The International Monetary Fund's (IMF) Fiscal Transparency Module of its Report on the Observance of Standards and Codes (ROSC) asserts that the Netherlands "achieves or exceeds the good practice standards against each of the four general principles of the fiscal transparency code." One area where improvements could be made is in the fiscal reporting and accountability practices of municipal level governments, departmental agencies, and non-departmental agencies. The ROSC called for a more thoroughgoing application of the fiscal reporting standards of the 1995 version of the European Standards of Accounting, again at the lower levels of government. Transparency is also diminished by the fact that the departmental agencies and the ZBOs use different accounting systems. To resolve some of these problems, the mandate of the Dutch Court of Audit could be expanded to allow it to track the expenditure of government issued funds by municipalities. The Netherlands subscribes to the IMF's Special Data Dissemination Standard and meets all the requirements for coverage, periodicity, and timeliness. It produces summary methodologies for all datasets and publishes advance release calendars for all relevant statistical releases.

General Overview

The International Monetary Fund (IMF) published its most recent Report on the Observance of Standards and Codes (ROSC), Fiscal Transparency Module in 2006. In that report, the IMF stated that "the Netherlands achieves or exceeds the good practice standards against each of the four general principles of the fiscal transparency code" (p. 1). According to the report, the allocation of fiscal roles and responsibilities within the government is admirably clear. The Bureau for Economic Policy Analysis (CPB) "provides an exemplary model for separating political and technical elements of macroeconomic policy" and, "combined with the well-articulated fiscal framework, provides a strong anchor for reliable and transparent fiscal policy setting and execution" (p. 1) as stated in the IMF report. The Netherlands Court of Audit (CoA) is charged with oversight of fiscal management, and Statistics Netherlands is responsible for data compilation and dissemination. The ROSC asserts that all three agencies exemplify integrity and independence, which explains the reputation they enjoy for sound management and reliable data. The Netherlands employs a trend-based fiscal framework characterized by the separate accounting for receipts and expenditures. Expenditures are governed by a well-defined set of rules.

The 2006 ROSC reports that fiscal policy is implemented through the application of spending caps. The public management system is open and well established. Budget procedures are clear. Budget management is decentralized, largely through the Financial Economic Affairs Directorates of the line ministries. The reliance on ministerial-level administration makes the delivery of services more reliable and accountable, but the ROSC cautions that management of complex processes (e.g., policy evaluation) might be impaired by this decentralized approach. The ROSC also suggests that "the dual cash-commitment system for the ministries, and accrual accounting system for agencies, ZBOs [semi-autonomous bodies], municipalities, and other local governments leads to some uncertainties and delays in reporting general government activity in ESA95 terms for the EMU balance" (p. 1). (ESA95 refers to the 1995 edition of the European Standard of Accounts.) The ROSC also notes that the extensive mandates enjoyed by ZBOs have given rise to concerns regarding their accountability.

Nonetheless, in its 2006 ROSC, the IMF praised the high quality and accessibility of Dutch budget and accounts documents. The use of performance budgeting facilitates public understanding of policies, targets, and initiatives. However, the ROSC suggests that more work can be done to enhance budgetary focus and accessibility. Specifically, there could be improvements in the consolidated data of local-level governments. Oversight of the budget process falls to the CoA, although its ability to audit municipal expenditures of central government funds is limited. The ROSC reports that the CoA's "independence and broad mandate... give assurance of effective external oversight of government fiscal management practices" (p. 1), but adds that it has only limited ability to audit the expenditure of public funds at the municipal level. The work done by Statistics Netherlands enjoys wide respect for its high quality standards. The ROSC adds that the Dutch central bank, De Nederlandsche Bank (DNB), "is independent and carries out no fiscal activities" (p. 9).

