IRELAND CAN distance itself from Greece and Portugal by making management of its public finances more independent and transparent, according to Gillian Edgeworth, a London-based economist with Italian bank Unicredit.

She cited the example of Hungary, which was helped in exiting an IMF programme by putting in place better budgetary institutions which markets deemed credible.

She was speaking at a seminar designed to elicit views on managing public finances co-hosted by the Department of Finance and Department of Public Expenditure and Reform yesterday.

Under the terms of the EU-IMF bailout, the Government must establish an independent fiscal council by the end of next month and draft a Bill containing new budget rules by the end of the year.

Officials from both departments made presentations along with a number of Irish and international economists with relevant expertise.

Lars Jonung, of Sweden’s long-established independent fiscal council, advised that Ireland’s council report to the Oireachtas rather than the Department of Finance so it can be as independent as possible.

Colin Forthun, an OECD public budgeting expert, stressed the importance of setting public spending targets that were appropriate for the wider economy, and then allocating resources to ministries on a “top-down” basis.

This method, considered international best practice, is in contrast to the traditional “bottom- up” approach used in Ireland, where departments bid for additional resources and the overall spending envelope is determined by the aggregate amounts agreed with the departments.

Mr Forthun also noted Sweden had introduced equality in employment protection rules for public and private sector workers during a banking and budgetary crisis in the 1990s. Before that, Swedish civil servants had enjoyed greater protection than private sector counterparts.