Republic of Poland: Technical Assistance Report-Aligning the Stabilizing Expenditure Rule to the European Union Fiscal Framework
Technical Assistance Reports, June 12, 2024
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Bibliographic details
- Published: June 12, 2024
- Series: Technical Assistance Reports
- DOI: https://doi.org/10.5089/9798400278327.019
Overview
- The stabilizing expenditure rule (SER) in Poland has been instrumental in fostering fiscal discipline in the years leading up to the pandemic.
- The pandemic and subsequent shocks severely tested the expenditure rule.
- Returning to the SER limit after severe shocks proved challenging, indicating the need to revise the SER to preserve its credibility.
- Aligning the SER to the EU fiscal framework requires ensuring consistency with the EU net expenditure path and explaining differences in expenditure coverage and classification between the SER and the EU fiscal framework.
- Over time, transition to binding multi-year limits in the SER would improve linkages between annual budgets and medium-term fiscal planning.
Key findings
- The SER contributed to fiscal discipline pre-pandemic but proved difficult to restore after large shocks.
- Main alignment needs with the EU fiscal framework:
- Ensuring expenditure limits implied in the SER are consistent with the EU net expenditure path.
- Providing explanation on the differences in expenditure coverage and classification between the SER and the EU fiscal framework to ensure compliance.
- Strengthening credibility is necessary through broader coverage and improved compliance mechanisms.
Policy recommendations and measures to enhance credibility
- Broaden the coverage of the SER to capture a wider set of expenditures.
- Strengthen compliance mechanisms, including:
- Establishing an independent fiscal council.
- Ensure transparency and reconciliation between SER definitions and EU fiscal framework definitions by:
- Explaining differences in expenditure coverage and classification between the SER and the EU fiscal framework.
- Transition the SER toward binding multi-year limits to:
- Improve linkages between annual budgets and medium-term fiscal planning.
- Enhance predictability and enforceability of the rule.
Implementation considerations
- Immediate steps:
- Revisit SER coverage and classification to align with EU requirements.
- Develop explanations and reconciliations between SER and EU net expenditure indicators.
- Medium-term steps:
- Establish institutional arrangements to strengthen compliance (for example, an independent fiscal council).
- Design and phase in binding multi-year expenditure limits to better connect the SER with budgeting and medium-term planning.
International Monetary Fund. Fiscal Affairs Dept. "Republic of Poland: Technical Assistance Report-Aligning the Stabilizing Expenditure Rule to the European Union Fiscal Framework", Technical Assistance Reports 2024, 049 (2024), Pages: 54, DOI: https://doi.org/10.5089/9798400278327.019, ISBN: 9798400278327, ISSN: 3005-4575.
Content in this bundle
- Tarea2024049