According to the 2006 ROSC, Dutch legislation is clear and comprehensive and in line with European Union (EU) standards. The Government Accounts Act governs the management of public funds. The Act defines the state budget structure and required content, defines the basis for appropriations, mandates the inclusion of multiyear income and expenditure estimates, establishes the budget cycle timetable, and requires that the budget identify new initiatives and their estimated costs. It also establishes the procedure by which a budget may be amended and defines the role of the Minister of Finance (MoF) with regard to fiscal, budgetary, and financial management. It further spells out the role of the CoA, sets forth the terms of ministerial accountability, and defines the roles and tasks of the Internal Audit Directorates. The 2006 ROSC adds that the public has easy access to legislative tests, and the Constitution guarantees the citizens' right to the court system, with the expectation of equitable treatment even when bringing action against a government entity. However, according to the ROSC, the Dutch high court (de Raad van State) "is part of the Executive, and some critics have indicated that this position has predisposed it for adjudicating in favor of the Executive" (p. 7). The public's right to government information is guaranteed by the Law on Public Availability of Administrative Information.

A 2005 IMF report on Selected Issues in the Netherlands identifies the CPB as having a major role in maintaining fiscal discipline. According to the report, the CPB helps sustain accountability "by publicly assessing consistency between the government's policy measures and its fiscal and other economic objectives" (p. 55). The report also notes that a focus on the medium-term reduces the influence of more immediate, often political, considerations on fiscal policy. It did, however, identify potential problems arising from the possibility of over-optimistic growth projections in the latter years of the framework, which could lead to the formulation of unwarrantedly expansionist fiscal policies. The Dutch government counters this danger by adopting a conservative approach to budgeting, but the risk remains, particularly in times of unusually high economic uncertainty.

A 2005 Economic Survey of the Netherlands report by the Organization for Economic Cooperation and Development (OECD), found much to praise in the Dutch fiscal framework, but found fault with the practical application of the expenditure ceilings. According to the OECD, these ceilings are often circumvented through tax expenditures. The OECD also found fault with the practice of using revenues from natural gas to fund special programs, even though, according to the Fund for Structural Enhancement of the Economy (into which natural gas revenues are paid), such monies should be used exclusively for capital expenditures.

The 2007 IMF Article IV Consultation report states that the new government has set a general government structural surplus target of 1% of GDP, to be achieved by 2011. The IMF staff supports this target, stating that it was important to identify and implement this and other sustainability-oriented measures. The IMF suggests that "with a significant portion of the gap left unfilled, and to lessen resource pressures and take advantage of robust economic growth, staff recommended erring on the side of a higher-than-targeted surplus in executing fiscal policy, also urging a frontloading of fiscal adjustment by locking in any unexpected saving in 2007 and in the context of the 2008 budget" (p. 1). The 2007 IMF report finds that current fiscal performance is "impressive" (p. 4). It notes that, although the aging of the Dutch population demographic presented challenges to fiscal policy, the Netherlands was equipped to handle it. The report notes the ongoing commitment of Dutch authorities to their multiyear fiscal framework, which the authorities argue had "served them well, providing discipline to fiscal policy and preventing 'big policy mistakes'" (p. 12).

The IMF's Special Data Dissemination Standard (SDDS) website discloses that the Netherlands is a subscriber, since 1996, to the SDDS and meets all requirements for coverage, periodicity, and timeliness. It regularly submits updated data, produces summary methodologies for all datasets, and publishes advance release calendars for all relevant statistical releases.

The Principles

Clarity of roles and responsibilities.

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The IMF's 2006 ROSC states that "roles and responsibilities of and within government are, in general, clearly defined and, in many areas, the Netherlands sets best practice standards. The CPB provides an exemplary model for separating political and technical elements of macroeconomic policy. This institution, combined with the well-articulated fiscal framework, provides a strong anchor for reliable and transparent fiscal policy setting and execution" (p. 1) The Dutch Constitution clearly defines the fiscal roles as they are allocated to the executive and legislative branches, and there is a strong Constitutionally derived separation of powers. Article 65 requires that the executive draft an annual statement of fiscal policies for the coming year and present it to both houses of parliament. Article 105 adds that this presentation must include estimates of the revenues and expenditures encompassed by those policies. According to the ROSC, the actual budget comprises 25 chapters, of which 16 are formulated by the individual line ministries. Each chapter is treated as a separate law, and must be defended by its respective line minister. Parliament may add amendments to these chapters, along with the proposed source of financing for the amendment, but there is no obligation for the line ministers to implement such amendments. Further details regarding the content of the budget law are provided in the Budget System Law, the Government Accounts Act of 2001, and various tax laws.

