At the 63th economic workshop Frane Banić, Advisor at the Economic Analysis Department, Milan Deskar-Škrbić, Senior Advisor at the Monetary Policy Department, and Maroje Lang, Vicegovernor of the CNB, presented the paper "Which Bite Harder: New or Old EU Fiscal Rules? Backcasting Croatian episode under EDP").

The aim of this paper is to explain the basic features of the reform of the EU fiscal framework and to illustrate the differences between new and old EU fiscal rules, using the experience of Croatia during the Excessive Deficit Procedure (EDP), which was activated in 2014 due to fiscal imbalances.

The preliminary results of the analysis suggest that the new rules could mitigate the pro-cyclical character of fiscal consolidation and allow for significantly greater flexibility and a longer process of individualised approach to fiscal adjustment, which is particularly important from the point of view of the degree of indebtedness due to the balance between fiscal discipline and economic growth. Despite limitations, the paper contributes to ongoing discussions on the implications of the reform at academic and policy levels.

In addition to presenting the paper, the authors briefly presented the first National Medium-Term Fiscal Structural Plan that Croatia sent to the European Commission, the assessment of the plans of Croatia and other countries and discussed the importance and implications of changes in the preventive part of EU fiscal surveillance. They also raised the issue of the future of national fiscal rules, whose non-compliance with the new EU rules was also referred to by the Fiscal Policy Commission.