The president of the Independent Authority for Fiscal Responsibility (AIReF), Cristina Herrero, has written an editorial in the newspaper El País in which she discusses the future reform of the European fiscal framework and the role of Independent Fiscal Institutions (IFIs), key pieces of European fiscal coordination.
After reviewing the creation of the Stability and Growth Pact (SGP), the changes that have taken place over the years and the reasons for the new reform, Cristina Herrero details the creation of the AIReF and the principles and functions of Independent Fiscal Institutions.
According to Cristina Herrero, the IFIs promote a medium-term orientation for financial stability, counteracting the deficit bias associated with electoral cycles; reduce information problems, making government fiscal and macroeconomic data and projections more transparent and credible; provide an independent source of discipline, not exposed to lobbying; increase reputational costs of non-compliance with fiscal targets and make the implications of current decisions for future generations more transparent.
Therefore, the reform of the SGP, and the necessary evolution from a model based on numerical fiscal rules and supranational governance towards a model that prioritises national commitment to the sustainability of public finances and growth, requires European support to ensure the independence and management autonomy of IFIs, whose specialised knowledge of each country gives them a major role in this qualitative framework of fiscal rules, and in the coordination that gave rise to the SGP.