Question 109

When does the legislature approve the Executive’s Budget Proposal?
 * a. The legislature approves the budget at least one month in advance of the start of the budget year.
 * b. The legislature approves the budget less than one month in advance of the start of the budget year, but at least by the start of the budget year.
 * c. The legislature approves the budget less than one month after the start of the budget year.
 * d. The legislature approves the budget more than one month after the start of the budget year, or does not approve the budget.
 * e. Not applicable/other (please comment).

OBS Guidelines
Question 109 examines when the legislature approves the Executive’s Budget Proposal. International good practice recommends that the Executive’s Budget Proposal should be approved by the legislature before the start of the fiscal year the budget proposal refers to. This gives the executive time to implement the budget in its entirety, particularly new programs and policies.

In some countries, the expenditure and revenue estimates of the Executive’s Budget Proposal are approved separately; for purposes of this question, at least the expenditure estimates must be approved. Further, approval of the budget implies approval of the full-year budget, not just a short-term continuation of spending and revenue authority.

To answer “a,” the legislature must approve the Executive’s Budget Proposal at least one month before the start of the budget year. Answer “b” applies if the legislature approves the Executive’s Budget Proposal less than one month in advance of the start of the budget year, but at least by the start of the budget year. Answer “c” applies if the legislature approves the Executive’s Budget Proposal less than one month after the start of the budget year. Answer “d” applies if the legislature approves the Executive’s Budget Proposal more than one month after the start of the budget year, or does not approve the budget. Answer "d" also applies in cases where a budget proposal is approved by administrative rule rather than by the legislature, which is typically supported by the national Constitution when the legislature doesn’t approve the budget by a deadline.

1) Case of Slovakia in OBS 2017
Slovakia's 2017 budget had not been approved by December 31, 2016 (cutoff date) and so “b” or “c” would apply. 2016 budget was approved well in time, more than 1 month prior to the beginning of the year (so option “a” applies). This has been the practice for previous years as well ==> suggested response “a.”

Resolution : we can use BY 2016, also in line with the fact that we are using the 2016 EB in Section 3.

2) Case of Croatia in OBS 2017
Due to elections in November 2015, temporary financing was in place in the first 3 months of 2016 (the budget process was not normal). Due to elections (again!) in September 2016, the budget process was delayed again. Neither 2017 nor 2016 budget approval processes were “normal”.

Questions to ask: How many budget proposals have been submitted to parliament, including the “interim” ones? The 2016 budget was approved in March this year, right? And when was the 2015 budget approved?

If the 2014, 2013, and 2012 budgets were approved following the normal budget process, we can respond by using BY 2014. This is because we should really have some continuity in practice, if we want to respond “a”, “b”, or “c”. However, if 2014 was the only year where the normal process was followed, we should use BY 2016, and therefore respond “d” to this question. We can then wait to see whether by December 31, Parliament approves the 2017 budget on time.

Resolution : Given that the 2013, 2014 and 2015 budgets were approved according to the normal procedure (while the budget for 2012 was approved in March 2012 due to parliamentary elections), we agreed we can use 2015 as a reference year for answering questions about the budget process.

3) What fiscal year should be assessed?
Unless there are identifiable exceptional circumstances, we should always answer this question considering the practice that happened in the latest fiscal year (or the year used for the Enacted Budget).

4) Does this question refer to the date the legislature approves the budget or the date the budget is enacted?
This question refers to the date the legislature is approved. In most countries, the difference between the approved and enacted dates of the budget isn't enough to change the scoring of this question, but we should make sure that we are being consistent on this question across countries.

4) The case of Guatemala in OBS 2021
As stipulated in the Political Constitution of the Republic of Guatemala, if the budget is not approved by November 30 of each year, the budget of the previous year will immediately enter into force (Guatemala has a calendar year fiscal year). At the end of 2019, the proposed budget for FY 2020 was not approved by the deadline, so the 2019 budget entered into force according to Decree 25-2018 of the Congress of the Republic of Guatemala. Notably, it was republished and contained some updates for 2020. In the case of the proposed budget for FY 2021, initially, Congress approved the proposal as a national emergency during the early morning of November 18, 2020, Decree 33-2020, in a scenario of severe criticism from the opposition benches, civil society, and citizens for the limited transparent and hasty mechanisms that led to its approval, with a favorable opinion signed on the same day of discussion and approval, without this opinion being really known, and increase in the budget of Congress on questionable issues. This generated severe criticism and social unrest, which resulted in days of demonstrations that were violently repressed by the security forces, in which even an unknown group (accused of government infiltrators) burned part of the facilities of the Congress of the Republic. The demonstrations not only intensified but also called for the resignation of the President as well as the deputies of Congress, especially the president of the legislative body. Therefore, Congress revoked the approval of Decree 33-2020. The deadline for budget approval expired, and consequently once again the previous budget was put into effect, as stipulated by law, which for 2020 was the 2019 budget, so for 2021 the Decree 25-2018 entered into force (Enacted Budget 2019), also as indicated by the Ministry of Finance on its page, plus the modifications that have been authorized through Decrees 12-2020, 13-2020 and 20-2020. Given that the 2021 Enacted Budget was republished on January 5, 2021 – past the cutoff date for OBS 2021 – we chose to look back to the 2020 Enacted Budget. Though it is essentially the 2019 Enacted Budget -- which we assessed for Guatemala in OBS 2019 -- because it was republished and also contained some updates for 2020, we chose to consider it for OBS 2021.

However, for Question 109, which asks when the legislature approve the Executive’s Budget Proposal, the correct response is “d” given that the legislature does not approve the budget. The budget is approved administratively and not by discussion of the legislature.