## _071613a

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### Overview
- Document title header as presented: INTRODUCTION___________________________________________________________________________________4
- Date: July 16, 2013
- Publication imprint text present: CASE STUDIES ON FISCAL COUNCILS; INTERNATIONAL MONETARY FUND
- Presents case studies of seven fiscal councils and examines how each council performs core functions and if and how it impacts the fiscal policy debate.

### Supplement scope
- Seven fiscal councils studied: Belgium (Conseil Supérieur des Finances—HCF), Canada (Parliamentary Budget Officer—PBO), Hungary (Költségvetési Tanács), Korea (National Assembly Budget Office—NABO), the Netherlands (Centraal Planbureau—CPB), Sweden (Finanspolitiska rådet), and the United States (Congressional Budget Office-CBO).
- Supplement discusses each council’s experiences in detail; main paper presents comparative lessons and general findings.

### Case selection criteria
- Length of existence: all councils studied have been in operation for at least three years.
- Functions performed: each council performs at least two core functions (reviewing or producing forecasts; reviewing and/or monitoring governments’ fiscal plans, objectives, and performance; costing of policy proposals and programs).
- Diversity of region and context: councils from Asia, Europe, and Western Hemisphere; varied political and economic contexts.

### Standardized case structure (applied to each case)
- Political and economic context motivating creation.
- Institutional set-up: structure and membership; appointment and dismissal processes; legal and budgetary status; resources; degree of independence.
- Performance of core functions.
- “Analysis and Impact”: outputs/products, transmission mechanisms, final outcomes or indirect impact on fiscal policy; episodes of interest where data available.
  - Forecasting: compare government forecasts with council forecasts for accuracy and optimistic/pessimistic biases.
  - Reviewing/monitoring: council actions during periods fiscal policy went off-track or intense policy development.
  - Assess media as a channel of influence.
- “Media Coverage”: quantitative and qualitative review of media strategy and press coverage.
- Summary and conclusion.

### Analysis methods and metrics
- Quantitative and qualitative methods applied within limits of available data.
- Forecasting assessment: comparison of government forecasts with council forecasts for accuracy and bias.
- Review/monitoring assessment: episodes of deviation from objectives; council responses; use of media to influence debate.
- Media activity measurement: number of unique newspaper articles containing combination of fiscal council name and keywords (in relevant language), sourced from Factiva (methodology applied uniformly across cases).

### Role of media as transmission channel
- Most fiscal councils lack a direct role in the budget process; media coverage is one of the main channels to communicate messages and seek to influence policy debate.
- Case studies examine:
  - Press coverage relative to key episodes (e.g., euro adoption, critical assessments, periods without formal leadership).
  - Tone changes in council statements and corresponding media attention.
  - Instances where council criticism provoked governmental reaction (including attempts to constrain council operations).

### Belgium — High Council of Finance (HCF): key findings
- Institutional context and mandate:
  - HCF produces normative recommendations; Federal Planning Bureau (FPB) produces macroeconomic forecasts under National Accounts Institute.
  - HCF dates to the 1930s; major reform in 1989 refocused mandate on promoting and coordinating fiscal discipline and issuing recommendations on public sector borrowing requirements.
- Historical fiscal context and figures:
  - Budget deficit was 7 percent of GDP in 1988.
  - General public gross debt was 125 percent of GDP in 1988.
- Institutional set-up and resources:
  - Chair: the Minister of Finance; two deputy chairs (appointed by the Minister of Finance); 24 members appointed for five year renewable terms.
  - Membership: 12 members proposed by Federal ministries and 12 by regional governments; nominations reflect expertise and regional/linguistic balance and in practice a balance of party political affiliations.
  - Secretariat: 12 full time staff (civil servants in research department of Federal Public Service Finance department); costs covered under Federal Public Service Finance budget (no separate budget line).
- Functions and outputs:
  - Advises Minister of Finance and Minister of Budget; issues normative recommendations; monitors regional fiscal policy; formulates medium-term financial objectives; assesses convergence with Maastricht criteria; post-euro monitors compliance with stability program.
  - Does not produce macroeconomic forecasts; PSBR section produces two main reports a year (ex-ante and ex-post compliance) and an annual medium- to long-term outlook; study group on ageing produces 50-year projections.
- Independence and operational issues:
  - Formally advisory and not legally independent; reputation for quality independent analysis.
  - Independence challenged; mid-2000s inability to agree PSBR membership led to two-year delay in providing recommendations; two-year vacancy in PSBR chair suspended reporting.
- Analysis and impact episodes:
  - Pre-euro: alignment with Maastricht convergence criteria; structural primary surplus increased by 5 percent of GDP; public debt started falling; budget moved towards balance.
  - Post-euro: influence declined; primary balance deteriorated as savings on debt interest used for tax cuts and expenditure growth.
  - Notable episodes: broadly in line with recommendations in 1999–2000; 2004 divergences and criticism; 2005–2006 suspension of reporting.
- Media coverage and tone:
  - Strong press coverage around euro adoption; surge in 2004 when Council became openly critical; diminished footprint during 2005–2006 suspension.
  - Example quotations: October 1999: “The deficit of the central government for 2000 is projected at 1 percent of GDP, which is 0.2 percent higher than recommended by the HCF.” July 2004: “The High Council considers these fiscal scenarios unrealistic in the medium-term” and “The High Council wants to point out that the deteriorating fiscal position is [not only] due to cyclical factors but also—and mainly—due to discretionary measures such as lowering taxes and a major growth in government spending.”
- Conclusions:
  - Influence fluctuated over two decades; split responsibilities with FPB allows technical specialization but HCF lacks legal and operational independence and is chaired by Minister of Finance.
  - Pre-euro consensus masked institutional limitations; post-euro divergence exposed limitations and reduced capacity to operate.
  - Despite constraints, HCF retained reputation for high-quality analysis and played key role in late 2000s consolidation planning and setting budgetary targets.

### Canada — Parliamentary Budget Officer (PBO): key findings
- Creation and context:
  - Created as part of Federal Accountability Act (FAA) enacted by Conservative government elected in 2006.
  - First PBO Kevin Page appointed March 2008.
- Institutional set-up:
  - Officer of the Library of Parliament; office holder serves a once renewable 5-year term.
  - Selection: conducted by Parliamentary Librarian; appointment by Governor in Council based on Prime Minister’s advice; in practice serves “at the pleasure of” the Prime Minister.
  - Staffing: around 15 full-time equivalents; two divisions (Economic and Fiscal Analysis; Revenue and Expenditure Analysis); budget part of Library of Parliament budget (no separate parliamentary budget line).
- Functions and outputs:
  - Broad remit modeled on U.S. CBO: objective analysis of government budget proposals and economic trends; reviewing government forecasts; preparing alternative forecasts; costing government and legislative proposals; research papers.
  - Produces alternative medium-term forecasts in April with October update; first fiscal sustainability report in 2010 with projections up to 75 years.
  - Developed Integrated Monitoring Database (IMD) to track departmental expenditures.
- Operational tensions and disputes:
  - Location in Library of Parliament raised reporting and publication conflicts; controversy over publishing The Fiscal Impacts of the Canadian Mission in Afghanistan during election campaign.
  - Budget dispute: promised 2.8 million for second year but initially stayed at 1.9 million; full budget restored only in 2010.
  - Access to information dispute led to Federal Court ruling April 2013 that PBO was within mandate to request information on proposed budget cuts.
- Analysis and impact:
  - Strategy: be front and center on leading fiscal issues; transparent reporting; active media engagement.
  - Examples: 2010 PBO warned of an 18.9 billion Canadian dollars structural deficit by 2013-14 if no action taken.
  - 2012: PBO forecasted growth 1.9 percent vs official 2.2 percent for 2012; actual 2012 GDP was 1.8 percent.
  - Government estimates became more accurate and less pessimistic after PBO creation (tables provided in source).
  - Costings: high-profile controversies (Afghanistan mission, F-35 life-cycle cost).
- Media:
  - Substantial coverage from outset; Kevin Page was a high-profile public figure.
- Conclusions:
  - PBO earned reputation for quality independent analysis; front-and-center strategy and media engagement effective but generated disputes.
  - Single-officer model provides clear public face but personalization risk; outgoing PBO advocated institutional changes to protect independence; proposed legislative change defeated in June 2013.

