IMF on Fiscal Councils Post author By Philip Lane Post date August 6, 2013 The IMF has released a couple of studies on fiscal councils: Case Studies of Fiscal Councils – Functions and Impact August, 2 2013 The Functions and Impact of Fiscal Councils August, 2 2013 Categories In Uncategorized 5 Comments on IMF on Fiscal Councils ← Restoring Confidence in the Financial System → John Moran: “Alternatives to Austerity” 5 replies on “IMF on Fiscal Councils” A Preliminary Report on the Source of Ireland’s Banking Crisis ” by Klaus Regling and Max Watson-page 6: “This was a plain vanilla property bubble,compounded by exceptional concentrations of lending to property-and notably commercial property” When the commercial property bubble burst it bankrupted the entire Irish banking sector,which in turn bankrupted the sovereign. Reckless Irish banks lent billions against the feudal leases i.e. upward-only rent reviews tied to long leases,not aganist the properties themselves ,and created the greatest commercial property bubble in the history of mankind. The reason Ireland had these ruinous leases was because the sovereign signed them. All Haughey’s bagmen are sovereign landlords. The Irish Fiscal Advisory Council is a creature of the Troika and it has a restricted mandate from the folk at the Department of Finance who went with the flow during the bubble. It would of course have been a shock for example if it had been given a role in assessment of party economic proposals at general election time or if it was to report to the Dáil rather than the finance minister. Australia’s new fiscal council, the Parliamentary Budget Office, reports to parliament, and ‘The Australian’ says on its role in costing economic proposals in the current general election campaign: “The PBO is transforming the politics of election costing but it is taking time for both sides to get used to the new rules of the game.” In Canada, Kevin Page, the first Parliamentary Budget Officer, who completed his 5-year term last March, had been in a running battle with Jim Flaherty, finance minister, but Page stood his ground. The Globe and Mail reports that Page went to court late last year after most federal departments balked at handing over details about the spending and staffing cuts announced in the budget. In a report last January, the PBO said spending restraint so far was hitting front-line services while back-office spending continued to rise – exactly the opposite of what Flaherty promised. If the IFAC interprets its mandate as being restricted to just providing views on macroeconomic forecasts, it is hard to envisage it being taken seriously overtime by the DoF and the public via the media. That would be the result of a conservative interpretation of the mandate. However, it is mandated: “To assess whether the fiscal stance of the Government is conducive to prudent economic and budgetary management…” This is the opening for iconoclasts, if any, to drill down into the detail. Enterprise/ science spending is likely not the only no-go area in the budget. Shame on Michael Noonan for taking the default conservative route and it will be shame of the first IFAC if it will continue to play the quiescent role, that is expected of it. @Michael Hennigan ‘This is the opening for iconoclasts, if any, to drill down into the detail. There is NO DETAIL. The mandate says nothing_zilch about the HOW and Distribution of Fiscal Adjustment – the HOW remains with the politicos and the civil servants and the submissions from those who must be appeased …. a large black box …. The Department of Finance this week published a so-called “Memorandum of Understanding with the Fiscal Advisory Council” which at its heart deals with an important function of the Council, namely “endorsement”. http://finance.gov.ie/documents/publications/mou/mouaug2013fiscalcouncil.pdf For this year’s budget, the Council will be required to “endorse” the Government’s forecasts and plans. This is a highly politically-inconvenient development because if the Council withholds its endorsement, then the Government loses face domestically and internationally. Given the concern expressed by the Council in the ability of the DoF to forecast accurately or to have its forecasts resemble eventual reality, there is now the potential for the Council to achieve leverage with the DoF, so that its recommendations aren’t merely acknowledged, noted and then ignored. One concern from the document though, is that it allows the DoF to assert confidentiality for some information. Presumably, no self-respecting Council would agree to such a term if it were to mean it were to be gagged from revealing vitally important forecast information. Surely, it wouldn’t agree to that. Though it does seem that Prof McHale did lend his signature to the document on 2nd August 2013. @Jagdip Ta for that update. Comments are closed.