Experts in the forecasting of budgetary income and expenditures met on 19 September in Brussels at a conference organised by the European Commission. Representing the Czech Republic at this event, entitled DG ECFIN Country Desk Workshop on Fiscal Forecasting, were two analysts of the Czech Fiscal Council Office, Pavel Morda and Ondřej Šíma. They learned, for example, more about possible errors in European Commission prognoses, which was the topic of the opening contribution of the European Commission representative (DG ECFIN) Björn Döhring.

The contributions of representatives of fiscal councils and other organisations that follow were dedicated to, among other things, budgetary income forecasts (Maurits van Kempen, of the Dutch CPB) and a presentation of the Italian model of interest expenses of government institution sector debt (Cecilia Gabbriellini, of Italy’s PBO). Of particular relevance to the Czech Republic were the findings presented by the Italian colleague Gabbriellini. She pointed to the importance of transparency in national debt management, which is in turn reflected in lower interest-rate costs and increased interest in government bonds among domestic entities. This helps to reduce the share of the securities held by non-residents, and hence, reduces the risk of the portfolio. The Czech Republic has noted an increase in the volume of debt held by non-residents in recent years. Whereas, between 2004 and 2014, the share of Czech debt held by non-residents was below 30%, in 2017, it reached nearly one half.

The next presentation was delivered by Pavol Majher of the Slovak Council for Budget Responsibility (CBR), whose presentation concerned primarily a comparison between the European Commission’s old and new methodology for fiscal income modelling, contrasted to the CBR methodology. Johannes Holler of the Austrian fiscal council evaluated the outcomes of fiscal and macro-economic forecasts of the European Commission, the Austrian Ministry of Finance, and the Austrian fiscal council, pointing to their differences and weaknesses. Eddie Casey, of Ireland’s IFAC, presented a comparison of the OECD model to a similar model for the Irish economy. It provided a detailed model of the impact of interest rate fluctuations, primarily on public debt. These contributions point to the importance of not forgetting, not only in the Czech Republic, but generally, about the national specifics of the given economy, when forming models or drawing any conclusions concerning economic policy.

The presentation that followed, of Spain’s representative Carlos Cuerpa, focused on the importance of fiscal councils’ communication with the public. The last presentation, by Andrew Burns of the World Bank, acquainted the audience with MFMod, a macro-economic fiscal model used by the World Bank.

At the meeting, representatives of the Czech Fiscal Council office built on their cooperation with colleagues from similar institutions abroad. From the professional point of view, they saw the contribution of the World Bank as the most beneficial. “While maintaining a sufficient distance, Andrew Burns’ presentation clearly and precisely showed how to model the supply and demand sides of the economy, accenting fiscal policy,” said CFC analyst Ondřej Šíma. From the institutional point of view, a crucial message was delivered by Carlos Cuerpa of Spain, who drew attention to the importance of fiscal councils’ communication with the general public. “Fiscal income and expense projections and fiscal policy in general are complex topics for the public. This makes it all the more important to be able to present them to people in a comprehensible and clear way, while maintaining a professional standard of communication,” says CFC analyst Pavel Morda.

(Photo: Mr. Morda)