### Hungary — Fiscal Council: key findings
- Political and fiscal context:
  - 2007 elections: public finances high on agenda; large deficit peaking at 10 percent of GDP in 2006.
  - November 2008 Fiscal Responsibility Law established fiscal council.
- Two-period evolution:
  - Council 2009–2010 (original model):
    - Composition: three non-partisan members nominated by President of the Republic, Governor of National Bank of Hungary, President of State Audit Office; elected by simple majority in Parliament for a 9-year non-renewable term.
    - Office staffed with over 30 economists; broad mandate including macro-fiscal scenarios, independent fiscal impact assessments, costing significant proposals, obligatory assessment of budget bills, monitoring pay-as-you-go rule and debt limit.
  - Council 2011 (reformed model):
    - Composition: three members — chairman (appointed by President for six years), governor of central bank (ex officio), head of state audit office (ex officio).
    - Staff cuts: reduced from over 30 to around 3; Central Bank and State Audit Office prepare background analysis.
    - Mandate narrowed: assesses state budget and execution, government debt developments, supports Parliament’s legislative activities; excludes macro-fiscal forecasting, costing of legislative proposals, commenting on fiscal transparency and sustainability.
    - New right to recommend to Parliament whether to pass or reject the budget bill (theoretical veto power; not used).
- Media and political reaction:
  - Media interest increased when council was operational in 2009–2010; coverage in late 2010–2011 focused on reform of the council.
  - International and domestic protests did not prevent reform and budget cuts.
- Conclusions:
  - Original council had broad remit and resources but lacked protection from political reversal.
  - Replacement council significantly weakened; highlights risk for new councils failing to build credibility before political backlash.
  - Maintaining independence is harder in highly polarized contexts.

### Korea — National Assembly Budget Office (NABO): key findings
- Creation and context:
  - Formally established in 2003 to provide fiscal advice to Parliament as part of democratic reform during divided government.
  - Korea public finances at NABO creation: general gross debt 13.8 percent of GDP in 1990; 18.56 percent in 2002.
- Institutional set-up:
  - Duties set out in National Assembly Budget Office Act.
  - Director appointed by Speaker of National Assembly based on Recommendation Committee; Director not appointed for fixed term and serves at Speaker’s discretion; Director can be dismissed by Speaker with approval of House Steering Committee.
  - Panel of outside advisors: chairperson and fourteen members.
  - Staffing: 125 staff in 2011; budget part of National Assembly budget with separate line; audited annually by Board of Audit and Inspection.
  - Four principles: independence, non-partisanship, expertise, credibility.
- Functions and remit:
  - Modeled on U.S. CBO; broad remit: monitoring/reviewing government fiscal policy; alternative forecasts; costing proposals/programs; economic and revenue forecasts; research.
  - Extended baseline projections due to medium and long-term financial plans requirement; long-term projections and analysis of pensions.
  - Unique mandate: evaluation of projects, programs, infrastructure, extra-budgetary funds, autonomous public institutions; recommendations for efficiency and effectiveness.
  - Division of labor with Board of Audit and Inspection (BAI): NABO focuses on performance and efficiency; BAI on financial audits; typically do not cooperate.
- Fiscal context and episodes:
  - Public debt 26.2 percent of GDP in 2004; initial forecast by budget office had forecasted 32.2 percent (source fragment indicates forecasting interplay).
  - NABO provided two forecasting scenarios when budget moved into deficit in 2009:
    - NABO scenario 1: assumed an increase of discretionary spending at the same average rate as during the 5 years before the crisis.
    - NABO scenario 2: expected discretionary expenditure to rise at the rate of GDP growth rate.
  - Comparison with government MTEF:
    - Government scenarios were more optimistic and underestimated expenditures.
    - Even NABO scenario 2 (conservative) showed higher values than baseline MTEF.
    - Government MTEF revisions converged toward NABO scenario over time, interpreted as educative/disciplinary effect.
- Key statistics and excerpts:
  - “2.5 percent over a short time period.”
  - “In 2012, the steady increase in nominal expenditure growth is persistent, highlighting a more fragile fiscal position.”
  - Historical debt movement: 2005 to 2006 change from "30.7 percent" to "32.7 percentage of GDP."
  - Table 3 excerpt (as presented in source): NABO scenario 1 301.8292.8317.5341.5368.4 399.3; NABO scenario 2 301.8292.8309.9325.6342.6 361.7; MTEF 2009-2013 301.8291.8306.6322.0335.3; MTEF 2010-2014   292.8309.6324.8337.7 353.0; MTEF 2011-2015 309.1326.1341.9 357.5; MTEF 2012-2016 325.4342.5 357.5.
- Media coverage:
  - Low initially; steadily increased over time.
  - 2006: NABO warned “national debt is rising too fast ... the debt should remain below 35 percent of GDP”.
  - 2009: NABO criticized 2010 budget draft for being 4 trillion won too high.
  - 2012 spike: differences between government, NABO, and other forecasters’ GDP forecasts; government expected 3.3 percent in 2012 and 4 percent in 2013; NABO forecasts reported: “Asia's fourth-largest economy is forecast to grow 2.5 percent this year before its growth rate accelerates to 3.5 percent in 2013 and 4.3 percent in 2014, according to the report compiled by the National Assembly Budget Office (NABO).”
  - Media compared NABO forecasts with Bank of Korea (3.2 percent [2013]) and Korea Development Institute (3 percent [2014]) and with private forecasters, foreign banks, and IMF.
- Conclusions:
  - NABO matured over ten years into a respected source, increasing transparency of budgetary data.
  - Plays a role in public discussions; seen as conservative and sensible voice.
  - Media plurality means NABO not sole alternative forecaster.
  - Independence is laid down in law and budget; Director’s lack of fixed term and dismissibility by Speaker is a weakness.

### The Netherlands — CPB: key findings
- Background and mandate:
  - CPB established in 1945; forecasts since the 1950s; public finance reports since the 1960s; election platform costing since the 1980s.
- Institutional set-up:
  - Branch of civil service within Ministry of Economic Affairs (MEA); funded from MEA budget; up to twenty percent of annual budget may come from external assignments.
  - Director appointed for seven years by the Minister.
  - Supervisory committee with members appointed by the cabinet for a 5 year term and 5 yearly independent evaluations.
- Functions and operations:
  - Prepares forecasts used in the budget; undertakes costing of programs and electoral proposals; conducts analyses and reviews of fiscal policy.
  - Forecasts produced behind closed doors and discussed with government prior to release; public updates in March and September (more extensive) and June and December (less extensive).
- Analysis and impact:
  - Considerable public credibility; no apparent bias in macroeconomic forecasts; average forecast errors for the budget year have been, if anything, pessimistic.
  - Insider institution with close relations to civil servants; avoids normative language to preserve impartiality.
  - Used by all parties for electoral program costing.
- Media:
  - Press coverage spikes coincide with CPB public forecasts and assessments; timing of publications supports influence on public debate.

