- Finally, fiscal institutions need to enjoy high credibility and a strong political support, which in
turn should be reflected in a large degree of autonomy and functional independence. - However, it must be stressed that special status is not always a pre-requisite for ensuring
independence, which can also be achieved by government ownership and commitment to the
duties assigned to the institution (e.g. the Central Planning Bureau in the Netherlands).
Country policy experiences show that numerical fiscal rules and institutions should not be seen as
mutually exclusive but rather as complements.
- The existence of fiscal rules reflecting the main fiscal policy objectives of a country can help in
specifying the mandate and facilitate the work of independent institutions. Fiscal institutions, on
their side, can effectively contribute to monitoring compliance with the existing numerical fiscal
rules, thereby increasing the chances that rules are respected. In turn, rules and institutions can
complement each other since they potentially focus on different aspects of government finances. - Numerical fiscal rules often apply to one sub-sector of the general government and generally have
a short to medium-term orientation. In contrast, independent fiscal institutions potentially conduct
analysis covering the whole of government finances and may also consider the situation of
government finances in a long-term perspective. - Finally, although these conclusions are in principle valid for all Member States, it must be clear
that the desirable design of national fiscal rules and institutions is country specific and depends on
domestic circumstances, such as the institutional and political setting and the nature of fiscal
problems. Above all, the success of national rules and institutions in improving fiscal governance
is subject to one prerequisite: the existence of a broad consensus on the need to conduct sound
fiscal policies and a strong political support for this aim.
It clearly follows that national fiscal rules and institutions are largely complementary to the SGP
provisions, and support their observance by promoting fiscal discipline and limiting pro-cyclical
loosening of the fiscal stance in economic ‘good’ times.
In this respect, the October 2006 Ecofin asked Member States to provide relevant information on their
national fiscal frameworks, including implementation and envisaged changes, in the forthcoming
Stability and Convergence Programmes (SCP).^14 It also encouraged the Commission to take into account
these elements when preparing its assessments of the programmes as far as relevant for the observance of
EU budgetary rules, and to provide an overview of the implementation of the existing national rules
based on the 2006 SCPs.
This overview was discussed by Member States in March 2007. Although with different levels of detail,
most Member States included relevant information in their updates, which facilitated a useful exchange
of best practices on the envisaged or recently implemented improvements of domestic fiscal
frameworks.^15 The main results of the overview may be summarised as follows:
Over the last 20 years, Member States have attached an increasing reliance to domestic fiscal rules and
this trend seems to continue according to the information contained in the SCPs. For instance, significant
changes and/or new rules were reported by France, Italy, Portugal, Cyprus, Estonia and Spain. In all
(^14) In this context, the definition of national fiscal frameworks encompasses three elements: i) those rules that regulate the
preparation of the budget (i.e. budgetary procedures); ii) all numerical fiscal rules; and iii) independent fiscal bodies.
(^15) Denmark, the Netherlands, Finland and Sweden provided the most comprehensive sets of information. These four
countries not only gave a complete description of their fiscal frameworks but also included an assessment of the
implementation of their fiscal rules currently in place (i.e. whether fiscal rules were respected in recent years). The
information submitted by these countries shows the role that fiscal rules play in the overall fiscal strategy adopted in the
update and their instrumental character in reinforcing the respect of the SGP provisions. These four cases were
considered as telling examples of what kind of information should be included in the SCPs regarding domestic fiscal
frameworks.