Opinion of the European Central Bank of 5 December 2011 on fiscal responsibility (CON/2011/96)
Date: 2011-12-05
Institutions: European Central Bank
Subjects: Slovakia, financial stability, fiscal policy, institutional activity, national law, public debt, public institution

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  Finance  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  Central  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  Procedure  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  responsibility  and  fiscal  transparency  and  the  Fiscal 
Responsibility Board2. 

The  Fiscal  Responsibility  Board  (hereinafter  ‘the  Board’)  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 elected 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. 

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7 

OJ L 189, 3.7.1998, p. 42.  
Article 1 of the draft law. 
Article 3(1) of the draft law. 
Article 3(2) of the draft law. Pursuant to Article 10(3), at the first election, the candidate will be proposed by at least one 
fifth of all deputies. 
Article 3(4) of the draft law. 
Article 3(8) of the draft law. 
Article 4(2) of the draft law. 

 
 
 
 
                                                 
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The  draft  law  initially  sets  the  government  debt  (hereinafter  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 percentage 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 analysts8. 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  compliance  with  the  monetary  financing  prohibition 

pursuant  to  Article  123  of  the  Treaty.  The  prohibition  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 facilitate the performance of such task. In this context, 

the  Office’s  tasks  are  to  be  fulfilled  and  financed  from  the  Government’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 levels, 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, natural 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  relatively  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 

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Explanatory memorandum to Article 3. 
The  precise  scope  of  application  of  the  monetary  financing  prohibition  is  further  clarified  by  Council  Regulation 
(EC) No 3603/93. 
Convergence report, May 2010, p. 25. 

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ECB-PUBLIC 

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  matters  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 forecast and the need for regular published ex post evaluations of 

projections. Moreover, fiscal transparency would be enhanced 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  Regulation  (EC)  No  479/2009  of  25  May  2009  on  the 

application  of  the  Protocol  on  the  excessive  deficit  procedure  annexed  to  the  Treaty  establishing  the 
European Community13. For the purpose of clarity, however, the ECB suggests inserting the definition of 

government  debt  in  the  list  of  definitions  and  clarifying  the  valuation  and  consolidation  of  government 

debt  and  financial  instruments  covered.  Further,  the  level  of  debt  mentioned  in  Article  5(2)  should 

additionally refer to the abovementioned Protocol 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 

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OJ L 306, 23.11.2011, p. 41. 
Available on the Council of the European Union’s website at www.consilium.europa.eu. 
OJ L 145, 10.6.2009, p. 1. 

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