THE MINISTER of Finance Michael Noonan has announced the make-up of the Fiscal Advisory Council, the independent watchdog tasked with overseeing the management of public finances.
Prof John McHale of the NUI Galway will chair the new entity. He will not be paid a salary for taking on the role.
The four other members of the council are Sebastian Barnes of the Organisation for Economic Cooperation and Development in Paris and a former analyst of the Irish economy for that body; Prof Alan Barrett of Trinity College Dublin and a former ESRI economic forecaster; former IMF deputy director Dr Donal Donovan of University of Limerick; and Róisín O’Sullivan, associate professor of economics at Smith College, Massachusetts, who previously worked as an economist at the Central Bank.
The council will have its own secretariat, and will be based initially in the offices of the ESRI.
Such budgetary watchdogs have become the norm in most developed countries. Ireland was obliged under the terms of its EU-IMF bailout to establish one.
The council will assess the economic forecasts upon which budgetary decisions are taken and whether tax and spending plans are prudent in keeping budgetary balance. It will also assess whether the overall fiscal stance is appropriate for the economic cycle. This function is expected to be particularly important in the run-up to elections when governments are tempted to over-stimulate the economy.
The council will have no powers to recommend levels of overall tax and spending.
It will publish its views in the form of reports to the Minister of Finance “at least” three times a year. These reports are to be published “within 24 hours” of being given to the Minister.
The council will have an advisory role in drawing up a set of budgetary rules, which, under the bailout terms, must be in place by the end of 2011. The full nature and extent of its role will not be known until these rules are set out.
Mr Noonan said the establishment of the council was another important step in reforming Ireland’s budgetary framework. The council would help to inform the public discussion surrounding economic and fiscal matters, he said.
The council, additionally, sent “a positive signal to markets regarding the conduct of future fiscal discipline”, he added.