian monitoring institution is the High Council of
           Finance (HCF-PB). (...) Overall, the set-up of the HCF-PB is
           compliant with the requirements set in Article 3(2) of the TSCG
           (...) The HCF-PB is grounded in law and its mandate includes
           the tasks prescribed by the Fiscal Compact and the common
           principles. Whereas the legal framework includes insufficient
           safeguards for functional autonomy, the Belgian authorities
           have formally committed to amend the 2006 Royal Decree
           with a view to strengthening the independence of the High
           Council of Finance and its members. (...) While provisions
           concerning the appropriate resourcing of the High Council
           of Finance and its capacity to communicate are lacking, the
           Belgian authorities have also formally committed to address
           those issues by amending the 2006 Royal Decree. Finally,
           access to information is grounded in provisions only with
           reference to the information High Council of Finance needs to
           assess the progress of the correction; nevertheless, the Belgian
           authorities have formally committed to explore ways to
           ensure a broader access to information by means of an
           existing protocol. » (p. 7).

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           COM analysis of the 2019 DBP                                             2019 DBP

           «According to the Regulation on the Economic Projections of the          «The 2019 DBP is based in particular on the following
           Federal Government (Vorausschätzungsverordnung) passed by                sources (...) : (...) Federal government autumn
           the Ministry of the Economy and Energy in agreement with the             projection on macroeconomic developments, dated 11
           Ministry of Finance and effective from July 2018, the Joint              October 2018, which was endorsed by the Joint
           Economic Forecast project group has been named as the                    Economic Forecast group as an independent body
           independent body in charge of assessing and endorsing the                in accordance with the Forecasting Act and the
           economic projections underlying the DBPs and the Stability               Forecasting Ordinance» (p.7).
           Programmes within the meaning of the Law on the Economic
           Projections (Vorausschätzungsgesetz) codifying the procedure for         2018 SP
           producing the government's economic forecasts and within the
           meaning of Regulation (EU) No 473/2013. (...) The Joint Economic         The 2018 SP does does not include information about
           Forecast project goup has endorsed the projection                        any involvement of the Advisory Board (or on any other
           underlying the 2019 DBP on 16 October 2018 in a statement                independent fiscal body in charge of producing or
           published on its website (gemeinschaftsdiagnose.de).» (p. 3)             endorsing macroeconomic forecasts of the
                                                                                    government) in the production or endorsement of the
           COM assessment of the 2018 SP                                            underlying macroeconomic projections.
                                                                                    However, it mentions: «Commencing in autumn 2018,
           «As pointed out in the COM Opinion on the 2018 no-policy-
                                                                                    the Joint Economic Forecast Project Team, as the
           change DBP, there is neither an independent body in charge of            independent institution designated for the purpose,
           producing or endorsing macroeconomic forecasts, nor is                   will review all three of the federal government’s
           there an endorsement procedure of forecasts involving an                 projections (annual, spring and autumn projection) and
           independent body within the meaning of Reg. (EU) No                      comment accordingly.» (p. 17)
           473/2013. This also holds for the macroeconomic scenario
           underlying the Stability Programme, which is based on the federal
           government’s macroeconomic forecast published in January
           2018. To address this shortcoming, the federal government has
           enacted a law on the drafting of the federal government's
           macroeconomic forecasts (Vorausschätzungsgesetz) together
 Germany

           with a related ordinance (Vorausschätzungsverordnung). This law
           codifies the current procedure of producing forecasts from
           autumn 2018 on, designating the Joint Economic Forecast Project
           Team, comprising leading economic research institutions, as the
           independent body for endorsing the government’s forecast,
           including the macroeconomic benchmark figures of the SP.» (p.
           14).