### Sweden — Fiscal Policy Council (FPC): key findings
- Creation and context:
  - Created in 2007 by a liberal-conservative government to promote long-term fiscal sustainability and fiscal space for counter-cyclical measures.
  - Complements existing fiscal framework (surplus rule and expenditure ceiling) from 1990s.
- Institutional set-up:
  - Government agency established by 2007 Ordinance, revised in 2011.
  - Council consists of five members assisted by a secretariat with five full time employees (2011 revision reduced members from 8 to 6 previously).
  - Budget approximately one million in 2011 and included in Ministry of Finance budget.
  - Chairmanship limited to six years and membership to three years.
  - Accountable to Ministry of Finance; presents reports in public hearings; no formal relationship with Parliament.
- Functions:
  - Primarily reviewing and monitoring; does not produce forecasts nor conduct costings.
  - Reviews compliance with surplus rule and expenditure ceiling; assesses fiscal stance and long-term sustainability; promotes public debate.
  - Publishes annual report “Swedish Fiscal Policy” no later than May 15th each year; dissenting opinions must be included.
- Analysis and impact:
  - Sweden had stable public finances when council established; gross debt to GDP declining since 1997.
  - FPC endorsed government policy in 2011–2012 but 2013 report noted indicators suggest surplus target will not be met and recommended a clear plan.
  - Forecasting bias shift: average forecasting error for budget balance changed from pessimistic deviation of 1.6 percent to optimistic error of 0.2 percent.
  - Strategy of independent analysis and communications via media and parliamentary hearings proved relatively successful.
- Institutional issues:
  - Council established independence and reputation quickly; budget considered small; tensions with Ministry of Finance have occurred but funding not cut.
- Conclusions:
  - FPC influenced fiscal policy and promoted more cyclically adjusted policy.
  - Success factors: political/public consensus on fiscal sustainability and complementary independent agencies.
  - Main challenge: fulfilling remit with limited resources.

### United States — Congressional Budget Office (CBO): selected points
- Background and scale:
  - Created in 1974; began operations February 1975.
  - Staff around 240 in 2012.
- Functions:
  - Produces alternative forecasts and reviews government forecasts; baseline budget projections and economic forecasts for a 10-year period; fiscal sustainability reports spanning 25 up to 75 years; costings of legislative proposals and scorekeeping.
- Forecasting and bias:
  - Administration’s tax revenue forecasts prior to CBO were unbiased on average despite year-to-year errors averaging 0.8 percent of GDP.
  - Following CBO establishment, the administration’s average forecast error increased from 0 to positive 0.1 percent of GDP; standard deviation of revenues was 1.3 percent of GDP.
  - CBO’s two-year ahead real GDP forecasts show a slightly pessimistic bias; administration shows a slightly optimistic bias; CBO forecasts marginally more accurate and in line with private sector forecasts.
- Impact and media:
  - CBO scoring increased attention to legislative costs and led members to adjust proposals to reduce costs.
  - Produced influential costings of controversial legislation while maintaining non-partisan reputation.
  - Large and increased media presence, especially since 2009; press briefings in February and August are focal points.
- Conclusions:
  - Well-funded, broad-remit fiscal council with professional staff and track record of credible, non-partisan analysis.
  - Effective in costing and legislative inputs though less successful in persuading partisan politicians/public to constrain deficits and debt.

### Cross-cutting findings and themes
- Media as primary transmission channel: councils without formal budget process roles rely on media presence to influence debate.
- Institutional design matters: legal protections, appointment procedures, staff resources, and clear mandates affect councils’ credibility and resilience.
- Forecasting comparisons: across cases, independent forecasts often serve as disciplinary benchmarks and can lead to convergence of government forecasts toward council scenarios.
- Vulnerability to political reversal: councils with limited legal safeguards or insufficiently established reputations risk weakening or reform (Hungary example).
- Communication strategies: transparency, timely publications, and active engagement with media enhance councils’ visibility and potential influence.
- Resource constraints: several councils operate with limited budgets and small staffs relative to remit (e.g., HCF secretariat 12 full time staff; Sweden FPC budget approximately one million in 2011; PBO around 15 full-time equivalents).

*Source: _071613a - INTRODUCTION (CASE STUDIES ON FISCAL COUNCILS, INTERNATIONAL MONETARY FUND)*

### INTRODUCTION___________________________________________________________________________________4

### INTRODUCTION___________________________________________________________________________________4

### Overview
- Document title header as presented: INTRODUCTION___________________________________________________________________________________4
- Date: July 16, 2013
- Publication imprint text present: CASE STUDIES ON FISCAL COUNCILS; INTERNATIONAL MONETARY FUND

### Country case studies and section structure (as listed)
- BELGIUM – THE HIGH COUNCIL OF FINANCE (HCF)—GAINING AND MAINTAINING CREDIBILITY IS KEY
  - A. Political and Economic Context
  - B. Institutional Set-up
  - C. Functions
  - D. Analysis and Impact
  - E. Media Coverage
  - F. Conclusions

- CANADA – PARLIAMENTARY BUDGET OFFICER (PBO)—THE CRITICAL EARLY YEARS BUILDING CREDIBILITY AND WALKING THE INDEPENDENCE TIGHT ROPE
  - A. Political and Economic Context
  - B. Institutional Set-up
  - C. Functions
  - D. Analysis and Impact
  - E. Media Coverage
  - F. Conclusions

- HUNGARY – WATCHDOGS NEED TIME TO BECOME ESTABLISHED AND BUILD CREDIBILITY
  - A. Political and Economic Context
  - B. Institutional Set-up and Functions: The Two Periods
  - C. Media Coverage
  - D. Conclusions

- KOREA – NATIONAL ASSEMBLY BUDGET OFFICE (NABO)—AN IMPORTANT PLAYER IN THE DEMOCRATIC SYSTEM
  - A. Political and Economic Context
  - B. Institutional Set-up
  - C. Functions
  - D. Analysis and Impact
  - E. Media Coverage
  - F. Conclusions

- THE NETHERLANDS – BUREAU FOR ECONOMIC POLICY ANALYSIS (CPB)—AN ESTABLISHED INTEGRATED INSTITUTION WITH A STRONG REPUTATION
  - A. Political and Economic Context
  - B. Institutional Set-up
  - C. Functions
  - D. Analysis and Impact
  - E. Media Coverage
  - F. Conclusions

- SWEDEN – FISCAL POLICY COUNCIL—CLOSING INSTITUTIONAL GAPS WITH LIMITED RESOURCES
  - A. Political and Economic Context
  - B. Institutional Set-up
  - C. Functions
  - D. Analysis and Impact
  - E. Media Coverage
  - F. Conclusions

- UNITED STATES – CONGRESSIONAL BUDGET OFFICE (CBO)—THE ROLE MODEL FOR NOVICE COUNCILS
  - A. Political and Economic Context
  - B. Institutional Set-up
  - C. Functions
  - D. Analysis and Impact
  - E. Media Coverage
  - F. Conclusions

### Tables (listed)
- 1. The Government's Average Forecasting Error Before and After PBO
- 2. Forecast Errors for the Government of Canada and the PBO 2008–2010
- 3. Comparison of NABO forecast and MTEF (2009–2013 to 2012–2016)
- 4. Average Real GDP Forecast Error 1982–2010

