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Stronger medium-term orientation in budgeting - key for sustainability

Stronger medium-term orientation in budgeting - key for sustainability
Stronger medium-term orientation in budgeting is key for sustainability

Network publishes a report identifying good practices in the design and operation of budgetary frameworks

The Network of EU IFIs has endorsed and published a report prepared by one of its working groups on Medium-Term Budgetary Frameworks: A Contribution to Definitions and Identification of Good Practices.

In an accompanying statement, the Network highlights the need for an increased medium-term orientation of national budgetary frameworks inter alia by introducing or strengthening national systems of prioritisation and presentation of multi-year expenditure envelopes, and by making them consistent with aggregate fiscal objectives as defined in a medium-term fiscal framework.

The current design and implementation of EU fiscal rules may not be conducive to the implementation of effective medium-term expenditure plans. The quantitative analysis in the paper provides evidence of moving fiscal targets and slippages in Stability Programmes for most countries. The Network, however, welcomes the recent proposal by the Commission for a Directive that implements the European Fiscal Compact into EU law as a positive development that could promote a more medium-term approach to budgeting at the national level with a reinforced role for independent fiscal institutions.

The report argues that there is no single best way of establishing an effective medium-term budgetary framework. Political commitment at the national level is, however, seen as a key precondition. The report identifies a range of good practices that could be a part of a reform package adapted to the legal, institutional and political landscape of a particular country.

Independent fiscal institutions operating at the national level could then play a key role in providing analytical support, and assessing whether the medium-term orientation of fiscal and budgetary policies is followed through by the government in practice and not only in legislation.

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