Introduction sectionThe economic planning cycle and documents: from domestic to European rules
The economic planning cycle and documents: from domestic to European rules
The series of plannig documents has evolved over the years: it started with the first documents of the Italian Republic that accompanied yearly budgets in the 1950s; major changes were made at the end of the 1970s with the introduction of the Financial Law (Legge finanziaria) and the first DPEF (documento di programmazione economica e finanziaria – economic and financial planning document) in the late 1980s, which was designed as the key document on which the government’s economic policy is based. Then came the “European” documents, such as the Stability Programme, introduced when Italy joined the Monetary Union, and the National Reform Plan, related to the Lisbon StrategyLink to internal page and the Europe 2020Link to internal page Strategy; finally at the end of 2009 the budget reform was initiated, in 2011 the “European semester” was established to coordinate national policies and in the 2013 was established to coordinate national policies introduced a new process for evaluating projects of national budget.
The evolution described above may be divided in three stages: a first stage from the establishment of the Italian Republic up to 2009; a second – very short - stage, when the budget reform began in December 2009 - affecting the whole series of planning documents in 2010; a third stage, which started in April 2011, that brought domestic documents and tools into line with the rules and deadlines set by the European semester.
This evolution is described in the table the cycle of planning documents which shows the planning documents drawn up in each stage.
I - The series of documents since the establishment of the Republic up to 2009
A detailed analysis of the planning documents envisaged by previous regulations, before the introduction of Law No. 196 of 31 December 2009, can be found in the Economy Guide of May 2006: The Planning Documents: the role, structure, processes and tools of the Ministry of the Economy and Finance,(PDF, 1639 KB) More specifically, up until the end of the 1970s, the State general accounting standards envisaged that just one forecasting document should be drawn up in connection with the yearly budget: the Forecasting and Planning ReportLink to internal page (Relazione Previsionale e Programmatica – RPP) introduced by Law No. 639 of 21 August 1949, as later amended. Another document, the General Report on the Country’s Economic Situation (Relazione Generale sulla situazione economica del Paese - RGE), also introduced by law 639, contains a wealth of data on Italy’s economic performance in the twelve months before its publication.
Although Law No. 468 of 5 August 1978 did not envisage any new planning documents, it introduced far-reaching changes; it laid down that economic planning should go hand in hand with financial planning, based on the adoption of a multi-year budget, and envisaged a regulatory mechanism enabling more flexible budget policies: the Financial Law (Legge Finanziaria).
In the late 1980s, Law No. 362 of 23 August 1988 amended Law No. 468 and also introduced new planning documents: the Economic and Financial Planning Document - DPEFLink to internal page and the Report on the Economic Performance of the Previous Year and the Update of Forecasts for the Current Year - AGGRPPLink to internal page which was drawn up at the same time as the Cash Quarterly Report on Public Expenditure. In 2007 the AGGRPP document was replaced by the Unified Economic and Financial ReportLink to internal page (Relazione Unificata di Economia e Finanza - RUEF), which is a merger of the two reports descrive above.
In the late 1990s, two additional documents envisaged by the new European regulations were added to the existing series of planning documents: the Stability Programme - PSLink to internal page – introduced when Italy joined the Economic and Monetary Union (EMU) and the Report on Economic Reforms - RERLink to internal page which since 2005 was drawn up as part of the National Reform Program related to the revitalisation of the Lisbon StrategyLink to internal page. At the same time Law No. 208 of 25 June 1999 introduced major changes to the content of the DPEF (Economic and Financial Planning Document) and of the Financial Law and changed the timeline for submitting the economic and financial planning documents (postponing the deadline from May 15 to June 30 for submitting the DPEF).
II – The fiscal reform of December 2009
Law No. 196 of 31 December 2009(PDF, 186 KB) introduced major changes in the cycle of planning and public finance documents, by streamlining content and setting deadlines for submitting them.
