What are independent fiscal institutions?
Independent fiscal institutions* are defined as non partisan public bodies, other than the central bank, government or parliament that prepare macroeconomic forecasts for the budget, monitor fiscal performance and/or advise the government on fiscal policy matters. These institutions are primarily financed by public funds and are functionally independent vis-à-vis fiscal authorities. Courts of Auditors are included in this definition if their activities go beyond the accounting control and cover any of the tasks mentioned above.
What are their benefits?
In a number of EU Member States these institutions (also called fiscal councils) have proved to be instrumental in improving fiscal policy making by providing positive and/or normative analysis, assessments, and recommendations in the area of fiscal policy. In particular, fiscal institutions can provide macroeconomic forecasts for the budget preparation that do not suffer from the optimistic biases often found in official government forecasts; they may impartially monitor the implementation of budget plans and the respect of budgetary objectives; they may raise awareness about short and long-term costs and benefits of budgetary measures both among policy-makers and the public, and finally they can assess whether fiscal measures are appropriate in terms of respect of rules, sustainability of public finances, and stability-oriented fiscal policies.
Database on fiscal institutions
The Commission services have compiled a broad set of information on national independent fiscal institutions in the EU countries through a comprehensive survey launched in 2006 across Member States. This survey compiled information related to the main characteristics of these domestic public bodies covering their mandates and functions, the composition of their governing boards, their formal status vis-à-vis government or parliament, and their media visibility and influence on public debates on fiscal policy. A first update of the database was made in 2008. The latest vintage of the database is from the 2013 update.
In 2016, as part of the new Fiscal Governance database methodology, the Directorate General for Economic and Financial Affairs introduced a Scope Index of Fiscal Institutions (SIFI) that aims to measure the breadth of tasks discharged by IFIs. A typology defining six separate groupings of tasks constitute the SIFI index (these tasks are described in Chapter II of the 2014 Report on Public Finances in EMU): (1) monitoring of fiscal policy and rules; (2) macroeconomic/budgetary forecasting; (3) policy costing; (4) analysis of long-run sustainability of public finances; (5) promotion of fiscal transparency; and (6) normative recommendations on fiscal policy.
The index offers a relevant image of the mandate of various institutions but should not be taken as a full proxy of their effectiveness.
- Analysis: National fiscal frameworks (Part II, chapter 3 of the Report on "Public finances in EMU – 2010", pp. 98ff.)
- Analysis: Current domestic fiscal framework reforms across the EU (Part I, chapter 5 of the Report on "Public Finances in EMU – 2010”, pp. 73-80.)
- Analysis: Independent Fiscal Institutions in the EU (Part II, chapter 5 of the Report on "Public Finances in EMU – 2014”, pp. 54-67.)
- Analysis: Independent fiscal institutions in the EU Member States in 2008 (Part II, chapter 4.3 of the Report on "Public finances in EMU – 2009", pp. 93ff.)
- Further analyses
(*) The definition of independent fiscal institutions has been used since 2006 for the purpose of selecting institutions present in the database and as a result it differs in certain respects from the definition of independent fiscal institutions that emerged from the new EU legal requirements gradually put in place since 2011.