### Figures (listed)
- 1. HCF Budget Balance Recommendations, Forecasts, and Outturns
- 2. Press Coverage of the HCF
- 3. Forecast Errors on Government Forecasts 2003–2010
- 4. Press Coverage of the PBO
- 5. Press Coverage of the Fiscal Council
- 6. Development of Revenues in the MTEF
- 7. Development of Expenditure
- 8. Real GDP Forecast Errors (Actual minus Forecast): 2000–2008 (Percentage points)
- 9. The Netherlands: Fiscal Targets, Forecasts and Outcomes
- 10. Press Coverage of the CPB (Number of press articles relative to 4-year rolling)
- 11. Average Seasonal Pattern of the CPB Media Presence
- 12. The U.S. Federal Receipts Forecast versus Actual
- 13. Comparison of U.S. Real GDP Forecast Errors
- 14. The U.S. Fiscal Activity: 10-year Increase in Debt Due to Events in Each Year versus CBO Media
- 15. Press Coverage of the CBO

*Source: _071613a - INTRODUCTION___________________________________________________________________________________4*

### INTRODUCTION

### _071613a - INTRODUCTION

### Supplement scope
- Presents case studies of seven fiscal councils and examines how each council performs core functions and if and how it impacts on the fiscal policy debate.
- The seven fiscal councils are: Belgium (Conseil Supérieur des Finances—HCF), Canada (Parliamentary Budget Officer—PBO), Hungary (Költségvetési Tanács), Korea (National Assembly Budget Office—NABO), the Netherlands (Centraal Planbureau—CPB), Sweden (Finanspolitiska rådet), and the United States (Congressional Budget Office-CBO).
- This supplement discusses in detail each individual fiscal council’s experiences; the main paper presents comparative lessons and general findings based on a systematic comparison.

### Case selection criteria
- Length of existence: all councils studied have been in operation for at least three years.
- Functions performed: each council performs at least two of fiscal council’s core functions (reviewing or producing forecasts; reviewing and/or monitoring governments’ fiscal plans, objectives, and performance; costing of policy proposals and programs).
- Diversity of region and context: incorporates fiscal councils from three regions—Asia, Europe, and Western Hemisphere—and from different political and economic contexts.

### Standardized case structure (applied to each case)
- Political and economic context motivating creation of the council.
- Institutional set-up: structure and membership; appointment and dismissal processes; legal and budgetary status; resources allocated; degree of legal and operational independence.
- Performance of core functions.
- “Analysis and Impact”: outputs/products, transmission mechanisms, final outcomes or indirect impact on fiscal policy; where data available, identification of episodes of interest.
  - For forecasting: compare government forecasts with council forecasts for accuracy and optimistic/pessimistic biases.
  - For reviewing/monitoring: review council actions during periods when fiscal policy went off-track and periods of intense policy development.
  - Assess effectiveness of channels of influence—media—and consider ability to identify impact on fiscal policy (often indirect).
- “Media Coverage”: quantitative and qualitative review of media strategy and press coverage.
- Summary and conclusion.

### Analysis methods and metrics
- Both quantitative and qualitative methods applied within limits of available data.
- Forecasting assessment: comparison of government forecasts with council forecasts for accuracy and optimistic/pessimistic bias.
- Review/monitoring assessment: episodes where fiscal policy deviated from objectives; council responses; council use of media to influence debate.
- Media activity measurement (applied across cases): number of unique newspaper articles containing combination of fiscal council name and keywords (in relevant language), sourced from Factiva (methodology applied uniformly across case studies).

### Role of media as transmission channel
- Most fiscal councils do not have a direct role in the budget process; media coverage is one of the main channels to communicate messages and seek to influence policy debate.
- Case studies examine:
  - Press coverage relative to key episodes (e.g., euro adoption, critical assessments, periods without formal leadership).
  - Tone changes in council statements and corresponding media attention.
  - Instances where council criticism provoked governmental reaction (including attempts to constrain council operations).

### Belgium — High Council of Finance (HCF): key points from case study
- Institutional context:
  - HCF produces normative recommendations; Federal Planning Bureau (FPB) produces macroeconomic forecasts under National Accounts Institute.
  - HCF dates to the 1930s; major reform in 1989 refocused mandate on promoting and coordinating fiscal discipline across federal system and issuing recommendations on public sector borrowing requirements.
- Historical fiscal context and figures:
  - Budget deficit was 7 percent of GDP in 1988.
  - General public gross debt was 125 percent of GDP in 1988.
- Institutional set-up:
  - Chair: the Minister of Finance; two deputy chairs (appointed by the Minister of Finance); 24 members appointed for five year renewable terms.
  - Membership selection: 12 members proposed by Federal ministries and 12 by regional governments; nominations reflect expertise and regional/linguistic balance and in practice a balance of party political affiliations.
  - Divisions: Public Sector Borrowing Requirement (PSBR) and Taxation and Social Security Contributions; one study group on ageing.
  - Secretariat: 12 full time staff (civil servants in research department of Federal Public Service Finance department); costs covered under Federal Public Service Finance budget (no separate budget line).
- Mandate and functions:
  - Advises Minister of Finance and Minister of Budget on fiscal, financial, and budgetary policy; issues normative recommendations.
  - Remit extends to regions; monitors regional fiscal policy; formulates medium-term financial objectives for federated entities; assesses convergence with Maastricht criteria; post-euro monitors compliance with stability program.
  - Does not produce macroeconomic forecasts (role of FPB); does not cost policy proposals or party election platforms.
  - PSBR section produces two main reports a year: ex-ante and ex-post compliance with Euro stability program and medium-term budgetary targets; annual report evaluates medium- to long-term budget outlook and recommends budget targets.
  - Study group on ageing produces long-term projections covering a 50-year period.
  - HCF can recommend limiting region borrowing for up to two years by royal decree (power never used).
- Independence and operational issues:
  - Formally advisory and not legally independent, but reputation for quality independent analysis.
  - Independence challenged; mid-2000s inability to agree PSBR membership led to two-year delay in providing recommendations.
  - Limited operational independence illustrated by two-year vacancy in PSBR chair resulting in suspension of reporting.
- Analysis and impact episodes/highlights:
  - Pre- and post-euro periods show different influence:
    - Pre-euro: alignment with Maastricht convergence criteria; structural primary surplus increased by 5 percent of GDP; public debt started falling; budget moved towards balance.
    - Post-euro: influence declined; primary balance deteriorated as savings on debt interest used for tax cuts and expenditure growth.
  - Notable episodes:
    - First two years after euro adoption (1999–2000): outcomes broadly in line with Council recommendations.
    - 2004: increasing divergences led to critical assessments of government policies.
    - 2005–2006: Council could not produce reports or recommendations due to vacant PSBR chair.
- Media coverage and tone:
  - Strong press coverage during period leading up to and during euro adoption; tails off into 2000s as influence declines.
  - 2004: Council became openly critical causing surge in media reports.
  - During 2005–2006 suspension of reporting, media footprint diminished.
  - Example quotations from HCF reports (tone shift):
    - October 1999: “The deficit of the central government for 2000 is projected at 1 percent of GDP, which is 0.2 percent higher than recommended by the HCF.”
    - July 2004: “The High Council considers these fiscal scenarios unrealistic in the medium-term” and “The High Council wants to point out that the deteriorating fiscal position is [not only] due to cyclical factors but also—and mainly—due to discretionary measures such as lowering taxes and a major growth in government spending.”
- Conclusions (Belgium):
  - Influence fluctuated over two decades; split responsibilities with FPB allows technical specialization but HCF lacks legal and operational independence and is chaired by Minister of Finance.
  - Pre-euro consensus masked institutional limitations; post-euro divergence of objectives exposed limitations and reduced capacity to operate.
  - Despite constraints, HCF retained reputation for high-quality analysis and played key role in late 2000s consolidation planning and setting budgetary targets.

