On Wednesday 4 December 2019, the European Court of Auditors (ECA) will publish a special report on EU Fiscal Governance - the EU requirements for national budgetary frameworks.
The auditors examined whether the EU requirements strengthened the national budgetary frameworks and whether the European Commission assessed how the Member States applied them. This included an examination of the role of national independent fiscal institutions (IFIs) and the European Fiscal Board. The auditors also carried out a survey across all IFIs and visited relevant stakeholders in eight Member States in the euro area: Greece, Spain, France, Italy, Latvia, Luxembourg, Portugal and the Netherlands.
The report is expected to point to a need to further strengthen the EU legal requirements regarding how Member States conduct their fiscal policies and to better monitor their application. The auditors are expected to make a number of recommendations to the Commission in that sense, including on enhancing the EU requirements regarding national budgetary frameworks and taking account of international standards.
Member States keep their sovereignty on budgetary policies, but coordination of the policies is needed to avoid negative spill-overs and threats to monetary stability in the euro area. To remedy the root cause of the financial crisis and improve fiscal governance particularly in the euro area, the Commission sought to complement the EU fiscal framework with binding national provisions. It required Member States to set up independent fiscal institutions (IFIs), national fiscal rules and multi-annual budgetary frameworks.
National budgetary frameworks are the arrangements, procedures, rules and institutions underlying budgetary policies, including statistics, forecasts, annual budgeting, medium-term budgetary framework, IFIs, fiscal rules and correction mechanism. The Commission assesses compliance of Member States’ draft budgetary plans with EU fiscal rules. In addition to assessing the compliance with national fiscal rules, some IFIs also assess the countries’ compliance with EU ones.
The ECA’s special reports set out the results of its audits of EU policies and programmes or management topics related to specific budgetary areas. The ECA selects and designs these audit tasks to be of maximum impact by considering the risks to performance or compliance, the level of income or spending involved, forthcoming developments and political and public interest.