PI-18. LEGISLATIVE SCRUTINY OF BUDGETS
ABOUT THE INDICATOR
This indicator assesses the nature and extent of legislative scrutiny of the annual budget. It considers the extent to which the legislature scrutinizes, debates, and approves the annual budget, including the extent to which the legislature’s procedures for scrutiny are well established and adhered to. The indicator also assesses the existence of rules for in-year amendments to the budget without ex-ante approval by the legislature. The indicator contains the following four dimensions and uses the M1 (WL) method for aggregating dimension scores:
- Dimension 18.1. Scope of budget scrutiny
- Dimension 18.2. Legislative procedures for budget scrutiny
- Dimension 18.3. Timing of budget approval
- Dimension 18.4. Rules for budget adjustments by the executive
IMPACT ON BUDGETARY OUTCOMES
In most countries, the government’s authority to spend is awarded by the legislature, through its passage of the annual budget law. If the legislature does not rigorously examine and debate the law, its power is not being effectively exercised, and the government’s accountability to the electorate for its fiscal strategy and strategic budget allocation
decisions is undermined. Assessment of legislative scrutiny and debate of the annual budget law is informed by the consideration of several factors, including the scope of the scrutiny, the internal procedures for scrutiny and debate, and the time allowed for that process.
Dimension 18.1. Scope of budget scrutiny
DIMENSION MEASUREMENT GUIDANCE
18.1:1. This dimension assesses the scope of legislative scrutiny. Such scrutiny should cover review of fiscal policies, medium-term fiscal forecasts, and medium-term priorities as well as the specific details of expenditure and revenue estimates. In certain jurisdictions, the review may be undertaken in two or more stages, possibly involving a gap between review of medium-term aspects and review of the details of estimates for the next fiscal year. In the absence of a legislature that performs legislative scrutiny functions, this dimension would score a D because the requirements of a C would not be met.
18.1:2. The relevant narrative of the PEFA report should include information on whether a functioning legislature exists, and provide a quick overview of its role in the budget process, including what documents it reviews. The report should also highlight the extent of review by the legislature, i.e., whether the documents are actively scrutinized, debated, and commented on or are simply noted. For an explanation of medium-term fiscal forecasts refer to PI-14.2.
Dimension 18.1. Scoring
|Score||Minimum requirements for scores|
|A||The legislature’s review covers fiscal policies, medium-term fiscal forecasts, and medium-term priorities as well as details of expenditure and revenue.|
|B||The legislature’s review covers fiscal policies and aggregates for the coming year as well as details of expenditure and revenue.|
|C||The legislature’s review covers details of expenditure and revenue.|
|D||Performance is less than required for a C score.|
Pillar Four: Policy Based Fiscal Strategy and Budgeting