89 Connect › Forums › Economy & Finance › Budget Watch: State Budget 2020 – Budget rigor and transparency
- This topic has 0 replies, 1 voice, and was last updated 09/04/2020, 11:17 by Institute of Public Policy – Lisbon.
09/04/2020 at 11:17 #4743Institute of Public Policy – LisbonParticipant440 PointsHalfway
By Paulo Trigo Pereira and Joana Andrade Vicente, Institute of Public Policy – Lisbon
Budget Watch project is a partnership between the Institute of Public Policy, ISEG (University of Lisbon) and Deloitte Portugal since 2013. It aims to analyze the State Budget Proposal from the perspective of rigor, transparency and budgetary responsibility. The analysis is exclusively technical, independent and objective, in light of good international reporting practices of the budget process.
THE ABSENCE OF A TRUE ABSTRACT STILL REMAINS (central to the accessibility of the SB to citizens), which should match an objective summary with the clarification of the Government’s budgetary policy priorities and the alignment of the main measures with those priorities, and not simply the repetition of government narrative around the generic description of some measures.
THE MACROECONOMIC SCENARIO OF THE SB PROJECTIONS APPEARS TO BE PRUDENT AND IN LINE WITH INTERNATIONAL PROJECTIONS, BUT THERE ARE SOME RISKS THAT MUST BE CONSIDERED. The forecast for economic growth, despite close to those of other institutions, shows an optimism in its projection, being that optimism also verified in the case of investment and exports, which contrasts with the average forecasts of the remaining institutions (4.2% and 2.7%, respectively).
The Budget Watch team predicts a slightly lower real GDP growth.
THE BUDGETARY STRATEGY MAINTAINS THE TREND OF IMPROVEMENT REGARDING THE CONTRIBUTION TO DEBT SUSTAINABILITY, DUE TO THE COMBINED EFFECT OF THE DECREASE IN INTEREST RATES AND THE PRIMARY SURPLUS, AND COMPLIES WITH THE STABILITY AND GROWTH PACT RULES REGARDING STRUCTURAL CONSOLIDATION expecting to achieve the Medium-Term budgetary Objective (null structural balance) already in 2020. The primary structural adjustment is, however, almost null (it is only 0.1 p.p.).
IN PUBLIC CONSUMPTION (PERSONNEL EXPENDITURE AND INTERMEDIATE CONSUMPTION) THERE IS AN ACCELERATION OF ITS GROWTH RATE, WHICH REFLECTS A GREATER REALISM given the underbudgeting foreseen for last year and the increase in rigid expenditure assumed this year with personnel expenditure (given the measures to unfreeze career progression and of wage appreciation).
The measures to contain intermediate consumption are not properly justified*. The uncertain and insufficient information on strategies to control Hospitals’ debt, and corresponding endowments for the National Health Service (which appear to be insufficient to cope with the new measures), also raise concerns.
THERE IS GREATER CONTROL OVER SOCIAL SECURITY EXPENDITURE, AND THE FORECASTS FOR A SHORT-TERM EQUILIBRIUM ARE CONSISTENT. THERE IS LESS PRESSURE ON THE SYSTEM’S SUSTAINABILITY IN THE MEDIUM TERM, BUT VULNERABILITIES IN THE LONG TERM PERSISTE. In the SB 2020, the prospects for coverage of expenditure on social benefits by social contributions improve, and no extraordinary transfers from the SB to Social Security are foreseen.
THE RATIONALE BEHIND POLICY CHOICES AT THE MACROECONOMIC LEVEL AND THE TRADE- OFFS IN EXPENDITURE POLICIES ARE NOT EXPLICIT. Important gaps in the provision of information and transparency at this level continue (especially in governmental choices between discretionary and non-discretionary expenditures), which can only be effectively diminish with the improvement of the budgetary process.
INFORMATION ON FINANCIAL FLOWS BETWEEN THE STATE AND THE STATE BUSINESS SECTOR IS SCARCE, GIVEN ITS RELEVANCE, AND IS DISPERSED with only a specific and not enough informative subsection. UTAM (Technical Unit for Monitoring the Public Business Sector) may bring future improvements at this level, but then it’s necessary to process and incorporate the information in the SBR 2020.
INFORMATION ON CURRENT AND FUTURE EXPENDITURE ON PUBLIC INVESTMENT REMAINS INCIPIENT AND PRACTICALLY NONEXISTENT, WHICH IS RELATED TO THE MAINTENANCE OF HISTORICALLY LOW LEVELS IN THIS VARIABLE. Information on the quantification of guarantees to public administrative and business entities increases, and also on the risks of contingent liabilities and contractual reviews (within public-private partnerships’ scope), but there is still lack of clarification regarding the variations in the charges’ projections.
The ‘sharing of efforts’ in containing public expenditure between the various levels of Public Administration shows that THE CONTRIBUTION TO THE CONSOLIDATION OF EXPENDITURE IN 2020 SEEMS TO COME SIGNIFICANTLY MORE FROM THE REGIONAL AND LOCAL ADMINISTRATION THAN FROM THE CENTRAL ADMINISTRATION.
THERE IS STILL NO IMPROVEMENTS IN THE BUDGETARY PROCESS, INCLUDING THE STATE OF IMPLEMENTATION OF THE NEW BUDGETARY FRAMEWORK LAW, crucial to the budgetary process improvement, even after the second amendment to the Law, with the re- calendarization of its effects now only for the SB 2021 – being already possible to anticipate that not even for the SB 2021 will be fulfilled.
- This topic was modified 3 years, 1 month ago by Institute of Public Policy - Lisbon.
- You must be logged in to reply to this topic.
Comments are closed.