Are Member States’ Budgetary Policies Adhering to the EU Fiscal Rules?

2020 ◽  
Vol 66 (1) ◽  
pp. 47-64
Author(s):  
David Cronin
Keyword(s):  
Fiscal Rules ◽  
Stability And Convergence ◽  
Fiscal Consolidation ◽  
Economic Cycle ◽  
Medium Term ◽  
Member States ◽  
Fiscal Effort ◽  
Budgetary Policy ◽  
Ex Post ◽  
The Eu

Harmonised data from the 2013 to 2018 Stability and Convergence Programmes (SCPs) are used to assess whether member states are acting to meet EU fiscal requirements and, in particular, their medium-term objectives (MTOs). EU AMECO data are employed to check whether planned fiscal policy, set out in the SCPs, materialises ex-post. The main finding is that planned changes in the fiscal stance aim towards meeting the MTO when that target has not yet been attained but less effort occurs in practice. Member states who have already met their MTO loosen their fiscal stance. The policy message is that, in general, the enhanced, post-crisis EU fiscal framework is delivering budgetary policy that contributes to avoiding excessive deficit and debt positions. The fiscal consolidation actually undertaken, however, is less than planned and the upside of the economic cycle does not see greater effort towards meeting MTOs. Moreover, those member states with prior excessive deficits do not make, nor plan, any additional fiscal effort over other member states also striving to meet their MTO. The policy reaction to the economic cycle is pro-cyclical in nature.

scholarly journals European Union’s Fiscal Rules and New Financial Instruments for 2021- 2017: Bulgaria’s Case Study

2021 ◽  
Vol 1 (1) ◽  
pp. 26-35
Keyword(s):  
European Commission ◽  
Fiscal Rules ◽  
Financial Instruments ◽  
The European Union ◽  
Economic Cycle ◽  
Member States ◽  
Growth Pact ◽  
The Stability ◽  
The Eu

Fiscal policymaking of the Member States aims to follow fiscal rules through the economic cycle that ensure macroeconomic sustainability in the European Union (EU). After the 2008 global crisis, the Stability and Growth Pact introduced the enhanced supranational fiscal rules, setting additional boundaries to fiscal deficits and government debt. The new ceiling on the structural deficit in public finance laws of Member States has served to protect creditworthiness. The COVID-19 pandemic, which led to a temporary suspension of the fiscal rules, clearly indicates that the key challenges are to implement a countercyclical policy during upturns, building buffers for bad days. Under the Next Generation Europe’s initiative the European Commission (EC) will borrow up to €750 billion and distribute it over 2021-2024 to Member States (European Commission, 2020a). Raising funds in the EU budget and repayment of the EC debt may lead to amendments to the design and application of the EU fiscal rules. This paper lays out the objectives of the EU current fiscal framework and its main pillars, discusses how the EC new financial instruments for the period 2021-2027 will be accounted for in the Member States’ fiscal framework, and what are its possible changes and challenges after Covid-19 and Brexit.

scholarly journals Balkan Candidate Countries Running for Fiscal Consolidation: Legal Frameworks vs. Economic Results

2019 ◽  
Vol 22 (3) ◽  
pp. 7-23
Author(s):  
Aleksandra Maksimovska Stojkova ◽  
Elena Nesovska Kjoseva ◽  
Irena Stojmenovska
Keyword(s):  
Fiscal Rules ◽  
The Political ◽  
The European Union ◽  
Fiscal Consolidation ◽  
Member States ◽  
Fiscal Compact ◽  
Balkan Countries ◽  
Economic Developments ◽  
Legal Frameworks ◽  
The Eu

The subject of this paper is four Balkan countries (Albania, Serbia, Macedonia, and Montenegro) that are determined to join the European Union. More particularly, it looks at their work towards accomplishing the political, legal and economic requirements for the EU. Thus, the legislation with the EU Fiscal Compact is the prime focus. Methodologically, the research is based on an assessment of fiscal and monetary legal documents, evaluating the stages of accomplishing the harmonization with the EU’s conditions. Further, cross‑section analyses are made by in putting selected indicators; additionally, the authors compare the four countries’ achievements. The EU’s rigorous fiscal rules are being quietly bypassed, but more frequently by existing member states than the candidate states; this statement is founded on legal and economic arguments, with mathematical estimations. Consequently, the authors question the political courage and financial capacity of the examined countries to cope with the fiscal compact of the superior EU 28 members. The answers are supported with numerous analyses of EU Reports for each country, as well as tables and figures that compare the states’ results and economic achievements vs. EU fiscal consolidation rules. The EU 28 average is givenin addition as a comparison. The conclusion gives across analysis between the four countries and the EU 28 member states, with accompanying argumentation to the main statement about the legal and economic developments of the examined Balkan countries as well as a future prognosis.