           Latest Fiscal Compact country report (2017)
           « The German monitoring institution is the Independent
           Advisory Board to the Stability Council (Advisory Board). (...)
           Mandate: (...) The Stability Council, with the support of the
           Independent Advisory Board, monitors compliance with the
           balanced-budget rule twice a year. (...) The Advisory Board is
           grounded in law (...) Through a chain of legal references which has
           been confirmed by the German authorities (Section 7 of the Stability
           Council Act; Section 51(2) of the Budgetary Principles Act and Article
           3(2) of the TSCG), the Advisory Board has been entrusted a broad-
           based mandate which covers the tasks foreseen by the Fiscal
           Compact and the common principles (...) Resources and access to
           information: The Fiscal Compact Implementation Act (Article
           2(7)(1)) requires functioning costs to be shared in equal parts by
           the Federation and the Länder. On that basis, the Advisory Board
           is currently provided a budget capped at EUR 100 000 per year
           that is primarily used for funding academic staff members and
           external experts. An additional amount of up to EUR 40 000 is
           reserved for covering travel expenses. (...) Overall, the set-up of
           the German monitoring institution complies with the TSCG
           requirements and common principles. (...)The legal framework
           includes appropriate safeguards for functional autonomy.(...)
           Adequate provisions on the Advisory Board's endowment with re-
           sources and access to information are in place.» (pp. 3- 6).

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           COM assessment of the 2019 DBP                                          2019 DBP

           «The macroeconomic forecast underlying the DBP was                      The 2019 DBP states that «The Draft 2019 State Budget
           prepared by the Fiscal Policy Department in the Ministry of             of the Republic of Estonia is based on the summer
           Finance of Estonia and was endorsed by the Fiscal Council               forecast of the Ministry of Finance, published on 11
           (Eelarvenõukogu), which is an independent advisory body                 September 2018.» (p. 4)
           attached to the Bank of Estonia. (...) The Fiscal Council considers     Furthermore, the DBP contains a summary (pp.9-10) of
           that the Ministry's GDP forecast for 2018 and 2019 is                   the opinion of the Fiscal Council, which assesses that
           plausible. The Fiscal Council also sees balanced risks to the tax       «The Fiscal Council finds that the summer forecast of
           revenues. However, the Fiscal Council considers the cyclical            the Ministry of Finance describes the outlook for
           position of the Estonian economy to be better than that                 economic growth and inflation in Estonia accurately
           estimated by the Ministry of Finance. (...).» (p.2)                     enough and is in line with the forecasts of several other
                                                                                   institutions» (p.3 of the opinion). it also raises concerns:
           COM assessment of the 2018 SP                                           «The Fiscal Council considers the cyclical position of the
           « (...) On 26 April 2018, the Fiscal Council published its opinion on   Estonian economy to be better than that estimated by
           the macroeconomic and fiscal forecasts underlying the national          the Ministry of Finance, and this means there are slightly
           budgetary strategy and the stability programme, as well as the          different opinions on the structural fiscal position.» (p.9
           opinion on the planned structural budget position. It endorsed          of the opinion)
           the GDP and inflation forecast of Ministry of Finance,
                                                                                   2018 SP
           considering it plausible, with risks broadly balanced. However,
           the Council considered that in 2017 the general government
                                                                                   No English version of the SP is available. The Estonian
           budget position was in a larger structural deficit (0.7% of
                                                                                   version states that the the national fiscal strategy and
           GDP) than estimated by the Ministry of Finance (0.3% of GDP)
                                                                                   the SP are based on the spring forecast of 2018
           and in breach of the fiscal target set when the budget was
                                                                                   published by the Finance Ministry on 16 April. The
           drawn up in 2016 (which at the time required a balanced
                                                                                   assessment of the Ministry of Finance's economic
           structural position). Looking ahead, the Fiscal Council finds that
                                                                                   forecast is provided by an independent Budget Council.
           the targets presented in the programme for 2019 and beyond are
                                                                                   (p.7).
           in line with the domestic fiscal rules, at face value. The Council's
                                                                                   The Fiscal Councils published its opinion on its website,
           own estimate of the output gap is similar to that of the Ministry of
                                                                                   stating «Overall the Fiscal Council finds that the spring
           Finance for 2018 and 2019 and does not lead to major differences
                                                                                   forecast 2018 of the Ministry of Finance describes the
           in the estimate of the cyclical component of the budget10.
                                                                                   outlook for economic growth and inflation in Estonia
           However, the Fiscal Council sees downside risks to the tax
 Estonia

                                                                                   accurately enough and is in line with the forecasts of
           revenue outlook for 2018 and beyond, stemming from
                                                                                   other institutions.» (p.3)
           uncertainty due to various recent tax changes. It also finds that
           the measures underpinning the targets (largely from 2019
           onwards) are not well specified. Overall, the Fiscal Council
           considers that the measures underpinning the targets are not
           sufficient to ensure that the national structural balance target is
           met from 2019 onwards. » (p. 16).

