Accrual budgeting and fiscal consolidation in the EMU

• Autores: Francisco Javier Salinas Sánchez
• Localización: VIII Encuentro de Economía Pública: Cáceres. 8 y 9 de febrero de 2001, 2001, pág. 55
• Idioma: inglés
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• Resumen

  • Drawing on modern macroeconomic literature focussing on the study of politico-institutional determinants of public policies, this paper analyzes the institutional design of the European fiscal policy laid down by the Treaty of Amsterdam and the Stability and Growth Pact. Both documents provide countries in the EU, and in particular those which have adopted the Euro, with a common code of fiscal conduct that is expected to uphold discipline in the management of government finances.

    Nevertheless, a simple review of this code of conduct shows the existence of serious drawbacks mainly derived from the asymmetry between the treatment given to outcomes of fiscal policy in comparison with that given to the procedures followed in generating them. It seems that the current design of the European fiscal co-ordination system disregards the findings of modern macroeconomics and neglects the relationship between budgetary processes/institutions and outcomes in fiscal policy.

    Moreover, this paper argues that, in the implementation of the broad reforms needed to achieve a sustainable fiscal consolidation, there are political complementarities (in the sense that the ability to gain political consent for one reform depends on the acceptance of other reforms) between the setting up of new fiscal policies of expenditure containment and new fiscal procedures.

    All in all, this analysis points to a sorely needed procedural reform in public sector budgeting as the best contribution to pursuing the stabilization of European public finances: the fuller use of accrual concepts in budget reporting. Much more than an isolated technical exercise, the shift to accrual budgeting could be quite a useful tool to facilitate wider reforms aimed at improving public sector financial management and performance while enhancing transparency and accountability.