The CFP’s establishment precedes Council Directive 2011/85/EU, which lays down requirements for Member States' budgetary frameworks, and Regulation (EU) No 473/2013 of the European Parliament and of the Council of 21 May 2013, which lays out common provisions for monitoring and evaluating draft budget plans and for the correction of the excessive deficit of euro area Member States.
As a response to the financial crisis, the European economic governance stressed the importance of specific numerical fiscal rules for each country, in order to ensure that Member States’ fiscal policies are consistent with their obligations under the Treaty on the Functioning of the European Union (TFEU).
In 2011, Council Directive 2011/85/EU of 8 November 2011 stated that one of the specifications that national numerical fiscal rules must include is an “effective and timely monitoring of compliance with the rules, based on reliable and independent analysis carried out by independent bodies or bodies endowed with functional autonomy vis-à-vis the fiscal authorities of the Member States”.
In 2013, the publication of the so-called “Two-Pack” made it compulsory for euro area Member States to have in place independent bodies monitoring compliance with fiscal rules. Article 5 of Regulation (EU) No 473/2013 of the European Parliament and of the Council of 21 May 2013, which applies directly to euro area Member States, states that:
“1. Member States shall have in place independent bodies for monitoring compliance with:
- numerical fiscal rules incorporating in the national budgetary processes their medium-term budgetary objective as established in Article 2a of Regulation (EC) No 1466/97;
- numerical fiscal rules as referred to in Article 5 of Directive 2011/85/EU.
2. Those bodies shall, where appropriate, provide public assessments with respect to national fiscal rules, inter alia relating to:
- the occurrence of circumstances leading to the activation of the correction mechanism for cases of significant observed deviation from the medium-term objective or the adjustment path towards it in accordance with Article 6(2) of Regulation (EC) No 1466/97;
- whether the budgetary correction is proceeding in accordance with national rules and plans;
- any occurrence or cessation of circumstances referred to in the tenth subparagraph of Article 5(1) of Regulation (EC) No 1466/97 which may allow a temporary deviation from the medium-term budgetary objective or the adjustment path towards it, provided that such a deviation does not endanger fiscal sustainability in the medium-term.”
The same Regulation also states that “national medium-term fiscal plans and draft budgets (…) shall be based on independent macroeconomic forecasts”, that is, budgetary forecasts that have been produced or endorsed by an independent body [see Articles 4 (4) and 2(1b)].
The EU legislation also sets out the minimum conditions that these bodies should comply with in order to be considered “independent bodies”. Pursuant to article no. 2 of Regulation (EU) No. 473/2013, “independent bodies’ means bodies that are structurally independent or bodies endowed with functional autonomy vis-à-vis the budgetary authorities of the Member State, and which are underpinned by national legal provisions ensuring a high degree of functional autonomy and accountability, including:
- a statutory regime grounded in national laws, regulations or binding administrative provisions;
- not taking instructions from the budgetary authorities of the Member State concerned or from any other public or private body;
- the capacity to communicate publicly in a timely manner;
- procedures for nominating members on the basis of their experience and competence;
- adequate resources and appropriate access to information to carry out their mandate.”
The CFP’s legal framework complies with all the conditions laid down in the European legislation in order to be considered an independent body pursuant to Regulation (EU) No 473/2013 and Directive 2011/85/EU.