The 2006 ROSC notes that there are three levels of government in the Netherlands: the central government, 12 provinces, and 489 municipalities. The local governments are represented in the cabinet by the Minister of the Interior. Each level of government has clearly defined fiscal responsibilities. At the municipal level, these responsibilities include the provision of town services and social assistance, education to the secondary level, healthcare, housing, and zoning. At the provincial level, the responsibilities include spatial planning, environmental policy, and infrastructural development. The provinces also have responsibility for coordinating policies that have implications for multiple municipalities. According to the ROSC, even though the municipalities derive their own tax and non-tax revenues, they are nonetheless "heavily dependent on central government grants, whether general (the level of which is tied directly to the level of central government spending), or specific purpose" (p. 11). Provinces, on the other hand, have limited access to non-tax revenues and levies; the bulk of their financing comes from general grants. Municipalities comprise a relatively larger proportion of the budget than the provinces. The ROSC notes that there are problems associated with the presentation and evaluation of local government budgets. They are not included in any consolidated budget, even though the grants they receive from the central government are accounted for in the central budget. The local governments are required to send quarterly reports to Statistics Netherlands, however, for use by Eurostat in reporting on the European Monetary Union (EMU) deficit. The Ministry of Finance (MoF) also receives this data in order to better monitor the general government's fiscal policy.

The Netherlands employs a system of categorization for central and local government and social security that is in line with the definitions employed in the Government Finance Statistics Manual of 2001 (GFSM 2001) and the ESA95, according to the 2006 IMF ROSC. Service delivery is achieved through the operations of two distinct types of agency. The line ministries control (and budget for) departmental agencies, of which there are presently 39. The second agency type is known as "semi-autonomous public bodies," or ZBOs. According to the 2006 IMF ROSC, "ZBOs implement public tasks, largely, but not exclusively funded by central government, and range from individual schools to large public entities" (p. 5). Statistics Netherlands is a ZBO, as are the regional police forces. The use of ZBOs has been justified because they handle tasks that must be carried out independent of ministerial interference. However, ZBOs independence is often perceived as only nominal, given that many of them work closely with ministries. Discrepancies in funding across the range of ZBOs have led to concerns that public funds may be used inappropriately. In the words of the ROSC, "this heterogeneity of government agencies and their governance structure is not conducive for fiscal transparency" (p. 5). As a result, the Dutch government is reconsidering the utility of ZBOs. Whereas some, like the Securities Supervisory Board, Statistics Netherlands, and the DNB seem to have a legitimate need to maintain their distance from political influence, others may more appropriately be converted to departmental agencies.

The 2006 IMF ROSC reports that "relationships between government and public financial corporations are clearly defined, but include some quasi-fiscal activity" (p. 7). There is significant public ownership within the nonfinancial corporate sector, but the ROSC acknowledges that commercial operations and the public-interest functions are kept separate. As of 2004, the state participated in the ownership, either wholly or in part, of 42 major companies. Since then, the policy has been toward gradual divestiture. The Dutch authorities reported to the IMF ROSC mission that it is problematic to divest itself of companies that fulfill a public interest or which face noncompetitive market circumstances. Consequences of divestiture in such cased could adversely affect "the management of the public interest role, the pricing of services, or the quality of service delivery" (p. 8).

