Irish Fiscal Advisory Council Strategic Plan 2023-2025
From Irish Fiscal Advisory Council
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From Irish Fiscal Advisory Council
Published on
Last updated on
The Fiscal Responsibility Act 2012 established the Irish Fiscal Advisory Council (“the Fiscal Council”) as an independent state body. This is the Fiscal Council’s fourth strategic plan.
The Fiscal Council’s mission is to support the effectiveness of fiscal policy in the near and medium-term through delivery on each element of its mandate as an independent fiscal institution.
The Fiscal Council’s vision is for an economy with broadly based growth in incomes and employment founded on sustainable macroeconomic and fiscal policies.
Values
The key values of the Fiscal Council are:
Mandate of the Fiscal Council
The Fiscal Council has four legally mandated functions. The first three were assigned in the Fiscal Responsibility Act 2012 [1]. The fourth function (endorsement) was assigned to the Fiscal Council in July 2013 [2].
1. To assess the official forecasts produced by the Department of Finance and published in the Stability Programme and in the Budget.
2. To assess the fiscal stance of Government, and specifically whether it is conducive to prudent economic and budgetary management, with reference to the EU Stability and Growth Pact.
3. To monitor and assess compliance with the Budgetary Rule [3].
4. To endorse the official macroeconomic forecasts prepared by the Department of Finance in relation to each Budget and Stability Programme. This follows revised European requirements to have national medium-term fiscal plans and draft budgets based on independent macroeconomic forecasts, which means macroeconomic forecasts produced or endorsed by an independent body. A joint Memorandum of Understanding between the Fiscal Council and the Department of Finance underpins the endorsement process [4].
Figure 1: Mandate of the Council
The Fiscal Council produces biannual Fiscal Assessment Reports as well as an annual Pre-Budget Statement. Reports are submitted to the Minister for Finance and subsequently published within ten days. The Fiscal Council also submits its Annual Report to the Minister who arranges to lay the Report before each House of the Oireachtas. The Council chairperson may also be required to appear before the Oireachtas in relation to its activities.
In relation to the endorsement function, the Council is required to provide a formal letter to the Secretary General of the Department of Finance at least five working days before the Department publishes the Budget and Stability Programme [5]. If the Council were to conclude that it had significant reservations about the preliminary or “provisional final” macroeconomic forecasts, it would immediately communicate these informally to the Department. If, following further discussions, the Council were still not in a position to endorse the macroeconomic forecasts underlying the Budget or SPU, the Chair would write to the Secretary General explaining why this was the case, at least five working days before the Department publishes the Budget or SPU.
To support the Fiscal Council’s delivery of its mandate, the Fiscal Council also produces ad hoc reports including Analytical Notes, Working Papers and other analytical work on the Irish economy, macroeconomic forecasting, and fiscal policy.
Current Position of the Council and Progress to Date
The Minister for Finance appointed the Council’s five members based on their experience and competence in domestic and international macroeconomic and fiscal matters. The current Council has a strong international dimension with four members based outside of Ireland.
The Secretariat comprises of a Chief Economist, two Economists, two Research Assistants, and an Administrator.
The Council was established in 2011 on an administrative basis and on statutory basis in 2012. To date, the Council has published 23 Fiscal Assessment Reports, 9 Pre-Budget Statements, 19 endorsement letters, 18 Analytical Notes, and 17 working papers.
Two independent peer reviews of the Council have been conducted. The first in June 2015, and the latest in February 2021 by the OECD. The latter concluded that:
“The Council has been an important institution in Ireland, helping to spread greater understanding around fiscal policy over a time period when there has been a drive for Ireland to improve fiscal management. The work of the Council is highly regarded by peers, and it is viewed as independent by those on all sides of the political spectrum.”
However, the OECD (2021) review made recommendations to ensure the Council was to continue to perform well relative to international standards. These included aspects related to how its budget is set, legal underpinnings for access to information, and adjustments to leadership arrangements, such as advertising the Chair role as up to half-time instead of part-time. These recommendations help inform the Council’s latest strategic plan.
Key Challenges
Risks
Central Goal: Deliver on all Elements of our Mandate
Goal Outputs
Assessment of:
Endorsement of:
Supporting Goal 1: Ensure Compliance with all Requirements for a Statutory Body
Goal Outputs
Publication of Annual report and a set of financial accounts. The Fiscal Council will:
Independence and transparency. * Publish dates of all Fiscal Council meetings.
External review of Fiscal Council operations. * The Council will implement as far as possible and as appropriate the recommendations of the OECD (2021) external peer review. Where there are changes required to legislation, it will work with other bodies to ensure the most complete implementation of the review recommendations. The Council will also intitiate an external review of the its operations in 2026 taking into account performance over the period since 2021.
Goal Outputs
Two Fiscal Assessment Reports and a Pre-Budget Statement every year * Ensure that reports are presented in a clear manner to the highest possible professional standards.
Analytical Notes and Working Papers * Publish key analytical work undertaken in relation to its mandate outside of the bi-annual assessment reports.
External communications and awareness of the Fiscal Council * When invited, appear before Oireachtas Committees in relation to the Fiscal Council’s work.
Goal Outputs
Economic Forecasting:
Public Finances.
Fiscal Rules.
Full-time six-person Secretariat.
Stakeholders.