scholarly journals Medium-Term Budgetary Framework in the EU Member States: Study Case

2015 ◽  
Author(s):  
Tatiana Camelia Dogaru ◽  
Adelina Dumitrescu Peculea Peculea
Keyword(s):  
Medium Term ◽  
Member States ◽  
Eu Member States ◽  
Study Case ◽  
The Eu

Market Discipline

2019 ◽  
pp. 110-130
Author(s):  
Charlotte Rommerskirchen
Keyword(s):  
Fiscal Policy ◽  
Free Riding ◽  
Policy Coordination ◽  
Market Discipline ◽  
Second Order ◽  
Fiscal Rules ◽  
Member States ◽  
First Order ◽  
Fiscal Policy Coordination ◽  
The Eu

Free riding is endemic. But it is not the type of first-order free riding that politicians and EU officials publicly chastised. Instead, fiscal policy coordination is burdened by a serious internal enforcement problem; that is, second-order free riding. The argument presented here is different from the usual decrying of a lack of enforcement in fiscal policy coordination, which is said to invite member states to engage in rampant fiscal free riding. This chapter contests that without internal enforcement within the EU, fiscal policy coordination has come to rely on market discipline with dire consequences for its members. The chapter demonstrates that, in contrast to fiscal rules and intergovernmental agreements, the incentives provided by market discipline shape public finances.

scholarly journals AN OVERVIEW OF FISCAL CONSOLIDATION PROCESS IN THE EUROPEAN UNION

2014 ◽  
Author(s):  
Iulia Andreea Bucur ◽  
Mircea Muntean
Keyword(s):  
Sovereign Debt ◽  
The European Union ◽  
Fiscal Consolidation ◽  
Consolidation Process ◽  
Fiscal Effort ◽  
Eu Countries ◽  
Eu Member States ◽  
The Impact ◽  
The Eu

This paper aims to explore, based on theoretical and empirical research in the field and on data available on Eurostat and European Commission, in the context of financial significant imbalances and thus of the financial stress in the EU countries and especially in the Euro area, the main developments in the fiscal consolidation process given the fiscal effort of each country towards fiscal union. Since the financial crisis started in 2008, many EU Member States demonstrates an obvious macroeconomic imbalance which requires increased responsibility regarding fiscal developments. The impact of the crisis and the causes of sovereign debt high levels trends varied between EU countries as well as the budget deficit levels. Thus, the main priority for EU members must be the continuation of differentiated fiscal consolidation, given the specificities of each economy, favoring growth. The medium-term fiscal policy needs to focus on consolidating public finances along with restoring long-term sustainability.

Recommendations

2020 ◽  
pp. 303-330
Author(s):  
Menelaos Markakis
Keyword(s):  
Euro Area ◽  
Technical Assistance ◽  
Fiscal Rules ◽  
Banking Union ◽  
Euro Crisis ◽  
Member States ◽  
Capital Markets Union ◽  
The Eu ◽  
Transparency And Accountability

This chapter draws together the implications of the Euro crisis for the EU and its Member States and critically evaluates the shortcomings of the Treaty schema in terms of transparency and accountability. The discussion begins with the measures intended to ‘complete’ and ‘deepen’ the Economic and Monetary Union (EMU). It sets out the author’s own view regarding the key reforms that would be necessary, albeit one that is informed by the proposals made by the EU institutions. These include a reform of the EU fiscal rules; the provision of technical assistance to Member States implementing structural reforms; establishing a Euro area stabilization function; completing the Banking Union and making progress towards a Capital Markets Union; and strengthening the role of EU financial watchdogs. This chapter further puts forward a number of concrete proposals on how to bolster transparency and accountability in the area of EMU, the dividing line being between those proposals that could be implemented without a Treaty amendment and those reforms that would require a Treaty revision. It further addresses separately accountability (and transparency) in the Banking Union, as well as the role of EU courts in the EMU.