### Canada — Parliamentary Budget Officer (PBO): key points from case study
- Political context and creation:
  - Created as part of Federal Accountability Act (FAA) enacted by Conservative government elected in 2006 to strengthen accountability, transparency, and ethics.
  - Motivations: provide parliamentarians independent expertise and objective assessment of Department of Finance’s fiscal and economic forecasts.
  - First PBO Kevin Page appointed March 2008.
- Institutional set-up:
  - PBO based on provision in Federal Accountability Act and amendments to Parliament of Canada Act.
  - Officer of the Library of Parliament; holds office for a once renewable 5-year term.
  - Selection: conducted by Parliamentary Librarian; appointment by Governor in Council based on Prime Minister’s advice; in practice PBO appointed and serves “at the pleasure of” the Prime Minister.
  - Staffing and budget: around 15 full-time equivalents; two divisions (Economic and Fiscal Analysis; Revenue and Expenditure Analysis); budget part of Library of Parliament budget (no separate parliamentary budget line).
  - PBO hires outside consultants; reports published; staff employment conditions similar to Library of Parliament staff.
- Early tensions and legal/operational disputes:
  - Location in Library of Parliament raised questions about reporting lines and mandate authority (Parliamentary Librarian vs. Speakers).
  - Publication practices (public dissemination) conflicted with Library’s confidential services; controversy over publishing The Fiscal Impacts of the Canadian Mission in Afghanistan during election campaign.
  - Budget dispute: promised 2.8 million for second year but initially stayed at 1.9 million; full budget restored only in 2010 after political pressure.
  - Access to information dispute led to Federal Court ruling April 2013 that PBO was within mandate to request information on proposed budget cuts.
- Functions and operational choices:
  - Modeled on U.S. CBO; broad remit covering all functions: objective analysis of government budget proposals and economic trends; reviewing government forecasts; preparing alternative forecasts; costing government and legislative proposals; research papers.
  - Produces alternative medium-term forecasts in April with October update; produced first fiscal sustainability report in 2010 including projections up to 75 years.
  - No fiscal rules in Canada; PBO cannot monitor compliance with rules but developed Integrated Monitoring Database (IMD) to track department expenditures.
  - Costing request management: prioritizes requests by materiality potential and contribution potential.
  - Reports peer-reviewed by independent external experts; collaboration with universities, think tanks, other fiscal councils, international organizations.
- Analysis and impact:
  - Strategy: be front and center on leading fiscal issues; transparent reporting; active media engagement.
  - Examples of raising the alarm:
    - 2010: PBO warned of an 18.9 billion Canadian dollars structural deficit by 2013-14 if no action taken.
    - 2012: PBO forecasted growth 1.9 percent vs official 2.2 percent for 2012; actual 2012 GDP was 1.8 percent.
  - Forecasting context:
    - Historically Department of Finance produced cautious forecasts with prudency assumptions; PBO’s existence created competition and methodological scrutiny.
    - Government estimates for revenues, expenditure, and balance became more accurate and less pessimistic after creation of PBO (table of average forecasting errors provided in source).
  - Costings: high-profile and sometimes controversial (e.g., Afghanistan mission cost estimate: Department of Defense $8-billion vs PBO up to $18-billion; F-35 life-cycle cost: government $75-million vs PBO $128 million); media coverage amplified credibility when PBO numbers proven accurate.
- Media coverage:
  - Substantial from outset; PBO active in press conferences and media training; Kevin Page a high-profile public figure (“budget watchdog”).
  - Press coverage increased as office built credibility; late first term coverage centered on mandate disputes and court case.
- Conclusions (Canada):
  - PBO earned reputation for quality independent analysis; front-and-center strategy, transparency, and media engagement effective in influence but also generated high-profile disputes with government.
  - Single-officer model provides clear public face but risks personalization of institution; transition periods critical for institutional standing.
  - Outgoing PBO advocated institutional changes (Parliament appointment, independent office of Parliament similar to Auditor General) to protect independence; proposed legislative change defeated in June 2013.

### Hungary — Fiscal Council: key points from case study
- Political and fiscal context:
  - 2007 elections: public finances and fiscal policy high on agenda; large deficit peaking at 10 percent of GDP in 2006 (highest among EU countries).
  - November 2008 Fiscal Responsibility Law established fiscal council as part of rules-based framework and transparency standards.
- Two-period evolution (2009–2010 original council; 2011 reformed council)
  - Council 2009–2010 (original model):
    - Composition: three non-partisan members nominated by President of the Republic, Governor of National Bank of Hungary, President of State Audit Office; members elected by simple majority in Parliament for a 9-year non-renewable term.
    - Office: Office of the Fiscal Council with over 30 economists; chair headed office; council reported to Parliament.
    - Mandate: broad remit including macro-fiscal baseline scenarios, independent fiscal impact assessment of bills, methodological guidelines, proposals to enhance sustainability and transparency; costed all significant tax and expenditure proposals; obligatory assessment of budget bills and mandatory laws; monitored compliance with pay-as-you-go rule and debt limit.
  - Council 2011 (reformed model):
    - Replaced by reduced model after government criticized by council and subsequent tensions.
    - Composition: three members — chairman (appointed by President of the Republic for six years), governor of central bank (ex officio), head of state audit office (ex officio).
    - Staff cuts: reduced from over 30 to around 3; Central Bank and State Audit Office prepare background analysis.
    - Mandate narrowed: assesses state budget and execution, developments in government debt, supports Parliament’s legislative activities; excludes other legislative proposals, macro-fiscal forecasting, costing of legislative proposals, commenting on fiscal transparency and sustainability.
    - New right: recommend to Parliament whether to pass or reject the budget bill (theoretical veto power; practical exercise constrained by small staff; has not been used).
- Media coverage and reaction:
  - Council emphasized informing the public and making assessments widely available on a timely basis.
  - Media interest increased when council operational in 2009–2010; late 2010–2011 coverage focused on reform of the council itself.
  - International and domestic protests did not prevent reform and budget cuts.
- Conclusions (Hungary):
  - Original council had broad remit and resources but lacked protection from political reversal.
  - Replacement council is significantly weakened; Hungary’s experience highlights risks for new councils: failing to “launch” and build sufficient credibility before facing political backlash.
  - Maintaining independence is more difficult in highly polarized contexts; building institutional credibility and trust is long-term and not guaranteed.

### Korea — National Assembly Budget Office (NABO): initial key points
- Political context and creation:
  - Formally established in 2003 to provide fiscal advice to Parliament as part of democratic reform during divided government; aim to match executive expertise and allow legislature to scrutinize President’s draft budgets.
  - Korea had stable public finances at NABO creation (general gross debt 13.8 percent of GDP in 1990; 18.56 percent in 2002).
- Institutional set-up:
  - Duties and organization set out in National Assembly Budget Office Act.
  - Director appointed by Speaker of National Assembly based on Recommendation Committee; Director not appointed for fixed term and serves at Speaker’s discretion; Director can be dismissed by Speaker with approval of House Steering Committee.
  - Panel of outside advisors: chairperson and fourteen members (experts from universities, research institutes, government offices, media).
  - Staffing and budget: well resourced with 125 staff in 2011; NABO budget part of National Assembly budget but has separate line; audited annually by Board of Audit and Inspection.
  - Four stated principles: independence, non-partisanship, expertise, credibility.
- Functions and remit:
  - Modeled on U.S. CBO; broad remit supporting legislative activities through analysis and evaluation of national finances and policies.
  - Performs main fiscal council functions: monitoring/reviewing government fiscal policy; developing alternative forecasts; costing proposals and programs; economic and revenue forecasts; research.
  - Extended baseline projections due to requirement for medium and long-term financial plans; conducts analyses of long-term structural issues including pensions; begun long-term projections.
  - Unique mandate: evaluation of projects, programs, infrastructure, extra-budgetary funds, autonomous public institutions; recommendations for efficiency and effectiveness.
  - Division of labor with Board of Audit and Inspection (BAI): NABO focuses on performance and efficiency; BAI concentrates on financial audits; typically do not cooperate.
- Early analysis and fiscal context:
  - Public debt 26.2 percent of GDP in 2004; small surplus and expenditure 24 percent of GDP; expenditure increased to 25.8 percent of GDP by 2008 with revenues increasing similarly, resulting in balanced budgets for most of the period.
  - 2009 fiscal stimulus increased expenditure to 28.4 percent of GDP and produced a fiscal deficit.
  - Government goal to reduce discretionary spending from 13.7 percent of GDP in 2011 to 12 percent of GDP by 2015.
- Episodes of interest (introduced, continued in source):
  - 2006: MTEF revised upwards for all years when increase of expenditure as percentage of GDP evident.
  - 2009: expenditure to GDP climbed to 28.4 percent and increased by more than [case study continues beyond supplied excerpt].

