The Slovenia Times

Fiscal Council on the Horizon


According to the fiscal rule act, the Fiscal Council will have three members, whereby the chair will be employed at least for 50% of full working time and the remaining two members no more than 50% of full working time.

The members will be nominated by the government but have to be endorsed by parliament by a two-thirds majority. They will be appointed for a five-year term with the option of one re-appointment.

The Council will assess the compliance of fiscal policy with the fiscal rule and EU regulations, monitor the implementation of the state budget as well a local, pension and health budgets, and assess whether circumstanced have arisen that warrant a deviation from the objective of having the budget balanced over the medium term.

While the establishment of the Fiscal Council is required by EU rules and almost all EU countries have such institutions, there has been some apprehension in Slovenia about its powers and remit.

The government's macroeconomic forecaster IMAD, for example, noted in its recent report Economic Issues that the Slovenian Fiscal Council would be too weak with just three part-time members given the scope of its tasks and would indeed be among the smallest in the EU.

The Slovenian president's economic advisor Helena Kamnar meanwhile suggested in an interview for the daily Večer on Saturday that the Council would be too powerful.

Decision-making is the remit of the National Assembly and there can be no decision-making body above it, said the former Finance Ministry state secretary, who was long the main budget planning official in government.

Both Kamnar and IMAD also noted that there could be problems in the calculation of the structural balance, a key benchmark that will determine which course fiscal policy needs to take given the requirement in the fiscal rule that budgets must be balanced or in surplus in all but exceptional economic circumstances.

Due to methodological differences the figure confirmed by the government will be different than that calculated by the European Commission. "Nobody will be able to prove which estimate is more correct," Kamnar noted.

She even went as far as suggesting that the fiscal rule, a result of the recent economic crisis, will gradually disappear as the crisis peters out. It will remain in place for a few years, whereupon the European Commission will start changing regulations and "come up with something new".

As the staffing itself, Kamnar as well as IMAD have highlighted problems.

IMAD, for example, said the members of the Fiscal Council would have to work hard to convince the public of their impartiality given that they are nominated by the government; in previous versions of the bill the central bank and the National Assembly would appoint one member each.

Kamnar, meanwhile, stressed that it would "not be easy to get three experts sufficiently to the liking of parliamentary parties to get 60 votes".

Slovenia has already had a fiscal council, though one established not due to EU requirements but as a result of the stated objective to improve fiscal policy planning.

It was set up in 2009 and disbanded in 2012 after the majority of its members resigned quoting lack of government support and in-fighting.

However, that body was fundamentally different than the forthcoming Fiscal Council: it had a consultative rather than a surveillance role, and there was no legislation legitimating its power.

Instead, it was relegated to writing opinions that were largely ignored given the absence of a binding framework.


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