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Bratislava – Due to the complex development of public finances in many countries of the European Union (EU) and after the positive experience with the functioning of independent fiscal institutions, the governments of the member states decided to strengthen their position through an amendment to the directive, which individual countries should incorporate into national legislation by the end of this year. The EU demands the strengthening of fiscal institutions especially in the areas of independence, access to data, and enhancing their voice in public finance management, said Ján Tóth, chairman of the Council for Budget Responsibility (RRZ), on Wednesday, reports TASR.
Since 2012, RRZ has been fulfilling the role of an independent fiscal institution in Slovakia. As it is established by a constitutional law, the most suitable and legislatively correct way, according to Tóth, would be the amendment of the constitutional law on budget responsibility.
“Such an amendment could resolve the need for modernization of the debt brake contained in the constitutional law, which was submitted back in 2020, but repeatedly got stuck in the National Council of the Slovak Republic,” pointed out the head of RRZ. He added that Slovakia is affected by various requirements of European legal regulations.
“The directive mandates that the appointment of members of the independent fiscal institution takes place through a transparent process based on their expertise in public finance, macroeconomics, or budget management. For Slovakia, this would mean adding the requirement of a public hearing for candidates to the council member and expanding the scope of experience to include budget management,” explained Tóth.
The independence of the fiscal institution should also be supported by an explicit declaration in the legislation prohibiting a council member from accepting instructions from the government or any other public or private entity. Stable and adequate funding for its tasks arising from the directive and domestic legislation should also be ensured.
“Fiscal institutions should have secured timely access to the information necessary to fulfill their tasks so that other bodies cannot restrict its role by withholding information, respectively delaying its provision. The directive mandates strengthening the position of fiscal institutions in the creation or evaluation of macroeconomic forecasts used in the budget,” concluded Tóth.
The EU Council also demands the introduction of the “comply or explain” principle. In such a case, governments, if they disagree with the fiscal council’s stance derived from the established tasks, should explain their position within two months.
“The basic task of independent fiscal institutions is to support fiscal discipline, long-term sustainability, and the credibility of public finances. Especially by independently evaluating the government’s fiscal policy and making their own fiscal and macroeconomic forecasts which, depending on the country, can also directly enter into the budget process,” explained Tóth. (March 19)