Requirements for Member States’ budgetary frameworks

KEY POINTS

The directive requires Member States’ governments to do the following.

• Operate public accounting systems that comprehensively and consistently cover all subsectors of general government and contain all the information needed to generate accrual data with a view to preparing data based on the European system of national and regional accounts. These systems must be subject to internal control and independent audits.
• Make fiscal data publicly available and publish them before the end of the following quarter or after publication of the relevant data by Eurostat – the EU’s statistics office.
• Ensure their annual and multiannual fiscal planning is based on realistic macroeconomic and budgetary forecasts, using the most up-to-date data. Budgetary planning must be based on the most likely macrofiscal scenario or on a more prudent scenario. The macroeconomic and budgetary forecasts must be compared with the most recent European Commission forecasts and, if appropriate, those of other independent bodies. Where there are significant differences between a Member State’s forecast and that of the Commission, these must be explained.
• Ensure their macroeconomic and budgetary forecasts for annual and multiannual fiscal planning are subject to regular, objective and comprehensive ex post evaluation by an independent body or other bodies with functional autonomy vis-à-vis the fiscal authorities of the Member States different from that which produced the forecast. The result of that evaluation must be made public and taken into account appropriately in future macroeconomic and budgetary forecasts.
• Establish one or several IFIs – public bodies that aim to promote sustainable public finances by independently monitoring governments’ compliance with fiscal rules and composed of members nominated and appointed on the basis of their experience and competence in public finances, macroeconomics or budgetary management, and by means of transparent procedures. IFIs should have the capacity to communicate publicly; adequate, stable and sufficient resources; and adequate and timely access to information. Their tasks will include:
  • producing, assessing or endorsing annual and multiannual macroeconomic forecasts;
  • monitoring compliance with country-specific numerical fiscal rules;
  • assessing the consistency, coherence and effectiveness of the national budgetary framework;
  • upon invitation, participating in regular hearings and discussions at national parliaments;
  • first upon invitation and later, from 1 May 2032, compulsorily issuing opinions on macroeconomic forecasts and assumptions in accordance with Regulation (EU) 2024/1263 – see summary; and
  • upon invitation, in the context of the excessive deficit procedure, preparing reports on the sufficiency of the measures taken and envisaged with respect to government expenditure targets.
• Establish a credible, effective medium-term budgetary framework² that includes a fiscal planning horizon of at least three years. These frameworks should contain comprehensive multiannual budgetary objectives, projections of major expenditure and revenue items, a description of medium-term policies, including reforms and investment, and an assessment of the long-term sustainability of public finances.
• In the annual budget and medium-term planning documentation, publish, to the extent possible, information on contingent liabilities and fiscal costs from natural disasters and climate-related shocks. Moreover, the assessment of the impact of the envisaged policies on the sustainability of public finances should, to the extent possible, take into account macrofiscal risks from climate change. Macrofiscal risks refer to the sources of potential large deviations from macroeconomic forecasts, fiscal forecasts or budgets. Disaster- and climate-related fiscal risks are deviations driven by disasters and climate-related shocks.
• Ensure the consistency and coordination of all accounting rules and procedures across all areas of government activity, along with the integrity of their underlying data collection and processing systems.