Fiscal discipline benefit management

Dace Kalsone, Dr.oec., LL.M.Fiscal discipline council secretary

64th Meeting of Directors General of the European Public Administration Network

Riga, 11 June 2015

Agenda

• Benefit management: crash course• From the euro introduction project to

continuous fiscal discipline• Fiscal council benefits• Fiscal discipline benefits

Benefit management importance (1/3)

• Benefit can be both quantitative and qualitative

• Benefit management consists of 3 main activities:

1• Benefit identification

2• Benefit management procedure

development

3• Benefit transfer

Why is it important?

• motivates to be responsible for changes

• ensures the provability of changes

• ensures common target for all stakeholders

• focuses on specific results

• proves return of investment

Source: Dr.sc.ing. Renāte Strazdiņa, E&Y

Benefit management process (2/3)

Identify benefits and indicators

• Create potential benefits longlist

• Link recommendations with benefits

• Agree on necessary indicators (quantitative or qualitative) for each sort of benefit

• Create benefit register• Define base value to

keep the track of progress

Tracing procedure and management

• Identify benefit holders and agree on management procedures

• Finalise possible benefit qualification and file benefit register

• Establish monitoring procedure

Overtaking benefits

• Identify quick-wins (benefits with immediate identification and fulfilment)

• Monitor changes• Control benefit

implementation• Integrate benefits into

everyday procedures• Transfer benefit chain to

the next benefit holder

DiagnoseIdentify DeliverCreate Maintain

Source: Dr.sc.ing. Renāte Strazdiņa, E&Y

Benefit management principles (3/3)

Source: Dr.sc.ing. Renāte Strazdiņa, E&Y

Real and measurable

• Benefits are clearly classified and linked to the results

• Benefits are real and reachable

• Identified financial and non-financial benefits

• Benefits are measurable (if possible)

Appointed the responsible executive

• Duties and obligations are facilitated with continuous benefit progress monitoring

• Benefits are gradually transferred from «monitoring phase» to the everyday activities

Ensured regular monitoring and control

• Benefits associated with risks are identified and minimised

• Activities oriented towards benefit creation and safeguarding

• Sustainability of benefits based on the involvement of interested parties during the whole benefit management life-cycle

Agenda

• Benefit management: crash course• From the euro introduction project to

continuous fiscal discipline• Fiscal council benefits• Fiscal discipline benefits

Red lines of Maastricht criteria: o 60% public debt and o 3% budget deficit

Fiscal discipline goes further:o Sustainable debt level*o Balanced budget

Euro benefits include fiscal discipline

* Let's talk about...public debt. European Parliament. 1/06/2015 http://europarltv.europa.eu/en/player.aspx?pid=933714b0-baad-42f3-b036-a4aa008c7e0f

Balanced budgettheory

-3% budget deficit, Maastricht red line

0% budget deficit

-0,5%

-1,0% if low debt

Space for structural reforms deviation

Source: EU Law on MTBF

Balanced budgetpractice (2013 EU MS)

-3% budget deficit, Maastricht red line

0% budget deficit

-0,5%

-1,0%

Source: EU Commission, 2015http://ec.europa.eu/economy_finance/eu/forecasts/2015_spring_forecast_en.htm

LV

PT

-1,5%

-2,0%

-2,5%ES

IT

FRIE UK

NL

BE

DECZ

BG

RO

PL

LT

EE FI

SE

MT

CY

HUSK

SI

AT

DK

CR

LU

Fiscal council – independent institute

Institution acting under the Fiscal discipline law (Directive 2011/85)

Monitors decisions that significantly impact fiscal development

Provides an independent view on any issue concerning state finance

In Latvia – since 1/01/2014

Fiscal council – independent institute

COUNCIL

SECRETARIAT

CHAIR DEPUTY CHAIR MEMBER MEMBER MEMBER MEMBER

SECRETARY FISCAL EXPERT

MACRO EXPERT ECONOMIST

VISION

RESEARCH

Fiscal discipline possible benefits

Spending efficiency: zero-base budget every year!

Positive communication: paying taxes is good!

Sustainable budgeting principles: at home, at enterprise, at municipilaty, at state level

Thank You for Your attention!

Your questions?

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