According to the 2006 IMF ROSC, "the regulation of profit transfers from state-owned enterprises are transparent, but policies could be clarified" (p. 8). Some state-owned enterprises are subject to targeted returns on investment, but the ROSC finds that the derivation of these targets is sometimes unclear. In addition, there is no specified remedy for failure to meet the established targets. The ROSC adds that, although privatization has been ongoing for some time, it is not rooted in a formal legal framework. Nonetheless, the ROSC found that the privatization process is "reasonably transparent." The disposition of assets is also reasonably open: proceeds of the sale of state assets go to the Treasury and their use is restricted to debt reduction. Such sales of assets are accounted for in the budget and in an annual report on state asset management. There is no legislative framework governing public-private partnerships (PPPs) in the Netherlands, according to the 2006 IMF ROSC. The MoF created the PPP Knowledge Center in 1999 in order to "set out clear rules and an independent review of potential alliances between government and the private sector" (p. 9). The Center's advisory council comprises individuals in the private sector with relevant expertise. The role of the Center is to monitor PPP activities and to offer advice to government representatives serving on the PPP Steering Group. The MoF itself does not formally oversee PPP activity, nor does the government see the need to codify PPPs in law.

According to the 2006 IMF ROSC, "municipalities enjoy some flexibility in setting rates and determining tax value of real estate within overall parameters and guidelines determined by law m municipal authorities" (p. 11), but local authorities have no influence over property and income taxes, which are set at the national level. Municipalities are responsible for formulating and approving their own budgets. Municipal budget execution is assessed through questionnaires administered by Statistics Netherlands. According to the IMF ROSC, there were significant deficiencies in the quality of information returned on these questionnaires prior to 2004, but that steps have been taken since then to improve municipal reporting. Progress in this regard is still ongoing. Municipal borrowing is done under the supervision of the provincial authority. It is permitted only for purposes of investment.

The Government Accounts Act (GAA) governs the management of public funds. The 2006 ROSC reports that "the GAA incorporates a clear definition of the structure of the state budget, including separate chapter budgets for all line ministries, the public debt, specified budget funds, and the prescription of comprehensive coverage by the budget of all parts of central government" (p. 12). It also clearly elaborates on the role of the CoA and the Internal Audit Directorates. In addition, it sets forth the responsibilities of the cabinet and line ministries with regard to financial management. Provisions of the GAA establish that the primary responsibility of the MoF "is to prepare the State Budget and manage the state debt" (p. 13). In addition to the GAA, there is an extensive body of regulations that address the budget process. According to the IMF ROSC, the GAA is silent on fiscal sustainability and managing the public debt. However, the ROSC reports that "the Netherlands does adhere to the Maastricht Treaty, which places quantitative limits on the stock of debt and the fiscal deficit" (p. 13).

The 2006 IMF ROSC finds that, in the Netherlands, "the legislative basis for taxation is clear and comprehensive. All taxes are soundly based in law, and the policy basis for the laws is clearly explained" (p. 14). While the ROSC finds that there are numerous tax exemptions, they are explicitly reported in the budget. The administration of the tax regime is also described as clear and well coordinated. Finally, the IMF's 2006 ROSC asserts that there are well-defined codes of conduct to which public servants must comply. However, the ROSC notes that these are promulgated on ministry-by-ministry, agency-by-agency, and ZBO-by-ZBO bases. Thus, uniformity as to code provisions is lacking. While the Ministry of the Interior has developed model codes and distributed these throughout the various government sectors, differences across the various government entities do exist. According to the ROSC, this raises difficulties, particularly in the area of conflicts of interest and rules governing secondary appointments. According to the ROSC, the trend in Dutch civil service is for staff to move from one ministerial posting to another, where the rules may differ.

Open budget processes

FC

The IMF's 2006 ROSC notes that "the Netherlands has a very open and well understood system of fiscal management. The basic principles of the trend-based fiscal framework include the separation of tax receipts and outlays, a stable and well-defined set of expenditure rules, and use of expenditure ceilings to implement policy. The framework is supported by a well established and open system of public management, with, on the whole, clearly-defined, reliable procedures for budget formulation, execution, reporting and internal audit" (p. 1). Decision making is done in two stages, with the setting of major reallocations and the setting of expenditure ceilings. This approach is now considered "best practice" among member states of the OECD. Early in the pre-budget year, expenditure ceilings are established for each budget chapter, giving the MoF and the line ministers a chance to discuss how to arrange allocations within the set limits. Over the course of the ensuing months, the CPB's macroeconomic projections are regularly updated, based on the MoF's recalculations of revenue and spending estimates. By June of the pre-budget year, the CPB's calculations include reference to new fiscal initiatives. According to the ROSC, "as the CPB also projects the expenditure and revenues of government for the medium term, this provides a valuable second-opinion on the projection of fiscal parameters" (p. 18).

