The Role of Independent Fiscal Agencies

This chapter describes and discusses the justification for and experience with independent fiscal agencies.1 It focuses mainly on fiscal councils, which are typically permanent executive or legislative agencies with responsibilities that mainly involve the impartial scrutiny of fiscal policies, plans and performance. While the precise mandate of fiscal councils — that is, which of these responsibilities or others they have or do not have — differs from country to country, no council has the power to set fiscal targets or adjust taxes. However, this is a role envisaged by those who have advocated setting up fiscal authorities as the fiscal counterparts to independent central banks. Nor are fiscal councils to be confused with national audit offices, parliamentary budget and accounts committees and various other public review committees that meet periodically on fiscal matters. These and similar entities play well-established and quite specific roles related to budget and broader fiscal policy matters and would be expected to coexist alongside fiscal councils. While this chapter contains a brief discussion of fiscal authorities, it mentions these other entities only in passing. Most of the discussion concerns fiscal councils and the nature of the independent scrutiny they provide.