Bratislava – In light of the intricate development of public finances across numerous European Union (EU) member states and following successful experiences with independent fiscal institutions, governments have agreed to enhance these institutions’ roles through an amendment to existing directives. This amendment is expected to be integrated into national legislation by the year’s end. Ján Tóth, chairman of the Council for Budget Responsibility (RRZ), stated on Wednesday that the EU emphasizes the need to strengthen these fiscal institutions, particularly regarding their independence, access to data, and influence in public finance management, as reported by TASR.
Established in 2012, the RRZ serves as Slovakia’s independent fiscal institution. Tóth advocates for amending the constitutional law on budget responsibility as the most appropriate and legally sound approach.
“This amendment could address the necessity for modernizing the debt brake outlined in the constitutional law, which was proposed in 2020 but has since stalled in the National Council of the Slovak Republic,” Tóth noted, highlighting Slovakia’s compliance with various European legal requirements.
“The directive specifies that the selection of members for the independent fiscal institution must follow a transparent process founded on their expertise in public finance, macroeconomics, or budget management. For Slovakia, this implies the inclusion of a public hearing for prospective council members and broadening the experience criteria to encompass budget management,” Tóth elaborated.
The independence of the fiscal institution should be further reinforced by a clear legislative statement that prohibits council members from receiving directives from the government or any public or private entity. Additionally, stable and sufficient funding for the institution’s responsibilities outlined in both the directive and domestic laws should be guaranteed.
“Fiscal institutions must have timely access to essential information required to carry out their duties to prevent other bodies from limiting their role by delaying or withholding information. The directive calls for the fortification of fiscal institutions in forming or assessing macroeconomic forecasts used in budgeting,” Tóth concluded.
The EU Council also calls for the implementation of a “comply or explain” principle, requiring governments to clarify their position within two months if they disagree with the fiscal council’s assessments based on their defined mandates.
“The primary objective of independent fiscal institutions is to promote fiscal discipline, long-term sustainability, and the credibility of public finances by independently assessing government fiscal policies and providing their own fiscal and macroeconomic forecasts, which can directly influence the budgeting process,” Tóth explained. (March 19)
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