Fiscal Council and Pre-election Platforms Evaluation: A Scenario for Greece

Abstract

The crisis of the Greek economy underlined the structural deficiency of the domestic growth model that was depicted to the wide "twin-deficit" problem of a statist market economy. The core of the domestic growth model is the role of the public sector which, inter alia, was characterized by high and permanent fiscal deficits, low efficiency, and steady divergence from an advanced welfare state. During the 2010-2015 adjustment effort, fiscal adjustment was the critical dimension of the effort in order to stabilize public finances at a sustainable level and significantly reduce the financial needs. The sustainability, however, of public finance stabilization is determined by the structural reforms in the fiscal policy framework and the public financial management framework. One of the structural fiscal reforms was the new law for the establishment of the Hellenic Fiscal Council in 2014 following the European institutional framework. The paper discusses the strong harmonization of electoral cycle and fiscal deterioration and analyses the scenario of enhancing the Fiscal Council's responsibilities in Greece with the evaluation of the pre-election platforms. In particular, the paper, taking into account the characteristics of the Greek political economy, focuses on the critical prerequisites so as this scenario to become a real structural reform. These institutional and political prerequisites are institutional independence, political independence, functional independence, broad political acceptance, "adjustment period", and clarity of rules and evaluation procedures. So, even though the evaluation of pre-election economic programs seems ultra-difficult for the case of Greece, it should not be set aside as unachievable in the long run.