           Latest Fiscal Compact country report (2017)
           « The Estonian monitoring institution is the Fiscal Council. (...)
           Mandate: The Fiscal Council's general mandate provides the
           necessary basis for carrying out the tasks foreseen by the Fiscal
           Compact and the common principles. The Fiscal Council is
           responsible for monitoring compliance with national fiscal rules
           (...) and for assessing economic forecasts underlying Estonia's
           economic policy. (...) Resources and access to information:
           According to Article 42 of the Bank of Estonia Act, the Fiscal
           Council is entitled to receive, from any ministry or any institution
           in the government sector or from the Bank of Estonia, the
           information which it needs for the performance of its tasks (...) In
           line with the Statute, the Fiscal Council gets assistance in its
           technical tasks from a secretary who is an employee of the Bank
           of Estonia and, with the agreement of the Governor of the Bank of
           Estonia, the Fiscal Council can use other employees temporarily
           if necessary for its work. Currently, the work of the Fiscal Council
           is supported by two economists from the Bank of Estonia, one of
           whom also performs the tasks of the secretary of the Fiscal
           Council. (...) Overall, the set-up of the Estonian monitoring
           institution is compliant with the TSCG requirements and
           common principles. (...). The legal framework includes appropriate
           safeguards for functional autonomy (...) Adequate provisions on
           the Fiscal Council's endowment with resources and access to
           information are in place. » (p. 3 - 4)
PE 634. 386                                                           9
IPOL | Economic Governance Support Unit

           COM analysis of the 2019 DBP                                        2019 DBP

           «The macroeconomic forecast in Ireland's DBP for 2019 was           «The Macroeconomic forecasts contained in this document
           prepared by the Department of Finance. The task of assessing        were produced by the Department of Finance and
           and endorsing the macroeconomic forecast underpinning               subsequently endorsed by the Irish Fiscal Advisory Council
           the draft budget was assigned to the Irish Fiscal Advisory          on the 02 of October 2018.» (p.1)
           Council (IFAC), an independent statutory body also
           mandated to independently provide an assessment of, and
           to publicly comment on, whether the government is meeting
           its own stated budgetary targets and objectives. (...) It           2018 SP
           endorsed the set of macroeconomic projections
           underpinning the 2019 DBP for the years 2018 and 2019,              «The macroeconomic forecasts contained herein were
           as within the range of appropriate forecasts» (p. 4).               endorsed by the Irish Fiscal Advisory Council on 10th April
                                                                               2018.» (p.i)
           COM assessment of 2018 SP
           « (...) The IFAC endorsed the set of macroeconomic
           forecasts underpinning the 2018 Stability Programme as
           being within the range of appropriate projections. It has
           verified the Department of Finance’s mechanical application
           of the adjusted Commonly Agreed Methodology to estimate
           trend supply-side variables. The letter of endorsement was
           signed on 10 April » (pp. 18/19).

           Latest Fiscal Compact country report (2017)
           « The Irish monitoring institution is the Irish Fiscal Advisory
 Ireland

           Council (IFAC) (...) Mandate: The mandate assigned by the
           Fiscal Responsibility Act (FRA) 2012 includes the assessment
           of official forecasts, the appropriateness of the government
           fiscal stance, and – in relation to the TSCG requirements - , the
           monitoring of the structural balanced-budget rule. In
           particular, the IFAC is required to monitor and assess at least
           once a year i) the existence and termination of exceptional
           circumstances; ii) the compliance of the budget position with
           the budget balance rule; iii) the appropriateness of the
           correction plan proposed by government; iv) the proper
           implementation of that correction plan. (...) The FRA 2012 sets
           out that the IFAC is independent in the performance of its
           functions (...) The members cannot be candidates or elected
           members of the Irish Parliament or the European Parliament,
           nor can they be members of a local authority (...) Resources
           and access to information: The IFAC is financed from the
           Central Fund, over which the government has limited
           discretion (...) The FRA 2012 provided a budget of EUR 800
           000 for IFAC in its first year of operation, to be
           subsequently indexed yearly (...) To secure access to
           information, there is a general clause whereby the IFAC has
           all powers necessary to the performance of its functions (...)
           Overall, the set-up of the Irish monitoring institution
           complies with the TSCG requirements and the common
           principles. (...) The legal framework includes appropriate
           safeguards for functional autonomy (...) Adequate provisions
           on IFAC's endowment with resources and access to
           information are in place. » (p. 4 -5).