The budget is structured in several layers. The first establishes 25 budget chapters (16 chapters correspond to the line ministries). Below this is the layer of policy goals and strategic objectives for each ministry. According to the 2006 ROSC, appropriations are assigned here. Further layers deal with planning and control considerations, operational objectives, instruments, and even specific activities. The Chart of Accounts employs the ESA95 methodology and the budget process employs a classification system consistent with the GFSM 2001. The budget document includes CPB forecasts of key macroeconomic indicators, including estimated GDP growth, inflation rates, wage increases, interest rates, exchange rates, oil prices, and unemployment rates. According to the 2006 IMF ROSC, the CPB includes both a "cautious" and an "optimistic" forecast scenario. At the outset of a new government's tem of office, the "cautious" forecast is routinely used as the basis for the budget. Other CPB's analyses are consulted during the course of the budget process, including the Central Economic Plan (released in March/April) and the Macroeconomic Outlook (released in September).

The 2006 IMF ROSC reports that a new cabinet bases its first budget memorandum (or coalition agreement) on a discussion of its "fiscal policy targets and medium-term framework implications for expenditures and revenues" (p. 21). In subsequent years, budgets refer to the principal outlines of this initial policy statement, taking into account changes in the economy over time. Each budget also includes a new four-year forecast. According to the ROSC, "the macroeconomic assumptions of these multiyear expenditure forecasts are revised only once or twice in four years, when CPB provides medium-term forecasts" (p. 21), and notes that "the budget memorandum provides all the relevant information but is not focused on fiscal sustainability or government debt, and thus, does not include targets for public debt or for the primary balance" (p. 21). It sets out broad fiscal policy objectives for the coming four-year period, and details the line ministries' spending plans. The ROSC cautions that sustainability is an important consideration, however, particularly when attempting to set medium-term objectives. The CPB prepares sustainability analyses for the parliament and makes them available to the public. Each coalition agreement employs the trend-based policy that underpins the Dutch fiscal policy framework. The 2006 ROSC contends that adherence to the trend-based fiscal rules "provide a high degree of stability in the budget process" (p. 22).

The ROSC adds that all new policy initiatives, and their fiscal costs, must be separately identified in the budget and the line ministries must extend that costing out over all relevant years. Once policy proposals are determined, they are sent to the Financial Directorates of the appropriate ministries for scrutiny, after which the MoF's Inspectorate of the Budget assesses their financial implications. After this, the council of ministers convenes to decide on the proposed policy measures. If included in the budget law, the proposals must include a statement of not only their budgetary effect but also of the likely impact arising from a change in prior years' policies. During the budget cycle, cutbacks and increased spending is taken into account on a regular basis and incorporated into the budget document.

According to the 2006 IMF ROSC, "the main elements of the Dutch fiscal framework include real expenditure ceilings for three subcategories of expenditures (central government, social security, health) and a ceiling on total expenditures" (p. 23). The budget can accommodate some overruns and shortfalls carried over from year to year and it includes a small reserve to cover unanticipated contingencies. Certain infrastructural investments are not covered by the budget ceilings because they are financed separately, by the Fund for the Structural Enhancement of the Economy. Also excluded from the ceilings is the spending of central government funds by local governments. The ROSC observes, however, that "local governments are required by law to run balanced budgets over the medium term, however. (p. 23). According to the ROSC, in the first year of a new administration, "ceilings are set in nominal terms...[then] converted to real ceilings initially using four-year inflation projections" (p. 23). This permits real expenditures to be compared to the initial real ceilings. The fiscal framework used to permit the use of revenues generated by deviations from estimated tax receipts to fund permanent tax cuts (tax increases if the deviation was negative). This policy has changed, and such "windfalls" can only be applied to the deficit.