*Source: _071613a - INTRODUCTION (IMF case studies supplement).*

### 2.5 percent over a short time period.

### _071613a - 2.5 percent over a short time period.

### Key findings
- "2.5 percent over a short time period."
- "In 2012, the steady increase in nominal expenditure growth is persistent, highlighting a more fragile fiscal position."
- "In 2006, total national debt grew to 32.7 percentage of GDP from 30.7 percent in 2005 and"

### Figures and sources
- Figure referenced: "Figure 7. Development of Expenditure"
- Source for figure: "Source: NABO"

### Observations for fiscal analysis
- Persistent nominal expenditure growth in 2012 is associated with a more fragile fiscal position.
- Short-term change magnitude: "2.5 percent over a short time period."
- Historical debt movement noted: 2005 to 2006 change from "30.7 percent" to "32.7 percentage of GDP."

*CASE STUDIES ON FISCAL COUNCILS INTERNATIONAL MONETARY FUND 27*

### 26.1 percent in 2004. The budget office had initially forecasted 32.2 percent. The increase is mainly

### _071613a - 26.1 percent in 2004. The budget office had initially forecasted 32.2 percent. The increase is mainly

### NABO forecasting and MTEF interaction
- NABO provided two forecasting scenarios when the budget moved into deficit in 2009:
  - NABO scenario 1 assumed an increase of discretionary spending at the same average rate as during the 5 years before the crisis.
  - NABO scenario 2 expected discretionary expenditure to rise at the rate of GDP growth rate.
- Comparison of NABO forecasts with government MTEF estimates:
  - The Government’s scenarios were considerably more optimistic and underestimated expenditures.
  - Even the more conservative NABO scenario that kept growth in discretionary expenditures limited to GDP growth showed higher values than the baseline MTEF scenario.
  - As MTEFs were revised over time, the government’s MTEF revisions converged toward the NABO scenario.
  - This convergence is interpreted as demonstrating the educative and disciplinary effect of NABO’s independent forecasts.
- NABO cautioned in 2012:
  - NABO’s 2012 estimates expected growth of total expenditure which is below the growth rate of the GDP for 2013, yet the fiscal situation was expected to be tight.
  - NABO warned: “total revenues are expected to be less than the Administration forecasts due to the inclusion of implausible revenues from sales of government holding shares. Therefore, massive expansion in the budget seems difficult to carry out for the sake of fiscal soundness but implementation of cycle/responsive fiscal policy is necessary.”

### Key statistics and tabular comparison (as presented in source)
- Table 3. Comparison of NABO forecast and MTEF (2009–2013 to 2012–2016)
  - NABO scenario 1 301.8292.8317.5341.5368.4 399.3
  - NABO scenario 2 301.8292.8309.9325.6342.6 361.7
  - MTEF 2009-2013 301.8291.8306.6322.0335.3
  - MTEF 2010-2014   292.8309.6324.8337.7 353.0
  - MTEF 2011-2015 309.1326.1341.9 357.5
  - MTEF 2012-2016 325.4342.5 357.5
- Source cited for table: NABO

### Media coverage of NABO
- Evolution over time:
  - Media resonance for the NABO in the first years was low, but steadily increased overtime.
  - In 2006 (fourth year) NABO gained media attention warning that “national debt is rising too fast as the government spends more than it earns due mainly to rising costs associated with a range of social welfare programs” and emphasized that ”the debt should remain below 35 percent of GDP”.
    - Footnote: The Korean Times, 08/23/06, National Debt Tops 33% of GDP.
- 2009 coverage:
  - Media attention focused on NABO’s analysis and warnings about high levels of expenditure and issues around future growth.
  - NABO criticized the 2010 budget draft for being 4 trillion won too high.
    - Footnote: JOONAI, 11/04/09, Assembly office wants deeper cuts in budget.
- 2012 spike:
  - Spike in articles focused on differences between government, NABO, and other forecasters’ GDP growth forecasts.
  - Government expected economy to grow 3.3 percent in 2012 and 4 percent 2013.
    - Footnote: Ibid
  - NABO forecasts reported: “Asia's fourth-largest economy is forecast to grow 2.5 percent this year before its growth rate accelerates to 3.5 percent in 2013 and 4.3 percent in 2014, according to the report compiled by the National Assembly Budget Office (NABO).”
    - Footnote: The Korean Times, 07/10/13, Korean economy projected to grow 3.5% through 2016: report, http://www.koreatimes.co.kr/www/news/biz/2012/10/123_121626.html.
- Media skepticism and comparison with other forecasters:
  - Media noted that NABO’s figure might still be overblown given lower growth forecasts from the Bank of Korea and the Korea Development Institute ― 3.2 percent [2013] and 3 percent [2014], respectively.
    - Footnote: Ibid
  - Private financial institutions and research institutes were even more pessimistic.
  - Foreign investment banks and the IMF were cited as lowering Korea’s economic outlook (Morgan Stanley, Goldman Sachs, Nomura Securities, and IMF).
    - Footnote: The Korean Herald, 27/11/13, Growth in Deficit, http://khnews.kheraldm.com/view.php?ud=20121127000183&md=20121128003438_AN.

### Conclusions on NABO
- Institutional maturity and role:
  - Over the past ten years, NABO has grown into maturity, providing valuable reports and analyses and increasing transparency of government budgetary data.
  - After an establishing phase, NABO plays a role in public discussions on fiscal policy and is generally received as a conservative and sensible voice.
  - NABO raises public concerns during large fiscal policy actions and warns when government policy may not align with sound policy settings, even recommending alternative courses of action in 2010.
- Media plurality:
  - The Korean media considers a range of forecasters; NABO does not have a monopolist role in providing alternative fiscal and economic forecasts.
- Independence and governance issue:
  - Independence of NABO is laid down in the National Assembly Budget Office Act and it has a separate budget in the parliamentary budget; in practice independence has not been challenged and the budget has grown.
  - Weakness: The NABO Director does not have a fixed term limit and can be dismissed by the Speaker of the National Assembly, leading to voluntary resignations when House Speakers change and raising the risk of political pressure (OECD, 2012).