                                                                    10                                                       PE 634.386
The role of national fiscal bodies - State of play - February 2019

          COM analysis of the 2019 DBP                                       2019 DBP
                                                                             «The macroeconomic forecasts used (...) were endorsed by
          «The macroeconomic forecast underlying the DBP for 2019            the Hellenic Fiscal Council» (p.3)
          was assessed by the Hellenic Fiscal Council (HFC). The HFC
          concluded that the Ministry of Finance’s forecast is within
                                                                             2018 SP
          reach for 2018 and considered the 2019 official growth
          projection as ambitious but conditionally achievable. (...)»       Greece was still subject to a macroeconomic adjustment
          (p. 3).                                                            programme and therefore exempted from submitting a
                                                                             DBP/SP, in accordance with Reg. 473/2013, Art 13.

          COM analysis of the 2018 SP
          There is no 2018 SP for Greece, since the country was still
          subject to a macro-economic adjustment programme and
          therefore to other surveillance procedures than those
          pertaining to the European Semester.

          Latest Fiscal Compact country report (2017)
          « The Greek monitoring institution is the Hellenic Fiscal
          Council (HFC) (...) The Law No 4270 on Fiscal Management and
          Supervision Principles (the LFM) established the HFC as a
          detached public legal entity. (...) Mandate: The HFC is
 Greece

          entrusted with a broad-based mandate, including most
          notably the monitoring of compliance with national fiscal
          rules and the evaluation of the macroeconomic forecasts used
          for budgetary planning. The tasks prescribed by the TSCG and
          the common principles are enshrined in the mandate. The
          HFC's opinion must be considered by the Ministry of Finance
          when it contemplates activating the correction mechanism for
          the structural balanced-budget rule. (...) Pursuant to Art. 2 of
          the LFM, the HFC enjoys operational autonomy and
          administrative and financial independence. (...) Resources
          and access to information: As to resource adequacy, Art. 13
          of the LFM states that the amount of the State grant is
          determined by the public estimate of a cost-based budget
          prepared by the HFC Board. (...) Art. 8(2) of the LFM lays down
          a ceiling of 20 persons for staffing. Barring specific
          legislative confidentiality requirements, all public authorities
          and public law entities must provide the HFC with any
          information required. (...) Overall, the set-up of the Greek
          monitoring institution is compliant with the TSCG
          requirements and common principles. (...) The legal
          framework stipulates appropriate safeguards for functional
          autonomy. (...) Adequate provisions on the HFC's endowment
          with resources and access to information are in place. » (p. 4 -
          5).

PE 634. 386                                                        11
IPOL | Economic Governance Support Unit

         COM analysis of the 2019 DBP                                           2019 DBP

         «The macroeconomic forecasts underpinning the 2019                     No English version of the DBP is available. The Spanish
         DBP have been endorsed by Spain's independent fiscal                   version      states that the macroeconomic scenario
         institution –Autoridad Independiente de Responsabilidad                described in the 2019 DBP is endorsed by the Inde-
         Fiscal (AIReF) in a report published on AIReF's website on 25          pendent Fiscal Responsibility Authority (AIReF) (p.7).
         October 2018. AIReF's mandate is broad, thus allowing it to            In its opinion on the DBP, AIReF states that it «considers
         play a relevant role in Spain's budgetary processes. (...)» (p. 3).    that the macroeconomic scenario of the Government is
                                                                                prudent as a whole, taking into account the exogenous
         COM assessment of 2018 SP                                              and political assumptions defined».