The ROSC remarks that each ministry is responsible for its internal management and business practices, but the MoF promotes standardization across ministries. The line ministries do share uniform accounting standards. However, 39 agencies, all the ZBOs, and the local governments use accrual accounting methods, whereas the other government agencies employ a cash-commitment system. The ROSC states that "the International Federation of Accountants, Public Sector Committee guidelines are observed in national accounting standards" (p. 24). According to the 2006 ROSC, "line ministries have invested substantially in strengthening internal controls and financial management in general" (p. 24), increasing their staffing and pushing for greater automation. The MoF 's Finance Academy offers training to the line-ministry staff in both budgeting and fiscal management, with extensive in-house training in budget and financial management skills through its Finance Academy.

According to the 2006 ROSC, the MoF reports monthly on the execution of the central government's budget, in the final drafts of which the cash data is reconciled with the line ministries' data. The final report is posted on the MoF website. Quarterly reports on local government data are produced by Statistics Netherlands. The ROSC notes that "fiscal reporting is done on a gross basis, with no netting of non-tax revenues. It includes all in- and outflows to other governments and multilateral organizations, such as the EU" (p. 27). However, it is not easy to do comparisons between the central and local governments' budget classification systems. Local governments provide in-year reports on budget execution to their municipal councils and financial supervisors. This data is then consolidated by the MoF, which passes the consolidated data on as part of the Ministry of Interior's budget. Statistics Netherlands also uses local government data, along with data from the central government, converting everything to a format consistent with the national accounts.

The 2006 ROSC argues that the budget memorandum that is released just prior to the first of June each year is probably the most important one used by parliament in assessing the current budget, whereas the September memorandum is of particular importance with regard to the budget in progress. (A memorandum published in late November is of lesser utility to either the current or upcoming budget years' considerations.) All of these documents include a performance analysis that explains any discrepancies between policies and their outcomes. The dates on which these memoranda are submitted are mandated by the GAA.

The GAA also stipulates the date on which the National Annual Financial Report must be submitted -- the third Wednesday in May. This report contains all the budget chapters in final form, along with the audit statement of those chapters that is produced by the CoA. According to the 2006 ROSC, beginning with the 2002 budget cycle, the Netherlands began using a new, performance-oriented type of program budgeting designed to "provide parliament [with] a more policy-oriented and transparent budget document and connecting this with a policy-oriented final account" (p. 28). Line ministries, with MoF guidance, have begun using performance indicators and targets in formulating their own budget proposals. However, according to the 2006 IMF ROSC, "a recent evaluation of the new system found that many performance targets are either subject to factors not under the control of ministries, not concrete enough, or not clearly linked to the amount of expenditure going into the policy area in question" (p. 29). The evaluation also disclosed a problem with information overload. These and other problems are deemed to be due to implementation issues, rather than to an inherent flaw in the system. The IMF reports that the recent evaluation provides useful suggestions for improving the system, but cautions that more development of the process by which performance audits are used in budget formulation is required.

Public availability of information.

