He told his audience at yesterday’s Eurostat conference, “Towards implementing European Public Sector Accounting Standards”, that there were no sound fiscal policies without good government finance statistics based on good public accounting. “To put it bluntly: where to go is an elusive question if you don’t know where you are.”
How important the reliability of government accounts is had been illustrated by some dramatic episodes in Europe of inaccurate reporting of deficits and debts in the run-up to the sovereign debt crisis, he said.
“Inaccurate accounting contributes to ill-founded policy decisions, insufficient consolidation efforts when deficits and debts are underestimated, and eventually to a total collapse of confidence leading to refinancing problems. Europe had had its “day of reckoning” with inaccurate reporting and learnt its lesson.
Harmonised public sector accounting standards will ensure that enhanced fiscal surveillance of member states takes place on a level playing field, provide high quality financial and statistical reporting of the performance and position of governments in Europe, improve the quality of policy decision-making and increase transparency and democratic accountability.
Van Rompuy said that Europe had made major progress in pulling itself out of the crisis. “As a result of our determined actions, the existential threat to the euro has been defeated.
“It’s a central achievement. The euro remains a strong global currency. Unlike many other major economies or currency zones, the euro area has a firmly balanced current account: this means we are not feeding into global imbalances and it shows a solid basis for our overall economic performance.”
However, Europe would only be able to exploit that solid basis in full if it continued to make progress towards European integration.
“Today my message is: we need harmonised public sector accounts in Europe. I have no doubt,” he added, “that you will contribute to defining best public sector accounting standards for Europe looking forward. By doing so, you will make a significant contribution towards European integration”.