         «The macroeconomic projections underpinning the SP were                2018 SP
         endorsed on 28 of April 2018 by Spain's independent fiscal
         institution (AIReF). AIReF deems the programme’s                       No English version of the SP is available. The Spanish
         macroeconomic scenario as "prudent" in the early years of the          version indicates that the AIReF endorses the
         programme, and "probable" in the outer years, and the                  macroeconomic forecasts, and states that the
         composition of growth as realistic. AIReF considers risks to the       Government takes note of the recommendations received
         macroeconomic scenario to be balanced in the short term,               in relation to the purpose of the report (p.17). In its
         and tilted to the downside in the medium term.» (p. 23).               opinion on the 2018 SP, AIReF confirms the endorsement
                                                                                and that it «considers the Government’s macroeconomic
         Latest Fiscal Compact country report (2017)                            scenario to be prudent overall, taking into account the
                                                                                exogenous assumptions and defined policies.» (p.2)
         « The Spanish monitoring institution is the Independent
         Authority for Fiscal Responsibility (AIReF) (...) Mandate: The
         AIReF’s mandate provides the necessary basis for carrying out
         the tasks foreseen by the Fiscal Compact and the common
         principles. (...) The institutional and operational independence
 Spain

         of the AIReF is explicitly established by the Organic Law
         6/2013 (...) Resources and access to information: (...) The
         AIReF is funded through a specific levy on the rest of the public
         administration, as well as through fees if a specific
         administration requests a study from the AIReF. (...) In 2014,
         the AIReF’s revenues amounted to EUR 4.1 million. (...)
         Article 4(2) of the AIReF-OL aims at securing an appropriate
         access to information for the AIReF. It states inter alia that the
         relevant authorities have to provide the economic and
         financial information required by the AIReF which are
         necessary to carry out its tasks. However, the Organic Statute
         of AIReF approved by the Royal Decree 215/2014 and the
         ministerial decision HAP/1287/2015 qualify that access to
         information by introducing a number of exceptions (...) it can
         be concluded that some of the exceptions introduced by
         legislation subsequent to the AIReF-OL leave the possibility to
         unduly narrow down the scope of information (i.e.
         documents and data) to which the AIReF can have access,
         thereby potentially affecting the latter’s capacity to properly
         discharge its specific tasks. (...) Overall, (...) the set-up of the
         AIReF will be compliant with the requirements set in
         Article 3(2) of the TSCG and in the common principles if and
         when the set of provisions regulating access to
         information for the AIReF are brought fully in line with the
         common principles. (...) The legal framework includes
         appropriate safeguards for functional autonomy. (...)
         Adequate provisions on the AIReF’s endowment with
         resources are in place. » (pp. 5 - 8).

                                                                     12                                                       PE 634.386
The role of national fiscal bodies - State of play - February 2019

         COM analysis of the 2019 DBP                                       2019 DBP

         « The High Council for Public Finances (HCPF), the               «The Directorate General of the Treasury prepares
         independent monitoring body attached to the French Court         macroeconomic forecasts and compiles public finance
         of Auditors, adopted on 19 September an opinion on the           forecasts. (...) These forecasts were submitted to the High
         macroeconomic forecasts underlying the DBP as well as on         Council on Public Finances (“Haut Conseil des finances
         the underlying budgetary strategy. (...) In its opinion, the     publiques”, HCFP) for its opinion. (...) The HCFP issues an
         HCPF considers that the macroeconomic scenario                   opinion on all of these components. This opinion is attached
         underpinning the DBP is credible for 2018 and plausible          to the DBP submitted to Parliament, and made public by the
         for 2019 regarding the projections for GDP growth,               HCFP at the same time under the terms of the Constitutional
         inflation, employment and salary mass. The HCFP                  Bylaw. The Constitutional Council has ruled that opinions
         nevertheless flagged the growing uncertainty surrounding         issued by the HCFP shall be taken into consideration when
         the external environment scenario. Moreover, the HCPF            assessing whether the texts submitted for its review are
         assesses the public finances scenario, pointing to the low level sincere. » (p.46) The opinion of the HCFP states that the
         of the adjustment in both 2018 and 2019. (...)» (p. 3).          macroeconomic forecast for 2018 is considered credible and
                                                                          that for 2019 plausible. Furthermore, it notes that «the
                                                                          structural adjustment presented for 2019 benefits from the
         COM assessment of 2018 SP                                        fact that the raise of the fifth down payment of the corporate
                                                                          tax, limited to 2019 fiscal year, was not taken into account as
         «The HCPF, the independent monitoring body attached to the a one-off measure. This questionable choice improves the
         French Court of Auditors, released on 13 April an opinion on structural adjustment presented by the Government by
         the macroeconomic forecasts underlying the Stability nearly 0.1 point of GDP in 2019.»
         Programme. In its opinion, the HCPF considers that the
         macroeconomic scenario underpinning the Stability 2018 SP
         Programme is plausible regarding the 2018 projections
         for GDP growth, as well as the forecast used for inflation, No English version available at the time of publication of this
         employment and salary mass. The HCFP also flagged that overview. The French version states that the HCFP has
         the GDP growth forecast for 2019 is within reach, while it publicly issued an opinion on the macroeconomic forecasts
                                                                          used in the SP and that this opinion has been attached to the
         is optimistic between 2020 and 2022 with economic
                                                                          SP which was submitted to the European Commission at the
         growth consistently above its potential. Moreover, the
                                                                          end of April 2018 (p.66).
         HCPF highlights the necessity to respect the objectives
                                                                          The opinion of the HCFP is published on its website and
France

