The impact of fiscal councils on the budgetary consolidation

  • Published April 5, 2017
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  • DOI
    http://dx.doi.org/10.21511/pmf.06(1).2017.02
  • Article Info
    Volume 6 2017, Issue #1, pp. 15-23
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Fiscal councils are independent institutions that play an important role in execution of fiscal rules and budgetary discipline through their realistic and unbiased macroeconomic and budgetary analysis and projections. It is important that the fiscal councils have easy access to the media to ensure that their analyses reach the wider public, and influence creators of fiscal policy. This paper analyzes the influence of fiscal councils on budget balance and public debt in period before and after financial crisis. The member states that had functioning fiscal councils before the financial crisis, on average, manage their public finances better than those who founded them after the beginning of crisis. Additionally, supervision of the enforcements of fiscal rules from fiscal boards is already showing positive results in this short time period. Fiscal councils are extremely important to ensure a healthy basis for conducting fiscal policy and to decrease the influence of politics on public finance management.

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    • Fig. 1. Average budget balance – GDP weighted
    • Fig. 2. Average change of public debt – GDP weighted
    • Table 1. List of independent fiscal councils in EU
    • Table 2. Independent fiscal councils
    • Table 3. Fiscal councils under the state institutions
    • Table 4. Fiscal councils associated with another independent state institution
    • Table 5. Overview of fiscal council established before and after crisis
    • Table 6. The share of the average budget balance in GDP for selected countries in the pre-crisis period (2002-2007), during the crisis (2008 to 2011) and after the introduction of the Directive (2012-2015)
    • Table 7. Comparison of average budget balance (GDP weighted) in the countries that have established a fiscal council before the crisis and in countries that have established a fiscal council after the crisis in the period from 2002-2015
    • Table 8. The share of the average public debt in GDP for selected countries in the pre-crisis period (2002-2007), during the crisis (2008 to 2011) and after the introduction of the Directive (2012-2015)
    • Table 9. Comparison of average change of public debt (GDP weighted) in the countries that have established a fiscal council before the crisis and in countries that have established a fiscal council after the crisis in the period from 2002-2015