Enforcement of the EU ETS in the Member States

elni Review ◽  
2015 ◽  
pp. 17-23
Author(s):  
Jonathan Verschuuren ◽  
Floor Fleurke
Keyword(s):  
Member State ◽  
Research Question ◽  
State Level ◽  
Central Research ◽  
Eu Ets ◽  
Member States ◽  
Eu Member States ◽  
Ex Post ◽  
Compliance Mechanism ◽  
The Eu

Although the EU ETS has been operating in three trading periods for ten years and has been extensively covered by legal research, there has been remarkably little attention given to the enforcement of the ETS. Although, generally, we have seen an increasing centralization of the EU ETS, monitoring and enforcement are still largely in the hands of the emissions authorities in the states in which the EU ETS operates: 28 EU Member States plus Norway, Liechtenstein and Iceland. This article reports on the main findings of an ex-post evaluation of the legal implementation of the EU ETS at Member State level with a focus on compliance. The central research question was: Has the effectiveness of the compliance mechanism of the EU ETS improved in the third period (2013-2020)? What further improvements (if any) are necessary? To answer this question, the authors of this article have described the relevant EU law in each of the three periods, reviewed previous evaluations and relevant research projects, and evaluated the implementation of the EU ETS in selected Member States, both through existing sources and through interviews with key players in the compliance mechanism at Member State level. The Member States that the authors studied for the latter part of the project were Germany, the Netherlands, Hungary, Greece, Poland and the UK.

Fiscal Rules—Anchoring Expectations for Sustainable Public Finances

Policy Papers ◽  
2009 ◽  
Vol 09 ◽  
Author(s):  
Keyword(s):  
Data Base ◽  
Public Debt ◽  
Sharp Increase ◽  
Developing Economies ◽  
Fiscal Rules ◽  
Fiscal Consolidation ◽  
Medium Term ◽  
Fiscal Deficits ◽  
Public Finances ◽  
Design And Implementation

The sharp increase in fiscal deficits and public debt in most advanced and several developing economies has raised concerns about the sustainability of public finances and highlighted the need for a significant adjustment over the medium term. This paper assesses the usefulness of fiscal rules in supporting fiscal consolidation, discusses the design and implementation of rules based on a new data base spanning the whole Fund membership, and explores the fiscal framework that could be adopted as countries emerge from the crisis.

scholarly journals Debt Relief as a Last Resort for the Lender of Last Resort?

2021 ◽  
Vol 56 (4) ◽  
pp. 223-233
Author(s):  
Arne Hansen ◽  
Dirk Meyer
Keyword(s):  
Policy Instrument ◽  
Central Banks ◽  
Debt Relief ◽  
External Support ◽  
The European Union ◽  
Lender Of Last Resort ◽  
Medium Term ◽  
Member States ◽  
European System ◽  
The Eu

AbstractThe coronavirus crisis has led to a sharp increase in the debt-to-GDP ratios of the euro area member states. Without external support, access to the capital market could be seriously threatened in the medium term for Italy, but also for other member states. While the Pandemic Emergency Purchase Programme, which is designed as a monetary policy instrument, is regarded by some as a violation of the prohibition of monetary financing, the Next Generation EU recovery fund is likely to direct the fundamental structures of the European Union towards a fiscal union with considerable redistribution elements. This article analyses an alternative strategy, namely debt relief by the European System of Central Banks through an EU debt agency. Such a scheme would be possible without amending the EU treaties and would avoid negative equity at the central banks. The question is under what circumstances would this approach be suitable and proportionate?

scholarly journals Fiscal councils as an element of the concept of fiscal governance in the European Union member states

Equilibrium ◽  
2016 ◽  
Vol 11 (4) ◽  
pp. 675
Author(s):  
Ryta Dziemianowicz ◽  
Aneta Kargol-Wasiluk ◽  
Renata Budlewska
Keyword(s):  
Fiscal Policy ◽  
Good Governance ◽  
Fiscal Rules ◽  
The European Union ◽  
Member States ◽  
Public Finances ◽  
Eu Countries ◽  
Eu Member States ◽  
Fiscal Balance ◽  
The Eu

Fiscal governance is defined as a combination of institutions, rules and norms that structure good governance in the area of fiscal policy. It can be named as the specific mechanism of coordination by using of tools such as: budgetary procedures (legislative fiscal rules), fiscal rules (numerical) and independent fiscal institutions/ fiscal councils. Fiscal governance focuses on how the fiscal policy is planned, approved, conducted and monitored, including the involvement of not only public bodies, but the business sector and civil society too. In this study, particular attention was paid to capturing the essence of the relationship between the qualitative elements of fiscal councils activity and its impact on stabilizing the public finances in the view of fiscal governance concept. During the last world crisis in the EU countries, an interest in establishing fiscal councils has increased. Before 2008 there were only seven institutions in the EU, while in 2014 there are already 19. The question is - are these institutions efficient in stabilizing public finances? Therefore, the main objective of the article is the assessment of the role of the fiscal councils in the coordination of the fiscal policy in the EU Member States. The conducted analysis verifies this role on the basis of theoretical deliberation of the current state of the art. The empirical research verifies fiscal councils’ dependence on fiscal balance of EU countries. Research was conducted on the basis of the European Commission, Eurostat and International Monetary Fund data sets.

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