         planned in terms of public expenditure reduction, which are
                                                                          deems that «For 2018, the HCFP considers that the sequence
         a key condition to achieve the structural balance trajectory. As
                                                                          described in the macroeconomic scenario of the stability
         already noted by the HCFP in its opinion on the second
                                                                          program for France is plausible, as are the employment,
         amended budget law for the year 2017, the non-existent
                                                                          payroll and inflation forecasts. It considers the Government's
         structural effort in 2017 and the very weak one in 2018 are at
                                                                          growth forecast of 2.0 per cent to be realistic». However the
         odds with the long way to go for bringing the structural
                                                                          HCFP has also some concerns, icnluding the following one: « For
         balance back to the medium-term objective and the more
                                                                          the following years, the High Council considers that the
         favourable conditions for the realization of such an effort
                                                                          scenario adopted of actual growth remaining continuously
         created by the improvement in the economic situation. » (p.
                                                                          above potential growth until 2022 is optimistic, given the
         23).
                                                                          assumptions made regarding higher interest rates and the
                                                                          consolidation of public finances» and that «the structural
         Latest Fiscal Compact country report (2017)
                                                                          balance, which is not affected by the assumptions of actual
         « The French monitoring institution is the High Council for growth, would remain negative throughout the period, while
         Public Finances (HCPF) (...) Mandate: The HCPF’s mandate improving significantly.» (p.1)
         covers the tasks foreseen by the Fiscal Compact and the
         common principles. The HCPF is tasked with identifying at
         least once per year (basing itself on the draft budget bill) any
         significant deviation from the multi-annual budgetary
         objectives, set in line with the balanced-budget rule (...)
         Resources and access to information: The HCPF is financed
         by the general State budget under a dedicated line
         (‘programme 340’). The HCPF has a secretariat of five staff and
         may draw on its budget for the provision of external
         expertise. The HCPF can call qualified personnel from the
         government in the area of public finances to testify. The
         government is obliged by law to reply to the HCPF’s requests
         for information. (...) Overall, the set-up of the French
         monitoring institution is compliant with the TSCG
         requirements and common principles (...) The monitoring
         institution has been grounded in law and equipped with
         appropriate safeguards as to its functional autonomy. (...)
         Adequate provisions on the HCPF’s endowment with
         resources and access to information are in place. » (p. 5 - 6).

PE 634. 386                                                         13
IPOL | Economic Governance Support Unit

