Rule-based budgeting and the financial stability – the European solution

Abstract

From the perspective of his twelve years of service at the Fiscal Council of Hungary (Fiscal Council, FC, Council), the author reviews the so-called rule-based budgeting practices that have been in use in some sixty countries around the world for decades, and their role in creating and maintaining financial stability. The article refers to the possibilities of contribution of institutions overviewing the enforcement of fiscal rules while strengthening resilience to economic crises. It presents the links between EU and Hungarian legislation, and the main ideas that emerged in the preparation of the professional-political decisions for the further development of the system in order to better enforce fiscal responsibility. It proves that the framework and the body that enforces it have become a useful and indispensable part of the fiscal policy and, as its annual implementation, of the Hungarian budgetary practice.