Parliament powerless before Government’s capital budget

Parliament adopted the budget for 2016 while the MPs have tried to add six new projects to the capital budget, through specific conclusions. We assume that nothing will happen with these six projects because of the systematic problem in development and presentation of the capital budget, which disables Parliament to obligate the Government in this matter.

During budget adoption for 2016, MPs have stopped long and senseless practice in submitting amendments to the Law on budget justification, in order to change capital budget. Even though the amendment had been adopted, it hasn’t created the change regarding the Law, or any new obligation for the Government.

Instead of the amendments, Parliament unanimously adopted conclusions with the Law on budget, regarding agreed capital budget changes, adding six new projects this year. This practice is not new – in previous years, MPs tended to adopt conclusions on Law on budget, in order to pressure Government to implement certain capital projects. Conclusions would not had been implemented, and the Government would not had given the reasons why the certain conclusion, even though supported by the majority of MPs, had been disregarded.

We have been alerting the Parliament about this problem, during the budget discussions on the Parliamentary committee for the economy, finance and budget, and in our analyses on budget adoption process.

Currently, the capital budget, as the most important part of the national budget for the citizens, is at the same time the least transparent.

Annual Law on budget does not contain list of the capital projects (which is only part of the justification). All projects are summarized through the budgets of the Directorate of Traffic and Directorate of Public Works and divided to general categories, such as local infrastructure expenditure, construction expenditure etc. Therefore, MPs assured bigger budget for a certain position within these two chapters, which doesn’t mean that this very purpose will be fulfilled, i.e. that submitted capital budget is going to be implemented.

MPs have decided on the capital budget for 2016 – including more than 300 million € for over 100 projects, justified on ten pages – without previous insight in the spatial plan and other documentation. Parliament has put itself before fait accompli, by delivering the capital budget within the overall law proposal on budget. Therefore, it is more correct to say that Parliament only concludes the capital budget, rather than considering it or adopting it.

The only solution is to systematically change the Law on budget and fiscal responsibility, so that annual Law on the budget contains the article which would name all the capital budget projects. This amendment to the Programme of public finances management reform 2016 – 2020, was our recommendation, unsupported by the Ministry of Finances.

Significant leap forward would be to include the Parliament in the establishment of the capital budget, which is the most sensible period to contribute to its content. In order to change the existing situation, legal procedure should be amended, therefore enabling main parliamentary committee to gain better insight into the capital budget draft, to give its opinions and suggestions, which the Government should take into consideration during implementing those suggestions.

We have suggested this solution during adoption of the systematic Law on budget and fiscal responsibility, without Government’s, or even more surprisingly, MPs understanding.

In short: if the Parliament wants to create key impact on the most important component of the annual budget, than it must undertake the task and create that possibility for itself, through changes of the systematic Law on budget and fiscal responsibility. All the other attempts, conclusions, changes in justifications and suggestions obligate no one else but MPs to recognize the lack of their execution.

Marko Sošić
Public policy researcher

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