---

### The Netherlands – CPB: institutional setup and impact
- Background:
  - CPB established in 1945; first director Jan Tinbergen.
  - Prepares economic forecasts since the 1950s; reports on public finances since the 1960s; election platform costing since the 1980s; long-term scenario analyses since the 1990s.
- Institutional set-up:
  - Formally a branch of the civil service within the Ministry of Economic Affairs (MEA) and funded from the MEA’s budget.
  - Up to twenty percent of its annual budget may come from external assignments.
  - Director appointed for seven years by the Minister, in consultation with other members of the government.
  - Supervisory committee with members appointed by the cabinet for a 5 year term and 5 yearly independent evaluations.
- Functions:
  - Prepares forecasts used in the budget; undertakes costing of programs and electoral proposals; conducts analyses and reviews of fiscal policy.
  - Forecasts are produced behind closed doors and discussed with the government prior to release.
  - Provides public information updates in March and September (more extensive) and in June and December (less extensive).
  - Extensive costing role including ministries’ requests and electoral platform costing.
- Analysis and impact:
  - CPB has considerable public credibility; Netherlands’ fiscal performance over past 15 years relatively sound.
  - No apparent bias in macroeconomic forecasts; average forecast errors for the budget year have been, if anything, pessimistic.
  - Coalition agreements include ex-ante fiscal targets; CPB expected to raise alarm if targets are in danger.
- Episodes where CPB raised alarm (as discussed in source):
  - 2002: fiscal outturn significantly worse than budget forecast; CPB noted small surplus in 2001 would turn into a deficit of 0.8 percent of GDP in 2002.
  - 2003: outturn worse than forecast and breached the deficit ceiling; March report revised projections downward and noted “additional deficit-reducing measures are necessary to comply with the rules from the SGP.”
  - 2005: budget forecast exceeded the ceiling; December 2004 report warned “[2005] deficit stays dangerously close to the 3 percent SGP deficit ceiling.”
- Media interaction:
  - Press coverage spikes coincide with CPB public forecasts and assessments; CPB times interventions to influence public debate around March and September publications.
  - CPB’s media visibility supports contribution to public debate and reduces information asymmetries.
- Conclusions:
  - CPB is an insider institution within the budget process with close relations to civil servants, influencing policy debate through informal channels.
  - CPB is restrictive in giving direct policy advice and avoids normative language to preserve impartiality.
  - CPB’s assessments are requested by all parties for electoral programs.

### Sweden – Fiscal Policy Council (FPC): setup, remit, and role
- Political and economic context:
  - FPC created in 2007 by a liberal-conservative government to promote long-term fiscal sustainability and fiscal space for counter-cyclical measures.
  - It complements an existing fiscal framework (surplus rule and expenditure ceiling) established in the 1990s.
  - Sweden already had independent forecasting and scrutiny institutions: National Institute of Economic Research, National Financial Management Authority, and National Audit Office.
- Institutional set-up:
  - FPC is a government agency established in a 2007 Ordinance, revised in 2011.
  - Council consists of five members assisted by a secretariat with five full time employees (2011 revision reduced members from 8 to 6 previously).
  - Budget small (approximately one million in 2011) and included in the Ministry of Finance’s annual budget.
  - Chair and Vice-Chair and other members appointed by the government based on proposals from the council; chairmanship limited to six years and membership to three years.
  - Council is accountable to the Ministry of Finance, has no formal relationship with Parliament, but maintains close contact with the Finance Committee and presents reports in public hearings.
  - 2011 revision concentrated remit more on fiscal sustainability and distributional effects; suggested by some that it should become an agency of Parliament, but revision stayed within government agency framework.
- Functions:
  - Primarily reviewing and monitoring tasks; does not produce forecasts nor conduct costings.
  - Reviews extent to which government achieves fiscal policy objectives (fiscal rule surplus objective, expenditure ceiling).
  - Reviews consistency of fiscal policy stance with cyclical developments and long-term sustainable growth and high employment.
  - Examines clarity of Government's budget bills and may review quality of government forecasts and models.
  - Mandated to promote and stimulate public debate on economic policies.
  - Publishes annual report “Swedish Fiscal Policy” presented to the government no later than May 15th each year; dissenting opinions must be included.
  - Organizes conferences and publishes studies on fiscal policy.
- Analysis and impact:
  - Sweden had stable public finances when council was established; gross debt to GDP declining since 1997.
  - In the 10 years preceding creation of the council, government ran a budget surplus for seven years and had a deficit for three years (source content ends mid-sentence on historical deficits).

*Source: IMF case studies content provided in the PDF chapter/section*

### 1.7 percent of GDP.

### 1.7 percent of GDP.

### FPC assessments of government fiscal policy
- In 2012 the FPC endorsed the government’s policy: “In the Council’s opinion, the fiscal policy pursued in 2011 and 2012 has complied with the current fiscal framework. We think that there is little risk of expenditures exceeding the expenditure ceiling in the next few years. We take the view that the fiscal policy is compatible with long-term sustainable public finances.”
- The FPC’s 2013 report noted that “the indicators reported by the government suggest that the surplus target will not be met” and recommended that “the government should present a clear plan for meeting the surplus target during the relevant business cycle”.
- The council and government view the surplus target as an intermediate objective toward:
  - fair intergenerational distribution,
  - social efficiency (tax smoothing),
  - building-up a precautionary buffer to deal with long-run uncertainties and to give room to use fiscal policy for stabilization purposes.

### Council remit, activities, and influence
- The council concentrates on:
  - evaluating long-term effects of government programs,
  - reviewing revenue policy,
  - improving transparency.
- In 2009, amid the global financial and economic crisis, the council recommended a stronger fiscal stimulus than the government, suggesting a temporary increase in employment benefits and support for local governments, emphasizing risks of cyclical unemployment becoming persistent.
- The council’s recommendations have at times been critical of the government on:
  - weaknesses in the tax system,
  - reform of unemployment insurance,
  - economic reporting practices.
- FPC reports have been used by opposition parties in developing their economic policies.
- The FPC’s mandate does not include producing forecasts but it has reviewed and reported on forecast quality and underlying models.

### Forecasting performance and changes
- Since creation of the fiscal council, the bias of the average forecasting error for budget balance (difference between forecast of period t made in t-1 and outturn) changed from a pessimistic deviation of 1.6 percent to a minor positive optimistic error of 0.2 percent (a negative deviation in 2009 is compensated by a positive one in 2010).
- Before the advent of the fiscal council the forecasts were cautious; after establishment they were very close to outcomes.
- Given the limited role of the council in forecasting, it is difficult to directly attribute this change to the council’s influence.

### Institutional credibility, resources, and tensions
- The fiscal council has rapidly established independence and reputational capital through independent analysis and willingness to criticize government policy.
- Tensions with the Ministry of Finance have occurred; in 2010 the then Minister of Finance threatened to reduce council funding when it requested more resources. In practice the council’s budget was not cut and has slightly increased over time, though commentators consider it still insufficient.

### Media coverage and communications
- The FPC relies on media contacts because its influence is indirect and it has no formal role in the budget process; its main mode of intervention is written reports and public discussion.
- Media analysis shows a gradual increase in newspaper articles mentioning the FPC; the council has successfully courted media and built a reputation as a reliable source for independent economic analysis.
- FPC members are regularly interviewed by Swedish media on fiscal policy issues.

### Conclusions on the FPC’s effectiveness
- In its short life the FPC has influenced fiscal policy and contributed to promoting a more cyclically adjusted budgetary policy.
- The council’s recommendations have often been taken into account by the government, sometimes reluctantly and sometimes with a time lag.
- The FPC’s strategy—establishing independence through normative analysis and focusing on communication via reports, parliamentary hearings, and media relations—has proved relatively successful.
- Success factors in Sweden include widespread political and public consensus on fiscal sustainability and embedding the FPC in an institutional framework with other independent agencies performing complementary tasks.
- The main challenge going forward is to continue fulfilling its remit with limited resources.

