The EU needs to further strengthen its legal requirements for national budgetary frameworks
and better monitor how Member States put them into practice, according to a new report from
the European Court of Auditors (ECA). In several respects the requirements are softer than
international standards and the European Commission has so far only limited knowledge about
whether countries apply them properly. The auditors also warn against the risk of
inconsistency between the Commission’s and independent fiscal institutions’ (IFIs) assessment
of countries’ compliance with EU fiscal rules, as well as of the limited effectiveness of the
European Fiscal Board due to the fact that it is not fully independent from the Commission.
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. Amongst other things, it required Member States to set up IFIs, national fiscal rules
and multi-annual budgetary frameworks. The auditors examined whether the EU requirements
strengthened the national budgetary frameworks and whether the Commission assessed how the
Member States applied them.
“The EU’s legislative action provided an impetus to strengthening the way the Member States
conduct their fiscal policies,” said Mihails Kozlovs, the ECA Member responsible for the report.
“However, the EU legal framework governing the national budgetary frameworks is fragmented
and leaves room for improvement.”