olli rehn : fiscal statistics and fiscal rules - some lessons from recent years keynote speech by mr olli rehn, governor of the bank of finland, at the high - level seminar “ building trust – the role of supreme audit institutions in ensuring the reliability of fiscal data ”, organised by the national audit office of finland helsinki, 28 november 2019. * * * accompanying slides of the speech. ladies and gentlemen, i wish to thank the organisers for the invitation to address to such a distinguished audience and to so many european friends. i also want to congratulate the organisers for the choice of the venue, as the finlandia hall was the venue of the signing the final act of the csce ( conference on security and co - operation in europe ) in 1975. as a kid i started to follow the europe pretty much thanks to the csce. even your choice of the dinner venue is in line of this, since kalastajatorppa hosted the famous csce reception with the participation ranging from urho kekkonen to olof palme, valery giscard d ’ estaing to helmut schmidt, as well as harold wilson to gerald ford, not to speak leonid breznev to erich honecker. it is a historical fact that the csce final act was a one critical factor of creating the europe whole and free. in recent years, fiscal statistics have played a role in my professional life in various ways, when i have worked as member of the european commission, as finland ’ s minister of economic affairs, and as a central banker. as commissioner i was also responsible for eurostat in 2010 – 11, until i was appointed vice - president with stronger competences in fiscal surveillance, when we created a firewall inside the commission and separated these two functions. as you can probably imagine, data generally are very much present in a central bank governor ’ s typical working day. it starts with a quick look at most recent financial market data and continues with work based, to a large extent, on statistics, regarding particularly inflation and other macroeconomic developments. banking statistics play a special role, as for finland they are compiled by the bank of finland. the importance of fiscal data for us follows from the objectives given to the european system of central banks. the primary objective is price stability, and it cannot be achieved in the long run without fiscal sustainability. therefore, while the responsibility for fiscal policy obviously rests with the governments, central banks cannot ignore issues

the eyes of the public would be enhanced. in exceptional situations, the rules need to allow flexibility, but this should be based on predetermined and consistent criteria. 3 / 5 bis central bankers'speeches an expenditure rule can be defined as a medium - term ceiling for the growth of government expenditure, set in relation to the estimated future economic growth and taking into account the stock of public debt. such a rule would probably serve more effectively as an operational fiscal policy guide than the current rule that is based on the structural fiscal balance. the so - called automatic stabilizers, such as increased expenditure through unemployment insurance in an economic recession, are important mechanisms of economic adjustment in the eurozone countries. the expenditure rule would not prevent the operation of automatic stabilizers. the expenditure rule supports responsible fiscal policy, as we have seen in countries like the netherlands, sweden and finland where it has been used over the past decades. recent research by the imf has come by and large to a similar conclusion : the compliance rate of expenditure rules is greater than that for budget balance rules, especially if it is directly under the control of the government and the rule is enshrined in law or in a coalition agreement. empirical research also indicates that the presence of expenditure rules is associated with stronger fiscal performance, i. e. a higher primary balance and countercyclical fiscal policies. finally, it is essential to repeat the paramount importance of national ownership of responsible fiscal policies. both an expenditure rule and an independent fiscal council can be valuable tools for that goal – but they are only tools, which should be used well. it is worth quoting the director of the imf ’ s fiscal department, vitor gaspar, and his co - authors : “ one extreme and dangerous manifestation … is the expressed perception by many analysts that european fiscal governance releases countries from their national responsibilities. nothing could be further from the truth : fiscal policy is, first and foremost, a national responsibility. ” several eu member states have in fact lived in line with gaspar ’ s recommendation and used the eu rulebook as an instrument to reinforce national ownership of fiscal policy. belgium, denmark, luxembourg and the netherlands introduced national expenditure rules in 1992 in response to the maastricht treaty and its debt and deficit rules. sweden and finland followed suit after becoming members of the eu in 1995. germany went so far as to introduce a constitutional debt brake, which has recently been discussed in germany and criticised for its excessive rigour that may prevent the