Access to public and non-public
information for IFIs: goodwill versus
procedures?
20 November, 2014
John McHale
Irish Fiscal Advisory Council
National University of Ireland, Galway
Presentation to the Second Meeting of the EU Network of Independent Fiscal Institutions
Some background on IFAC
• Established on an interim basis, July 2011
– Physically based at the Economic and Social Research
Institute (ESRI), an independent research organisation
• Put on a statutory basis under the Fiscal
Responsibility Act, December 31, 2012
Mandate
• Endorsement of macroeconomic forecasts underlying
budget and SPU
• Assess macroeconomic forecasts and budgetary
projections
• Assess compliance with national Budgetary Rule and
Correction Mechanism
• Assessment of fiscal stance (with reference to
requirements of SGP)
Fiscal Responsibility Act
• Statutory independence
• Budget from Central Fund not subject to annual
appropriation(ceiling of €800,000, indexed for inflation)
• Appointments made by Minister for Finance, with requirement of
appropriate macroeconomic/budgetary expertise
• Dismissals: Requires resolution of parliament
• Requirement to publicly report at least twice per year
• Requirement to appear before parliamentary committee
Structure and personnel
• Council membership (Part-time)
– Sebastian Barnes (Senior advisor to Chief Economist and former head
of Ireland desk, OECD)
– Alan Barrett (Professor, ESRI)
– Donal Donovan (Former Deputy Director, IMF)
– John McHale, Chair (Professor, NUIG)
– Roisin O’Sullivan (Professor, Smith College)
• Secretariat (Full-time)
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Thomas Conefrey (Head of Secretariat and Chief Economist)
John Howlin (Economist)
Eddie Casey (Economist)
Sarah Doyle (Administrator)
Andrew Hannon (Research Assistant)
Key published outputs
• Six Fiscal Assessment Reports
– Seventh report to be published on November 25th
• Other reports:
– Report on Reforming Fiscal Institutions, February 2012
– Report on The Government’s Balance Sheet After the
Crisis: A Comprehensive Perspective, October 2013
– Pre-Budget Statement, September, 2014
Production function for a fiscal council
Inputs
Expertise:
-- Council
-- Secretariat
Information
flow
Outputs
• Analytical capacity
• Independence
• Accountability
• Visibility
Analysis:
-- Forecast endorsement
& assessment
-- Rule compliance
-- Fiscal stance
Capacity to raise
reputational costs of
inappropriate fiscal
policies
Key information flows
Department of
Finance
Department of Public
Expenditure and Reform
European Commission /
IMF / Networks of IFIs
Central Statistics
Office
IFAC
NTMA
Central Bank of
Ireland
Other Government
departments/agencies
Private-sector
forecasters
Economic and Social
Research Institute
Critical cooperation on staff secondments
• Both chief economists on secondment from
Central Bank
• Other secondments
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NTMA (now permanent staff member)
Department of Public Expenditure and Reform
Department of Arts, Heritage and Gaeltacht Affairs
ESRI
Mixture of goodwill and procedures
• Procedures
– Some teething problems in accessing information from DoF
• Now much improved with a central point of contact
– Formal MoU with DoF on endorsement function
• Important safeguard
• Goodwill
– Have avoided an overly procedural approach with DoF
• MoU in background
• Flexible ongoing cooperation
– Goodwill relationships with other departments/agencies
– Some challenges with access to budgetary information from other
departments
• Potential need for more formal relationships
MoU has structured interaction on endorsement
• Sets out:
– Variables on which information is to be provided
– Timing of formal interactions
• Presentation to secretariat
• Presentation to Council
• Timing of endorsement
– Ongoing MoU review procedures
Example: Tax Forecasting Errors
• IFAC wanted to examine the source of tax forecasting errors to
see if there was any indication of systematic bias in the
forecasts
• Department of Finance provided data for several tax heads
going back to 2001:
– Budget time forecasts and outturns
– Forecasts for macroeconomic drivers and the accompanying
elasticities
– Estimates of the effect of policy changes
– Information on one-offs
• Department made themselves available to answer any
questions IFAC had regarding the data
Examples of information access from other departments
• Health Expenditure
– IFAC wished to gather information on the nature and causes on the
persistent expenditure overruns in the Department of Health
– Department of Public Expenditure and Reform (DPER) met with IFAC
to discuss the management of costs in the Department of Health and
within hospitals
• Unemployment Benefits
– IFAC sought understanding of how expenditure on unemployment
benefits was forecast and how accurate they could be
– IFAC met with DPER and Department of Social Protection to discuss
the relationship between the unemployment rate, the live register and
the costs of Jobseekers Benefit and Jobseekers Allowance
Non-government Bodies
• IFAC secretariat regularly meets with other public bodies
– Central Bank and National Treasury Management Agency can each
offer unique perspectives and data
• Central Statistics Office (CSO)
– IFAC has met with the CSO a number of times to understand unusual
trends underlying headline data and the affects of ESA 2010 revisions
• New proposed consultation group of users: DoF, IFAC and ESRI
• Private sector forecasters
– Prior to endorsement exercise, IFAC meets with a number of private
sector economists from stockbrokers, banks etc.
External information access very important
• Regular meetings with “Troika” missions
• Networks of IFIs
– OECD
– Informal network of EU IFIs
– EUNIFI
• Good informal access to information from the Commission, but need for a
more structured role given the integration of European and national fiscal
rules following the Fiscal Treaty
– Much of the EU fiscal framework was established prior to IFIs
– IFIs cannot be expected to rely on Ministries for information on the
harmonised methodology or issues related to the rules
– Example: “Calendar of convergence” and the adjustment path for the
structural balance for high debt countries
– IFIs should be on the Output Gap Working Group circulation list for papers
with some representation at meetings
Summing up
• Reasonably positive experience with information access
• Goodwill and procedures play complementary roles in relationship
with Department of Finance
• Potential need for more formal arrangements with other
departments, especially in relation to assessing budgetary forecasts
• Good working relationships with other public and private bodies
• Good informal access to information from the Commission, but
need for a more structured role given the integration of European
and national fiscal rules following the Fiscal Treaty