Question 103

Is there an Independent Fiscal Institution (IFI) that conducts budget analyses for the budget formulation and/or approval process?
 * a. Yes, there is an IFI, its independence is set in law, and it has sufficient staffing and resources, including funding, to carry out its tasks.
 * b. Yes, there is an IFI, but either its independence is not set in law or its staffing and resources, including funding, are insufficient to carry out its tasks.
 * c. Yes, there is an IFI, but its independence is not set in law and its staffing and resources, including funding, are insufficient to carry out its tasks.
 * d. No, there is no IFI.
 * e. Not applicable/other (please comment).

OBS Guidelines
Question 103 examines whether an Independent Fiscal Institution (IFI) exists that contributes budget analyses to the budget formulation and/or approval process. According to the Principles for Independent Fiscal Institutions, adopted by the OECD Council in 2014, “independent fiscal institutions are publicly funded, independent bodies under the statutory authority of the executive or the legislature which provide non-partisan oversight and analysis of, and in some cases advice on, fiscal policy and performance”, and with “a forward-looking ex ante diagnostic task”. In practice, they come in two main forms:


 * Parliamentary budget offices (also known as PBOs) such as the Congressional Budget Office in the United States, the Parliamentary Budget Office in South Africa, and the Center for Public Finance Studies in Mexico (Centro de Estudios de las Finanzas Públicas); or
 * Fiscal councils such as the Office for Budget Responsibility in the United Kingdom and the High Council for Public Finances in France (Haut Conseil des finances publiques).

For more information, see von Trapp et al. ‘Principles for Independent Fiscal Institutions and Case Studies’, OECD Journal on Budgeting 15:2 (special issue, 2016).

To answer “a,” there must be an IFI, and its independence must be set in law. In addition, it must have sufficient staffing and resources, including funding, to carry out its tasks. Answer “b” applies if an IFI exists, but either its independence is not set in law or its staffing and resources are insufficient to carry out its tasks. Answer “c” applies if an IFI exists, but its independence is not set in law and it lacks sufficient staffing and resources. Answer “d” applies if no IFI exists.

If the answer is “a,” “b,” or “c,” please specify in the comments the name and type of IFI that exists (e.g., parliamentary budget office or fiscal council). If the answer is “a” or “b,” identify the law that guarantees its independence, and provide evidence in support of the assessment of the adequacy of its staffing and resources. This can include the IFI’s total budget allocation over recent years, any press reports that discuss perceived funding shortfalls, assessments by international organizations, and/or information from interviews with staff of the IFI.

1) Case of Armenia in OBS 2021
Armenia has a body called the Budget Office of the National Assembly of Armenia, established in 2016. Functioning, staffing, powers and responsibilities are regulated by the Law on the Rules of Procedure of the National Assembly of Armenia. Article 163 (1) of the Law on the Rules of Procedure is most relevant: ''A Budget Office shall be established in order to contribute a productive implementation of the oversight powers, reserved to the National Assembly by part 1 of Article 111 of the Constitution, as well as of the provisions established by Chapter 20, Articles 114-118 of the Rules of Procedure and for provision of professional assistance and information to Deputies, standing committees and factions. The Budget Office shall have functional independence.'' Another helpful reference is page 44 of a May 2019 Fiscal Transparency Evaluation of Armenia, which helpfully summarizes the Budget Office’s mandate and staffing: ''The Budget Office of the Parliament does not evaluate the government’s forecasts and policies, including compliance with the fiscal rule. It has been granted functional independence in 2016, with a mandate to support the Parliament on budgeting issues. It is currently lightly staffed (three technical staff in total), and its main role is to help Parliamentarians understand budget propositions and their implications. Going forward, for the Budget Office to play a role as an independent fiscal watchdog, it will need a stronger mandate and will require capacity building.'' Finally, here’s a description of the Budget Office’s scope of work on the National Assembly website. If you Google translate, you can see that their main role is providing necessary assistance to National Assembly members, standing committees and factions through preparing references, summary descriptions for them, as well as assisting them in formulating interventions to EBP. Questions: The researcher initially chose to assess the Budget Office as an Independent Fiscal Institution. Given that it has limited staffing and resources, he chose to assess the Budget Office as “b”, while adding a note that even though the “Budget Office, by law, enjoys functional independence, its budget is not a separate line in the state budget, but rather part of the National Assembly budget, approved by the National Assembly Speaker, and it has no charter of regulations of its own but rather is regulated by National Assembly regulations, meaning that its independence is seriously compromised.”


 * Would you consider that the Budget Office is an independent institution, given its functional (operational) independence as set out in law? Do you believe that this is sufficient to declare independence, even with the hesitations mentioned by the researcher?


 * Both the researcher (and maybe the IMF?) appear to consider the Budget Office an Independent Fiscal Institution. However, its mandate is such that it does not evaluate the government’s forecasts and policies and thus scores “d” on the rest of the IFI questions. As noted above, its primary work is to prepare references and summary descriptions to MPs and assist them in formulating interventions to the budget proposal. Given this mandate, would you consider the Budget Office an IFI at all? Would we score this question “‘‘‘d’‘‘”? Or, taking into account the considerations of the researcher (and maybe the IMF – it’s a little unclear from the FTE), would we score this “c” or “b” on Question 103 only, and consider it a very weak IFI?

Resolution: Usually, IFIs have their own laws and their own budgets. As that is not the case in Armenia, it is unclear what "functional independence" actually means. The fact that it currently has only three technical staff (no director or manager, no support staff, etc.) seems to mean that their independence is not even functional...

Many countries have similar support teams that produce technical analyses for MPs on budgetary matters, but these do not qualify as IFIs.

External references

 * Congressional Budget Office in the United States
 * Parliamentary Budget Office in South Africa
 * Centro de Estudios de las Finanzas Públicas
 * Office for Budget Responsibility in the United Kingdom
 * Finanspolitiska Rådet
 * Haut Conseil des finances publiques