The principles of budgetary completeness and transparency are indispensable elements of fiscal surveillance in the European Union. Within this context, this study deals with the leading question to which extent budgetary policy in the ten new EU member states (NMS) can be regarded as transparent and sustainable. A variety of institutional and quantitative methods (among others analyses of fiscal forecast quality, stock flow adjustments, consolidation structure and a simulation of the EU budgetary system) is applied.In the assessment of current budgetary trends, the employed criteria consistently underline the fact that the Baltic countries and Slovenia find themselves in a relatively stable fiscal situation. In contrast to that, Hungary ranks low on the scale with its chronic deficits, its poor record for sticking to consolidation announcements and an unfavourable consolidation structure.In the next decades the demographic development will change significantly the age structure of the population in the European Community. Detailed cross-section analyses and case studies of pension and health systems in selected countries (Poland, Slovakia, Czech Republic, Cyprus and Hungary) indicate that further structural reforms are required in order to limit sustainability risks.The study of possible fields of budgetary intransparencies hints towards Hungary as the country which most likely is the most acute problem case in this respect. For several countries, particularly sensitive fields with a potential for blurring official fiscal data are government guarantees, capital injections as hidden subsidies and, in future increasingly, instruments to mobilize private sector resources for infrastructure projects in the context of PPP.The simulation of the EU financial framework in the period 2007-2013 clarifies that the NMS with the exception of Cyprus and Malta can count on net-inflows via the EU budget which could reach a significant macroeconomic magnitude of three or, in some cases, even above four percent of GNI.The study concludes with recommendations for improving fiscal transparency. Among others an ex ante approach for an early settlement of statistically contentious issues is suggested. This approach should assist member states already in the process of drafting a budget.

Selected Publications

Expertises

Heinemann, Friedrich, Volkhart Vincentz, Michael Knogler, Dan Stegarescu and Sebastian Hauptmeier (2006), Transparency and sustainability of budgetary policy in the new EU member countries, Bundesministerium der Finanzen, Mannheim.

Selected Events