FC

The IMF's 2006 ROSC reports that "the budget and accounts documents are of a high standard and provide comprehensive, timely, and reliable information on government activity in an accessible format. Coverage and accessibility standards of the fiscal transparency code and the IMF Special Data Dissemination Standard are fully met" (p. 1). The Netherlands provides general government aggregates. Fiscal data is available in a variety of forms, including the budget memorandum sent to parliament. This document also contains an overview by the MoF that deals with current macroeconomic conditions, strategic priorities, and new policy initiatives. Estimates of expenditures for these are clearly set forth. According to the ROSC, "the [budget] memorandum also contains overviews of various expenditure and revenue categories, deficit projections and borrowing requirements, the budgets of agencies, state guarantees, the multiyear implications of tax expenditures, a listing of 'Large Infrastructure Investments,' etc." (p. 29). A highly detailed supplementary document accompanies the budget memorandum and deals with tax expenditures, appropriations, and changes that have occurred in the multiyear framework over the past year. The 25 individual chapter budgets are also highly detailed, and there is comprehensive reporting of defense spending. Final accounts data are equally detailed and comprehensive. As the 2006 IMF ROSC notes, "the budget memorandum, individual budget chapters, final accounts, and other budget information, including Annexes with even more information, can be downloaded, free of charge, from the internet" (p. 30). Less accessible is information on local governments. In the past, the Ministry of the Interior produced a somewhat comprehensive document that covered fiscal data at the municipality level, but it has since ceased publication. General government data is compiled by Statistics Netherlands for regular reporting to Eurostat.

The budget documents include a highly detailed statement on contingent liabilities, which appears as an annex and, according to the IMF's 2006 ROSC, covers "all government contingent liabilities by beneficiary and type of guarantee (credit, export, capital, liquidity, etc.)" (p. 30). The ROSC suggests that the already highly detailed documentation could be improved by providing a comparison of cost and revenue estimates for the current budget year with the same information from the prior year. Since the 1999 budget year, the budget documentation has included the Annual Tax Expenditure Report as one of its annexes. Also included are medium-term forecasts covering the upcoming four years. In addition, according to the ROSC, comprehensive information on the public debt is readily available in print form and online. The ROSC further notes that "the Dutch State Treasury Agency publishes an annual report on the realized borrowing, the existing debt stock, the debt management strategy of the government, and the outlook for the coming year" (p. 31). The MoF also produces a separate, less technical budget chapter that deals exclusively with the public debt. Both this document and the Annual Report of the State, which details the states financial assets, are available on the MoF website. The IMF's 2006 ROSC adds that the MoF website provides access to a wide range of fiscal data and information on the execution of the budget. This latter is updated monthly. The regular publication of in-year fiscal data is required by law.

The CPB publishes short-term forecasts in its newsletter, and they are also available online. Forecasts include a brief explanation of their contents, including their underlying assumptions. They are also presented in the two more formal CPB documents, the Central Economic Plan (in March) and the Macroeconomic Outlook (in September). The latter is also submitted along with the budget to parliament. The CPB also publishes an annual assessment of the accuracy of its previously published forecasts. According to the 2006 ROSC, "the political parties from both sides of the political spectrum value the independence and quality of the CPB's activities. The practice has grown that all political parties subject their election program to evaluation by CPB on macro and fiscal impact. (p. 36)

Independent assurances of integrity.

FC

The IMF's 2006 ROSC noted that "fiscal data quality standards are high and the institutional framework for maintaining the integrity of the fiscal management system and data are at, or close to, best practice-level" (p. 1). The CPB was founded in 1945 to serve as the central coordinator of government policy and to advise on the development of Private Sector Production Plans. Its present mandate is to be a key player in the process of budget formulation, implementation, and assessment. While officially housed within the Ministry of Economic Affairs, the CPB enjoys both operational and technical independence based on long-established practice, although this independence is not strongly codified in law. The ROSC states that "today the CPB provides forecasts of GDP growth and for a wide range of macroeconomic variables used by the government for budget preparation, and evaluation of the government's and political parties' economic policies" (p. 21). The CPB does not set spending ceilings or fiscal targets, but it does provide regular evaluations of the degree to which policy proposals and their expected outcomes are consistent.