### CBO overview and comparison (selected points)
- The Congressional Budget Office (CBO) was created in 1974; the agency began operations in February 1975.
- The CBO is the largest fiscal council with a staff of around 240 in 2012.
- Key CBO functions:
  - produces alternative forecasts and reviews government forecasts,
  - conducts independent analysis, review, and monitoring of government fiscal policies,
  - prepares baseline budget projections and economic forecasts for a 10-year period,
  - prepares fiscal sustainability reports with projections spanning from 25 up to 75 years,
  - provides costings of legislative proposals and scorekeeping against the budget baseline.
- Forecasting and bias findings:
  - Administration’s tax revenue forecasts prior to CBO were unbiased on average despite year-to-year errors averaging 0.8 percent of GDP.
  - Following CBO establishment, the administration’s average forecast error increased from 0 to positive 0.1 percent of GDP; standard deviation of revenues was 1.3 percent of GDP.
  - CBO’s two-year ahead real GDP forecasts show a slightly pessimistic bias; the administration shows a slightly optimistic bias; CBO forecasts are marginally more accurate and in line with private sector forecasts.
- CBO impact:
  - CBO scoring has increased attention to legislative costs and led members to adjust proposals to reduce costs.
  - CBO has produced influential costings of politically controversial legislation while maintaining non-partisan reputation.
- Media and communications:
  - CBO has a large and increased media presence, especially since 2009; press briefings in February and August are focal points.
  - The Director and staff engage with media through interviews and background briefings to ensure journalists understand CBO work.
- CBO conclusions:
  - CBO is a well-funded, broad-remit fiscal council with a professional staff and a proven track record of credible, non-partisan fiscal analysis.
  - It has been highly effective in costing and providing inputs into the legislative budget process, while having less success in persuading politicians and the public to constrain deficit and debt increases in a partisan environment.

*Source: CASE STUDIES ON FISCAL COUNCILS — INTERNATIONAL MONETARY FUND (content unit: 1.7 percent of GDP.)*

### References

### References

### Forecasting accuracy and government revenue forecasts
- Auerbach, Alan, 1999, “On the Performance and Use of Government Revenue Forecasts.” National Tax Journal, Dec. 1999, 52(4) pp 767–782.  
- CBO, 1981, “A Review of the Accuracy of Treasury Revenue Forecasts, 1963 – 1978”, Staff Working Paper, Feb 1981  
- CBO, 2013, CBO’s Economic Forecasting Record: 2013 Update, Jan 2013.  
- Ernst & Young, 1994, “Review of the Forecasting Accuracy and Methods of the Department of Finance”, (Ottawa: Department of Finance).  
- McNab, Robert Martin, Mark Riderand, Kent D. Wall., 2005, “Are Errors in Official U.S. Budget Receipts Forecasts Just Noise?” Andrew Young School of Policy Studies Research Paper No. 07-22  
- Muhleisen, Martin, Stephan Danninger, David Hauner, Kornélia Krajnyák, and Bennett Sutton, 2005 “How Do Canadian Budget Forecasts Compare with Those of Other Industrial Countries?” (Washington, DC: International Monetary Fund).  
- O’Neill, Tim, 2005), “Review of Canadian Federal Fiscal Forecasting: Processes and Systems”, O’Neill Strategic Economics.  
- Brooke, Jeffrey, 2010. “The Parliamentary Budget Officer Two Years Later: A Progress Report.” Canadian Parliamentary Review Winter 2010: 37‐45.  

### Fiscal councils, independent fiscal institutions, and promoting fiscal discipline
- Bogaert, Henri, Ludovic Dobbelaere, Bart Hertveldt and Igor Lebrun, 2006, “Fiscal councils, independent forecasts and the budgetary process: lessons from the Belgian case”, Working Paper 4-06 (Federal Planning Bureau Economic Analyses and Forecasts: Brussels).  
- Bos, Frits and Coen Teulings, 2011), “Evaluating Election Platforms: A Task for Fiscal Councils? Scope and Rules in Light of 25 Years of Dutch Practice“, MPRA Paper No 31536 (University Library of Munich).  
- Calmfors, Lars, 2011, “The Swedish Fiscal Policy Council”, in Wirtschaftspolitische Blätter 2011/1 (Journal of the Austrian Chamber of Commerce: Vienna).  
- Calmfors, Lars, 2012, “The Swedish Fiscal Policy Council – Watchdog with a Broad Remit“, CESIFO Working Paper 3725.  
- Hagemann, Robert 2010, “Improving Fiscal Performance through Fiscal Councils”, Working Paper No. 829, (OECD Publishing: Paris).  
- Hemming, Richard and Philip Joyce, 2013, “The Role of Fiscal councils in Promoting Fiscal Responsibility”, in Marco Cangiano, Teresa Curristine and Michel Lazare (eds.), Public Financial Management and Its Emerging Architecture, 2013 (Washington, DC: International Monetary Fund).  
- Jonung, L. and Martin Larch, 2006, "Improving fiscal policy in the EU: the case for independent forecasts" Economic Policy, CEPR & CES & MSH, vol. 21 (47), pp. 491-534.  
- Joyce, Philip, 2011. The Congressional Budget Office: Honest Numbers, Power and Policymaking (Washington: Georgetown University Press).  
- Kopits, George, 2011, “Independent Fiscal Institutions: Developing Good Practices”, in OECD Journal of Budgeting, Vol. 2011/3,  

### Country-specific lessons and case studies on fiscal councils
- Coene, L. (2010). ‘Lessons from Belgium,’ paper presented at the conference “Independent Fiscal Institutions”, organized by the Fiscal Council of Hungary, Budapest, 18–19 March 2010.  
- Coene, Luc and Geert Langenus, 2011, “Promoting Fiscal Discipline in a Federal Country: the Mixed Track Record of Belgium’s High Council of Finance,” paper presented at the Workshop “Fiscal Policy Councils—Why do we need them and what makes them effective?” organized by the Austrian Government Debt Committee, Vienna, January 31, 2011.  
- Debrun, Xavier, Marc Gérard and Jason Harris, 2012, “Fiscal Policies in Crisis Mode: Has the Time for Fiscal Councils Come at Last?” paper presented at 4th Annual Meeting of the OECD Network of Parliamentary Budget Officials, Paris, 23–24 February 2012.  
- Halffman, Willem, 2009, “Measuring the Stakes: The Dutch Planning Bureaus“, in Peter Weingart and Justus Lentsch (eds.), Scientific Advice to Policy Making: International Comparison. (Opladen: Barbara Budrich).  
- Kirchgässner, Gerhard, 2011, “Fiscal Policy Councils: A Comment on Sweden, Belgium and Austria”, paper presented at the Workshop “Fiscal Policy Councils—Why do we need them and what makes them effective?” organized by the Austrian Government Debt Committee, Vienna, January 31, 2011.  
- Kopits, George and Balázs Romhányi, 2010, “Lessons from Hungary”, presented at the conference “Independent Fiscal Institutions”, organized by the Fiscal Council of Hungary, Budapest, 18–19 March 2010.  
- Kraan, Dirk-Jan, 2005, “Typically Dutch“, in OECD Journal on Budgeting, Vol. 4, No. 4 (OECD: Paris)  

### OECD and international guidance on fiscal institutions
- OECD, 2012, “Draft Principles for Fiscal Institutions, Annex: Draft Country Notes”, presented at the 33rd OECD Senior Budget Officials Meeting, Reykjavik, 7–8 June 2012.  

*International Monetary Fund — References section*

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_Source: https://www.imf.org/-/media/websites/imf/imported-full-text-pdf/external/np/pp/eng/2013/_071613a.pdf_