More specifically, the Public Finance DecisionLink to internal page was introduced, which is a planning tool based on a three-year period superseding the Economic and Financial Planning Document - DPEFLink to internal page. Moreover, the Planning and Forecasting Report - RPPLink to internal page was repealed and since 2011 the Unified Economic and Financial Report - RUEFLink to internal page has been replaced by the Report on the Economy and Public Finance - REF.Link to internal page
In addition, under Article 7, paragraph 2, subparagraph g) the law explicitly included the Update of the Stability Programme- PSLink to internal page among the financial planning documents and laid down that the Goverment shall submit the Update of the Stability Programme to the European authorities according to the deadlines agreed at European level. The Stability Programme is submitted by the Government to Parliament. Article 9 of the above Law also envisages that while drawing up the Update of the Stability Programme - fifteen days before the deadline for submittal agreed at European level- the Government shall submit to both Houses of Parliament and to the Permanent conference for the coordination of public finance a draft of the Stability Programme outlining the medium-term outlook for Italy’s economic policy within the European Union.
Remain in force General Report on Italy’s Economic Situation – RGE and National Reform Programme – PNR.Link to internal page
III - The document cycle and the European semester
Following the new rules adopted by the European Union for the coordination of the economic and budgetary policies of member states, especially with the start of the new Europe 2020Link to internal page development strategy and with the introduction of the so-called European semester, Law No. 39 of April 7, 2011Link to internal page amended Law No. 196 of 31 December 2009Link to internal page, by reviewing the structure and deadlines for submitting planning documents: the beginning of the cycle has been brought forward to the first half of the year, while the public finance package (the Stability Law and the Budget Law) is drafted in the month of October. These changes aim at achieving full integration of the national planning cycle in the new European semester.
The planning cycle starts with the submittal, by April 10 each year, of the Economic and Financial Document - DEFLink to internal page with its separate sections containing the Update of the Stability Programme - PSLink to internal page and theNational Reform Programme - PNR.Link to internal page The Document is sent to Parliament by the Government. As the deadline for submitting the Economic and Financial Document, superseding the Public Finance Decision - DFP,Link to internal page, was brought forward, the Report on the Economy and Public Finance - REFLink to internal page was repealed. Once the Economic and Financial Document has been considered by Parliament (adoption of resolutions), the Stability Programme and the National Reform Programme are sent to the European institutions by April 30. By September 20, the Government sends to Parliament the Update Note of the DEFLink to internal page which contains an update of macroeconomic and public finance forecasts as well as planning targets integrating any comments by the EU Council. Along with the schedule, also the tools and content of planning documents envisaged by the accounting and public finance law have been changed. Parliament now has greater influence in designing budgetary policies and sharing the policy targets among the various levels of decentralised government.
Moreover Law No. 39 envisages that the content of the General Report on the Country’s Economic Situation - RGE,Link to internal page to be submitted to Parliament in April as of 2012, should be reviewed. The RGE relating to 2010 is to be submitted to Parliament in September. The Committee on the reorganization of the RGE,Link to internal page established by the same law, fulfilled its task in the months from May to July 2011 of analysing the content of the RGE and assessing its relevance.
The reinforcement of the tools to coordinate and evaluate the economic and budget policies of the EU Member States, started with the Six Pack, have been implemented in 2013 with the so called Two Pack (EU Regulation no. 472 and no. 473), which influences the national economic and financial planning cycle. This regulation introduces a new process of evaluating national budgets, establishing a common deadline (15 October) by which Euro Area Countries must send their Draft Budgetary Plans (DBP) to the European Commission. The DBP contains an update of the estimates indicated in the previous Stability Programme. The document takes into account revisions of final data introduced by the ISTAT and outlines: the reasons for any differences with respect to the estimates contained in the Stability Programme drawn up in April; the public finance measures proposed by the Government for achieving the programmed targets, as well as the impact on public accounts and economic growth. By 30 November, the European Commission adopt and present to the Eurogroup an opinion on each DBP that contains an evaluation of the conformity of the budget programme to the recommendations formulated as part of the European Semester, and an evaluation of the consistency of the budget with respect to the programmed targets of the Member State.