Because the CPB is widely perceived as independent, its economic analyses enjoy a reputation for quality and objectivity. The ROSC adds that further assurance of the CPB's integrity derives from the fact that, along with its forecasting and analysis, the CPB includes a discussion of the underlying assumptions. Recently, the CPB director has established a Supervisory Committee to provide independent advice on setting the research agenda and to investigate work-quality issues. The CPB also regularly engages with international experts and frequently welcomes investigation by international evaluation committees. Such evaluations are routinely made available to the public. The 2006 ROSC comments that "additional assurance of independent macroeconomic analysis is provided by the DNB forecasts. (p. 36). Because the CPB plays such a central role in assuring the integrity of fiscal policy, the 2006 ROSC stated in the "Aide de Memoire" component of the 2006 ROSC that it "supports the continuation of the current institutional set up" (p. 9). It did, however, raise concerns about the CPB's approach to making growth projections at the outset of a new government's administration. According to the ROSC, the CPB consciously employs a lower-than-baseline projection at such times, as a sort of "safety margin." This could have a distorting effect on forecasting, with negative implications for CPB credibility. The ROSC applauded the fact that, in recent years, the size of the safety margin has grown progressively smaller.

The CoA, whose independence is mandated by the Dutch Constitution, is charged with conducting oversight of Dutch fiscal policy through external audits. The ROSC notes that the CoA maintains its independence from both the executive and legislative branches of the government. According to the ROSC, the CoA's mandate "covers all central government public sector activities and emphasizes performance" (p. 34). Both the Constitution and the GAA confer on the CoA the responsibility of ensuring that public funds are properly collected and effectively spent, as well as investigating Dutch compliance with its international treaty obligations. The CoA sets its own investigative agenda, deciding what to audit, how to audit, and what it should publish. The CoA works on a five-year plan basis, formulating and publishing a new strategy at the outset of each five-year period. The 2006 ROSC notes that the CoA has begun conducting performance audits in addition to the regularity audits required under Section 83 of the GAA. That Act requires the CoA to produce an audit of the National Annual Financial Report. The CoA also audits central and local government use of EU funds, but it does not have the authority to track local usage of central government funds, unless invited to do so by local officials. Instead, according to the ROSC, "municipalities are required to set up their own Municipal courts of audit. In addition, they are required by law to be audited by private audit companies" (p. 35).

The 2006 IMF ROSC found the CoA to be appropriately staffed and resourced: "The CoA has an approximately 300-member staff, more than 80% of whom have graduate or higher degrees" (p. 35). The CoA board comprises three members holding lifetime appointments from parliament. Its funding forms a part of the Ministry of Interior and Kingdom Relations budget. It works closely with ministerial audit units, as well as the audit units of the departmental agencies and the ZBOs. Many of these do their own full internal audits, in which case the CoA acts to verify the results.

The 2006 ROSC discloses that the CoA produces a regular cycle of audit reports called for during the course of the budget process, but also produces separate audits on particular policy initiatives throughout the year, as required. According to the ROSC, in addition to performance assessments, the annual audit "also assesses the legitimacy and correctness of budget expenditure and the quality of financial management systems" (p. 35). Prior to finalizing its report, the CoA offers the government the chance to respond to its findings, and includes the government response in the final draft. Parliament usually holds a discussion in full session of the CoA annual audit that accompanies the National Financial Report, after which it is sent to the appropriate parliamentary committees for further scrutiny. Any recommendations arising from these parliamentary discussions are noted and the CoA provides progress reports on them in its own annual report. When the CoA identifies significant issues, it has an established procedure by which to inform ministers or the parliament. A minister who receives a warning from the CoA must respond with a formal explanation of the situation and a statement of any corrective measures that may be planned.

The independence of Statistics Netherland is also assured, both legislatively and administratively. It was once a part of the Ministry of Economic Affairs, but gained ZBO status in 2004. According to the 2006 IMF ROSC, Statistics Netherlands follows the guidelines and standards of Eurostat, to which it submits its statistics as source data. Its work program is set out for it by the Central Commission for Statistics, itself an independent body that, according to the ROSC, "watches over the independence, impartiality, relevance, quality and continuity of the statistical program" (p. 37). The decision as to statistical methodology is made independently by the Director General of Statistics Netherlands, who also has sole authority to decide whether publication is warranted. As the ROSC notes, however, "the Minister for Economic Affairs is responsible for setting up and maintaining a system for the provision of government statistical information" (p. 37).