Designing an Independent Fiscal Institution for Poland

Unlike common practices in other EU member states and despite being mandated by EU law, Poland still lacks a fully-fledged Independent Fiscal Institution. IFIs are impartial, expert bodies that help improve the transparency, accountability, and quality of fiscal policies, and support sound and sustainable public finances. They became important after the 2008-09 global financial crisis showed the need for better fiscal management. Their role is to use their analyses and advocacy skills to push for long-term stability in fiscal policies. Creating a robust and effective IFI in Poland could enhance the quality and credibility of fiscal policy in the context of shifting structural budgetary dynamics. While the country performed well in the post-EU accession period, achieving rapid income convergence, and maintaining fiscal stability, it has not always complied with EU fiscal rules. With fiscal challenges set to grow in the medium and long term (i.e., due to the impact of the ageing population and increasing defense spending) the case for the establishment of an IFI is even more compelling. Recognizing that need the Polish government has expressed interest in establishing a formal IFI to enhance the quality and credibility of the Polish fiscal framework. This report supports the government of Poland in designing and implementing an IFI, aligned with international best practices while considering the specificities of the country. The report summarizes the main conclusions and recommendations from the World Bank and Ministry of Finance collaboration started in January 2024. The project included a diagnostic assessment of the existing fiscal framework and institutions, based on a benchmarking exercise against international best practices and standards of EU IFIs. The recommendations use a conceptual framework that focuses on three key aspects: the Right Form, the Right People, the Right Behavior