EN ECB-PUBLIC  
 
 
OPINION OF THE EUROPEAN CENTRAL BANK 
of 5 December 2011 
on fiscal responsibility  
(CON/2011/96) 
 
Introduction and legal basis  
On 11 November 2011, the European Central Bank (ECB) received a request from the Committee of the 
National Council of the Slovak Republic on Fina nce and the Budget for an opinion on a draft 
constitutional law on fiscal responsibility (hereinafter the ‘draft law’). 
The ECB’s competence to deliver an  opinion is based on Articles 127(4) and 282(5) of the Treaty on the 
Functioning of the European Union and the third indent  of Article 2(1) of Council Decision 98/415/EC of 
29 June 1998 on the consultation of the European Ce ntral Bank by national authorities regarding draft 
legislative provisions1, as the draft law relates to Národná banka  Slovenska (NBS). In accordance with the 
first sentence of Article 17.5 of the Rules of Pro cedure of the European Central Bank, the Governing 
Council has adopted this opinion. 
 1.  Purpose of the draft law 
The draft law establishes rules of fiscal respons ibility and fiscal transp arency and the Fiscal 
Responsibility Board
2. 
The Fiscal Responsibility Board (hereinafter ‘the Boar d’) will be an independent body monitoring and 
evaluating the development of the Slovak economy and evaluating compliance with fiscal responsibility 
rules3. It will comprise a chair and two other members el ected by the Slovak Parliament. NBS’ Governor 
will propose a candidate for one of the members4. Membership of the Board will be incompatible with 
membership of NBS’ Bank Board5. NBS will finance and set a limit on expenditure for the Office of the 
Board (hereinafter ‘the Office’)6. To the extent of its competence, the Board will cooperate with NBS and 
provide data to NBS7. 
                                                 
1  OJ L 189, 3.7.1998, p. 42.  
2  Article 1 of the draft law. 
3  Article 3(1) of the draft law. 
4 Article 3(2) of the draft law. Pursuant to Article 10(3), at the first election, the candidate will be proposed by at least on e 
fifth of all deputies. 
5  Article 3(4) of the draft law. 
6  Article 3(8) of the draft law. 
7 Article 4(2) of the draft law. 
ECB-PUBLIC 
2 The draft law initially sets the government debt (herei nafter the ‘debt’) threshold at 60% of GDP and 
establishes procedures for reducing the debt that will  apply to debt of at least 50% of GDP; starting 
in 2018 the thresholds will be reduced by 1 percenta ge point annually, until reaching final levels of 50% 
and 40% of GDP respectively in 2028. 
 2. Funding the Board and the Office The Office will have legal capacity and will perform professional, organisational, administrative, human 
resources and technical tasks for the Board. It will be  managed by an Executive Director and have its own 
staff acting as budget analysts
8. The Board will decide on the structure of the budget of both the Board 
and the Office. Whereas NBS will finance and set a limit on the Office’s expenditure, the explanatory 
memorandum to Article 3 of the draft law also  states that NBS will finance the Board.  
The ECB notes that it is important to safeguard co mpliance with the monetary financing prohibition 
pursuant to Article 123 of the Treaty. The prohibiti on is essentially designed to prevent central banks 
from providing overdraft facilities or any other type of credit facility to the public sector9. National 
legislation may not therefore require that a national central bank finance the performance of functions of 
other public sector bodies10. The Board and Office are independent of the NBS and the task assigned to 
them is neither a central banking task, nor does it facilita te the performance of such  task. In this context, 
the Office’s tasks are to be fulfilled and financed from the Gove rnment’s budget. On this point, the 
financing of the Office’s and the Board’s expenditure by NBS breaches the prohibition on monetary financing. 
 
3. Fiscal rules  
The proposed fiscal rule provides for a debt threshold and escalating measures to tighten fiscal policy as it 
is approached or exceeded. No limits are imposed on fiscal policy when debt remains at least 10% of 
GDP below the threshold. If debt exceeds various le vels, increasingly strong measures are required, such 
as justifications, expenditure limits and a vote of confidence when the threshold is breached. Escape 
clauses cover severe recessions, financial crises, natu ral catastrophes and war. Interim provisions clarify 
that the initial debt threshold is set at 60% of GDP, and will be reduced by 1 percentage point per year 
starting in 2018 and reaching a final limit of 50% of GDP in 2028. 
The ECB considers that the proposed fiscal rule set out in the draft law does not fulfil all the fiscal 
requirements, as it does not include a deficit limit, provisions to allow for the economic cycle and 
references to Union legislation. The rule should limit general government deficits in addition to debt in 
order to bind fiscal policies even when debt is rela tively low. A deficit limit is also required under the 
Council Directive 2011/85/EU of 8 November 2011 on requirements for budgetary frameworks of the 
                                                 
8  Explanatory memorandum to Article 3. 
9  The precise scope of application of the monetary financing prohibition is further clarified by Council Regulation 
(EC) No 3603/93. 
10  Convergence report, May 2010, p. 25. 
ECB-PUBLIC 
3 Member States11, as well as in the Euro summit statement of 26 October 201112. The fiscal rule should, 
moreover, make provisions for the economic cycle that go beyond the current escape clause applicable 
only in the severest circumstances. The fiscal rule should also refer to Union legislation to take into 
account possible changes of Union limits on deficit or debt in the future. 
The abovementioned rules in Directive 2011/85/EU should preferably be reflected in the draft law, as the 
Euro summit statement of 26 October 2011 recommends  their adoption at constitutional level. The ECB 
notes that the Slovak legislator addresses only the ma tters of highest importance in such constitutional 
laws and that, in any event, the rules should  be duly reflected in Slovak legislation. 
 
4. Fiscal transparency 
The provisions on transparency do not cover all the requirements under Directive 2011/85/EU, such as 
the obligation to publish monthly cash-based data, the obligation to compare the own macro-fiscal 
scenario with the European Commission fo recast and the need for regular published ex post  evaluations of 
projections. Moreover, fiscal transparency would be e nhanced by giving the task of fiscal projections to 
the Fiscal Responsibility Board, rather than to  a committee under the Ministry of Finance. 
 
5. Definition of government debt  
The ECB understands that the term ‘government debt’ (‘ dlh verejnej správy ’) in the draft law has the 
same meaning as in Article 1(5) of Council Regula tion (EC) No 479/2009 of 25 May 2009 on the 
application of the Protocol on the excessive defici t procedure annexed to the Treaty establishing the 
European Community13. For the purpose of clarity, however, th e ECB suggests inserting the definition of 
government debt in the list of definitions and clar ifying the valuation and c onsolidation of government 
debt and financial instruments covered. Further, th e level of debt mentioned in Article 5(2) should 
additionally refer to the abovementioned Prot ocol and to Regulation (EC) No 479/2009. 
 This opinion will be published on the ECB’s website.    Done at Frankfurt am Main, 5 December 2011. 
[signed] 
 
The President of the ECB 
Mario DRAGHI 
                                                 
11  OJ L 306, 23.11.2011, p. 41. 
12  Available on the Council of the European  Union’s website at www.consilium.europa.eu. 
13  OJ L 145, 10.6.2009, p. 1.