Strengthening analytical capacity for fiscal oversight in Portugal
The Commission provided support to Portuguese Public Finance Council (CFP) to enhance its capacity in debt sustainability analysis, as well as tax modelling and revenue forecasting. The support contributed to the capacity of CFP to fulfil its mandate as an independent fiscal institution, as foreseen in EU regulations.
Adequate analytical tools are crucial for Independent Fiscal Councils to fulfil their mandate and provide realistic public finance analysis, strengthening the oversight of public finances and contributing to evidence-based policymaking. The CFP has identified a need for more accurate tools on debt sustainability analysis and forecasting methods to better support its mandate on fiscal and economic analysis, thus fostering transparency and public debate. Acquiring and building capacity on a microsimulation tax model in the CFP can play an important role in estimating the revenue and distributional impact of tax-benefits reforms and improving revenue forecasting outputs.
The Commission provided support over a 10-month period delivered through a private expert. The support measures consisted of advisory support on the development of a public debt projection model based on a stochastic framework.
The project also included a capacity development training on tax-benefit microsimulation modelling through EUROMOD, delivered through in-house expertise of Commission officials from the Joint Research Centre.
The project has enhanced the capacity of the CFP to conduct accurate and timely debt sustainability analysis for the benefit of public debt projections, through the integration of the already existing scenarios of debt forecasting instruments (deterministic) with the stochastic approach. Moreover, the capacity-building support on tax modelling contributes to better estimation of the revenue impact of tax-benefits changes and their distributional impacts, as well as helps to refine revenue forecasting outputs.