The creation of Independent Fiscal Institutions (IFIs) to oversee the sustainability of public finances is a practise that is becoming more and more common around the world as they are generating beneficial effects for public finance sustainability, growth and wellbeing.
These organisations were first established in the middle of the 20th century. The Netherlands created the first IFI in 1947, which led to other experiences just a few years later: Denmark and Germany and, sometime later, others followed suit: the United States, Belgium, Austria, Korea, Sweden and Canada.
As of 2009, and following the economic and financial crisis, the need to guarantee public budget stability became widespread and the creation of independent institutions contributed to this aim. Thus, there are currently more than 80 countries, including Spain, that have set up these authorities for the primary purpose of ensuring public finance sustainability. In order to reach this objective, their operation (which is reinforced if pursuant to fiscal regulations) provides:
- Transparency. They facilitate the publication and transmission of data as well as the identification of possible biases in fiscal and macroeconomic projections.
- Discipline. They provide an independent source of discipline, which is not exposed to the pressure of interest groups, and are committed to medium-term financial targets which are free of any compulsion politicians may feel in view of upcoming elections.
- Coordination. To internalize costs of lack of fiscal discipline.
For more information on existing IFIs worldwide, please consult the websites of the International Monetary Fund (IMF) and the Organization for Economic Cooperation and Development (OECD)