         COM analysis of the 2019 DBP                                            2019 DBP

         «(...) the non-endorsement of the programme scenario,                   While the the Parliamentary Budget Office (PBO) disagreed
         mentioned in the revised DBP, took the form of two letters              with the macroeconomic forecasts for the year 2019 contained
         (dated 5 October and 14 October 2018, respectively)                     in the original DBP (« the growth rates for the key variables
         addressed to the Italian Minister of Economy and Finance and            of economic activity and prices appear to be generally
         publicly available on the PBO’s website. In its parliamentary           unrealistic by comparison with the projections of the PBO
         hearing on the DEF update, the PBO noted that the growth                panel», see letter published on 13 October) and p.6 of
         outlook for 2019 was overly optimistic and subject to high              DBP), it has endorsed (with comments) the 2019 Budget
         downside risks. » (p. 2).                                               Bill as amended by the Senate (« the MEF forecast for 2019
                                                                                 is considered plausible, although presenting considerable risks
                                                                                 of a downward revision. These risks are amplified if the forecasts
         COM assessment of 2018 SP                                               for 2020 and 2021 are considered.», see PBO website).
         «The PBO has endorsed the trend macroeconomic scenario
         presented in the SP. The endorsement took the form of a
                                                                                 2018 SP
         letter sent to the Minister of Finance on the 5th of April 2018.
         The Office indicated that the growth projections in the trend
                                                                                 The 2018 SP is not available in English. The Italian version
         scenario are positioned in the higher part of the forecast range
                                                                                 states that the new 2018-2021 macro-annual framework
         used for its assessment, in particular in 2019 and 2020. » (p. 21)
                                                                                 was validated by the PBO on 29 March 2018 (p.3)
                                                                                 On its webside, the PBO published a validation letter in
         Latest Fiscal Compact country report (2017)                             which is noted «The PBO Council − having examined the trend
         « The Italian monitoring institution is the PBO (...) Mandate:          forecasts for the years 2018-2021, updated on the basis of the
                                                                                 new national accounts published by ISTAT and sent by the MEF
 Italy

         Law 243/2012 (...) assigns to the PBO a number of broadly-
         defined functions concerning economic and financial                     to the PBO on 4 April last − confirms the endorsement
         analyses. Among those functions, the PBO performs analyses,             communicated on 29 March, inasmuch as the forecasts are
         verifications and assessments regarding compliance with                 within an acceptable range in the light of the information
         budgetary rules, the activation and use of the corrective               currently available.» (p.0).
         mechanism, and deviations from objectives arising from the
         exceptional circumstances referred to in Law 243/2012.
         (...) Resources and access to information: Law 243/2012
         (Article 19) provides an authorisation of EUR 3 million per
         year in favour of each Parliamentary Chamber for the
         expenditure necessary for the functioning of the PBO. (...)
         Within the limits of its budget, the PBO manages
         autonomously the expenditure for its functioning. By law the
         support staff is capped initially to 30 and ultimately to 40.
         (...) According to Law 243/2012 (Article 18(6)), all government
         entities, public authorities and entities that belong to public
         holdings must ensure the PBO’s access to all databases
         regarding economic or public finance issues, in order to allow
         the PBO to carry out its institutional tasks. (...) Overall, the set-
         up of the Italian monitoring institution is compliant with the
         TSCG requirements and common principles (...) The legal
         framework includes appropriate safeguards for functional
         autonomy. (...) Adequate provisions on the PBO’s endowment
         with resources and access to information are in place. » (p. 5 -
         6).

                                                                      14                                                              PE 634.386
The role of national fiscal bodies - State of play - February 2019

          COM analysis of the 2019 DBP                                          2019 DBP

          «(...) On 12 September 2018, the Council endorsed the                 «The macroeconomic projections underlying the
          macroeconomic forecast accompanying the DBP for 2019 in a             budgetary outcomes have been endorsed by the Fiscal
          public letter, by concluding that the forecast as projected by        Council» (p.3).
          the Ministry of Finance was within acceptable limits (...)» (p. 3).
                                                                                2018 SP
          COM assessment of 2018 SP
                                                                                «The macroeconomic and fiscal forecasts underlying this
          «The macroeconomic forecasts underlying the SP had been               Programme have been submitted to the Fiscal Council for
          submitted to the independent Fiscal Council for endorsement.          endorsement and the Council concluded that the headline
          On 25 April 2018, the Council concluded in a public letter to         GDP and budget balance figures as forecast by the
          the Minister of Finance that the macroeconomic forecast               Ministry of Finance are considered realistic for the
          underlying the SP was deemed to be sufficiently                       programming period under consideration.» (p.6).
          conservative. More specifically, as stated in the SP, the
          Council concluded that the headline GDP and budget
          balance figures as forecast by the Ministry of Finance were
          considered realistic for the programming period under
          consideration. (...). » (p. 19).

