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PE 475 121 an Assessment of the European Semester UPDATE PUBLISH

PE 475 121 an Assessment of the European Semester UPDATE PUBLISH

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The second group comprises Estonia and Finland. Both are small and newish euro area
countries. They rely on contract-based fiscal governance but the timing of the budgetary
process and the role National Parliaments in the budget process are different from one
country to the other. They are also the only two euro area countries, together with
Luxembourg, that are not subject to the EDP at the time of the first Semester cycle and
indeed their public finances are generally considered to be very sound. Both went through
national elections shortly before the presentation of the national documents to the EU in
April 2011.

The Estonian Ministry of Finance collects multi-annual development plans from each
ministry before the first of March every year but then initiates the annual budget process
later on in June, leads the negotiations and eventually transmits the draft budget to the
government. After government approval, the budget is transmitted to the Parliament at the
end of September.62

The timeline of the budgetary process is slightly postponed compared
with most countries in our sample. Estonia has only a very recent experience with multi-
annual fiscal planning, even if the new MTBF is as strong as in Finland and Germany. The
Parliament has a modest role in the budget process compared with Finland.

In Finland, the governmental phase of the budgetary process develops from December or
January to September, thus earlier than in other countries (except for Germany), at the
end of which the Ministry of Finance merges the individual ministries’ budget proposals into
a draft budget. The text is transmitted to parliament in September and voted in December.
In Finland, the preparation of the annual budget thus starts quite early on, similarly to
Germany. The country enjoys a relatively strong MTBF, similar to Estonia and Germany.
The parliament has an important role in the budgetary process and is the strongest of all
countries in our sample.

Concerning the implementation of EU recommendations, the countries score high only in
areas that are either unproblematic or in any case close to national policy agendas.
Estonia, for example, has a good implementation record in the case of fiscal policy, which
is unsurprising given that public finances are under control. In Finland, the strongest
reaction to EU recommendations is in labour market policies, which are in any case more of
a national than a European priority. In all other areas, the implementation record is either
moderate or low. The two countries have moderate degrees of ownership of the Semester
process, with the Estonian documents probably more attentive to acknowledging potential
spillover effects across policy areas.

62

See Kraan, Wehner, and Richter (2008). See also: Estonian Ministry of Finance website;
http://www.fin.ee/index.php?id=79458.

An Assessment of the European Semester

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PE 475.121

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