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Ireland Launches Budget Watchdog

by Jason Gorringe,, London

11 July 2011

Ireland has established a new independent fiscal watchdog, designed to hold the government to its own targets and objectives, as part of a commitment to a shakeup of the country's budgetary framework.

The Fiscal Advisory Council was launched on July 7 by Finance Minister Michael Noonan. The body is to be independent, with five members, the standard tenure of each being limited to three years.

The Council is intended to assess whether the government is meeting the budgetary targets and objectives it sets itself. It will also judge the appropriateness and soundness of the government's stance and macroeconomic projections. The Council will report formally to the Finance Minister at least three times a year.

The government is also introducing multi-annual budget planning, performance budgeting and a new set of fiscal rules. The Council will be charged with judging the government's compliance with these new fiscal rules. These changes will be put forward in a Fiscal Responsibility Bill by the end of the year.

The establishment of a Fiscal Advisory Council was a commitment made in the coalition's Programme for Government - the document the government published when it first came to power, outlining its aims and making a series of pledges. The Council's formation was also stipulated under the European Union/International Monetary Fund Programme of Financial Support.

Commenting on the initiative, Noonan said: “The establishment of the Irish Fiscal Advisory Council is another important step in the process of reforming Ireland’s budgetary framework. The Council will provide an independent assessment of the government’s budgetary plans and projections and, in doing so, will help to inform the public discussion surrounding economic and fiscal matters. A number of other countries have taken the step of establishing such a council and have found it to be beneficial not only in helping to ensure that an appropriate budgetary policy is pursued, but also in sending a positive signal to markets regarding the conduct of future fiscal discipline.”

Professor John McHale, Head of Economics, National University of Ireland, Galway, will act as chair, and will be joined by four other members. They will be: Sebastian Barnes, OECD; Professor Alan Barrett, Trinity College Dublin; Dr. Donal Donovan, University of Limerick (formerly IMF staff) and Dr. Róisín O’Sullivan, Associate Professor, Smith College, Massachusetts.

TAGS: tax | economics | Ireland | fiscal policy | budget | International Monetary Fund (IMF) | European Union (EU) | Europe

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