          Latest Fiscal Compact country report (2017)
 Cyprus

          « The Cypriot monitoring institution is the Fiscal Council. (...)
          Mandate: (...) According to Article 19 of the Fiscal
          Responsibility and Budget Framework Law of 21 February
          2014 (FRBFL), the Fiscal Council is entrusted inter alia with the
          monitoring of compliance with national numerical fiscal rules
          (including the structural balanced budget rule). (...) Resources
          and access to information: In terms of dedicated human
          resources, between three and six staff positions can be
          filled. Funding for the Fiscal Council comes from the general
          budget; Article 32(2) lays down that the budget "adequately
          reflects the staffing and resources proposed by the President
          of the Council, as provided for in the annual plan for the
          performance of the Council’s duties”. As to access to
          information, the Fiscal Council may request all the necessary
          information from any government entity. A definition of the
          core information needed for the Fiscal Council to discharge its
          tasks is laid down in Article 30(2) of the FRBFL, the non-
          communication of which may constitute an offence. (...)
          Overall, the set-up of the Cypriot monitoring institution is
          compliant with the TSCG requirements and common
          principles. (...) The legal framework stipulates appropriate
          safeguards for functional autonomy. (...) Adequate provisions
          on the Fiscal Council's endowment with resources and access
          to information are in place. » (p. 4-5).

PE 634. 386                                                           15
IPOL | Economic Governance Support Unit

          COM analysis of the 2019 DBP                                        2019 DBP

          «The macroeconomic forecast of the DBP was prepared by the          «The forecasts have been approved by an agreement
          Ministry of Finance and endorsed by the Fiscal Discipline           protocol with the Bank of Latvia and the Ministry of
          Council on 10 October 2018 in a letter from the Fiscal              Economics. In the preparation of the forecasts, the MoF
          Discipline Council to the Ministry of Finance, which is also        consulted experts from the International Monetary Fund
          published on the Council’s website. (...) » (p. 3).                 and the EC. The Fiscal Discipline Council has endorsed the
                                                                              forecasts in October 15, 2018. Thus, the developed
                                                                              macroeconomic indicators were used as a basis for the
          COM assessment of 2018 SP                                           development of the Latvian Medium-Term Budget
                                                                              Framework for 2019-2021.» (p.5) The opinion of the Fiscal
          « The macroeconomic forecast underlying the SP was                  Discipline Council concludes that «The Council endorses
          endorsed by the FDC on 14 February 2018. The FDC                    the macroeconomic forecasts to underpin the fiscal
          considered the macroeconomic forecasts of the Ministry of           projections for the medium-term budgetary framework
          Finance to be realistic, while highlighting that the price          for 2018-2020.» (p.5)
          inflation and wage growth should be watched as an evidence
          of lower growth potential and widening positive output gap.         2018 SP
          » (p. 18).
                                                                              «The updated medium–term forecasts of macroeconomic
          Latest Fiscal Compact country report (2017)                         indicators have been presented also to the Fiscal
 Latvia

                                                                              Discipline Council, which has approved them on 14
          « The Latvian monitoring institution is the Fiscal Discipline
                                                                              February 2018.» (p.13).
          Council (FDC). (...) Mandate: The FDC's general mandate             The FDC publishes its opinion on its website on the 14th
          provides the necessary basis for carrying out the tasks             of February, stating «The MoF macroeconomic forecast of
          foreseen by the Fiscal Compact and the common principles.
                                                                              real gross domestic product (hereafter – GDP) growth,
          The FDC has been assigned the duties of monitoring                  nominal GDP growth, inflation and GDP deflator is largely
          compliance with fiscal rules (including the structural              in line with the forecasts of the European Commission (...),
          balanced-budget rule), issuing an opinion on the degree of          the International Monetary Fund and the Bank of Latvia's
          permissible deviation from the balanced budget rule during          (hereafter – BoL)» (p.26) and endorses the MoF forecast.
          severe economic downturn, and preparing regular fiscal
          discipline monitoring reports and, in case of breach of the FDL,
          of irregularity reports. (...) Resources and access to
          information: Beside its (six) members (appointed by the
          Parliament), the FDC has a Secretary and a supporting team
          of experts (currently three); in addition, the FDC may
          employ experts based on procedures foreseen by the public
          procurement legislation. (...) Overall, the set-up of the Latvian
          monitoring institution is compliant with the TSCG
          requirements and common principles. (...) The legal
          framework includes appropriate safeguards for functional
          autonomy. (...) Adequate provisions on the FDC's endowment
          with resources and access to information are in place. » (p. 4 -
          6).p. 12 - 13 of 2017 European Semester Country report).

                                                                   16                                                         PE 634.386
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