The Fiscal Governance is an element of fiscal responsibility and can be defined as a set of rules, regulations and procedures that influence the fiscal policy preparation, approval, implementation and monitoring.
An effective Fiscal Governance includes:
National fiscal rules – are numerical limits on key government indicators (e.g., debt rules, budget balance rules, expenditures and revenues rules) that impose a long-term constraint on fiscal policy and prevent the emergence of medium and long-term budgetary imbalances.
Fiscal transparency and the existence of independent fiscal institution – this refers to the wide availability of information on the fiscal policy formulation and implementation and the existence of independent public institutions that contribute to fiscal policy-making and monitor fiscal performance by providing analysis, assessments and recommendations. These institutions imply the existence of independent parliamentary oversight, independent fiscal council, external public audit (supreme audit institution). Transparency also implies open government policies, making the public aware of fiscal policies.
Formulation and implementation of medium-term fiscal policy in a practical way, through the Medium-Term Budget Framework (MTBF). The MTBF generally refers to the set of rules, procedures and policies over a period of at least three years to ensure a multiannual fiscal planning perspective.