The budget of the Belgian federal government: an introduction May 20th 2011 Tom De Bue Finance Inspection
Definition The federal budget is : • an estimate for one year • of the authorized expenditures • and the approved receipts • of the federal government.
Budget • Approved by the Chamber of representatives • Approval confirms that the Government is supported by a democratical elected parliamentary majority • Budget is more than an estimate and an authorization; it expresses and reflects the policy of the government on economical, financial and social level.
Budget principles • Annuality (article 174 Constitution) • Specialty (article 180 Constitution.) • No earmarking (exceptions apply) • Publicity (article 190 Constitution.)
Budget documents 1. General Budget of expenditures (GBE) = EXPENDITURES = LAW 2. Ways and Means Budget (WMB) = RECEIPTS = LAW 3. General Statement (GS) INFORMATION
Budget documents 1. General Statement (GS) Contains: - analysis and synthesis of the budgets - economic report - financial report - multiannual estimates (3 years) - note on the financial impact of the ageing population
General statement • Gives information on - the budget policy of the government - situation of the public finances - public debt • Gives an outline on the allocated receipts - to the EU - to the Regions and the Communities
General statement • Puts the government policy in an international context • Forms the connexion between receipts and expenditures • Not voted in the House of Representatives : GS gives information on the budget law
Budget documents 2. Ways and Means Budget (WMB) - = A LAW - authorisation to collect taxes - authorisation to collect non-tax revenues - authorisation to contract loans
Ways and Means Budget • Provides an estimate of all the receipts of the State • Empowers Government to levy taxes during the relevant fiscal year and to raise non- fiscal revenues.
Budget documents 3. General budget of expenditures • = A LAW authorization from the House of Representatives to the Executive to perform expenditures according to the credits voted
General Budget of Expenditures • Contains an estimate of the various items of expenditure • Authorization to proceed with the expenditures listed by programme
Example = appropriation 13 56 52 33 00 01 Section The department or Department for the agency interior (13) Division Which section of Soccer section the department? (56) Programme Goal of the (5) expenditure Action Goal of the (2) expenditure Items (“basic Expenditure item “Grant to soccer allocation”) association X” (330001)
2 types of budget appropriations • Commitment appropriations: maximum limit on total amount of closing contracts during year T • Payment appropriations: maximum limit on total amounts due during year T resulting from commitments made in year T and/or previous years
Example: ‘classical’ investment (for example: construction of a building) Year Commitment Payment T 1.000 € 150 € T + 1 0 € 550 € T + 2 0 € 300 € Total 1.000 € 1.000 €
Preparation of the budget • prepared by the government and ministries (public services) • approved by a democratically elected parliament
Preparation of the budget When Who What February- Administrative level. Central Instructions (circular letter) for preparation of the March budgetary department. budget. Baseline = no policy change. June-July Administrative level. The Secretary Bilateral meetings to discuss the proposals. for the Budget, the central budgetary Baseline = no policy change. department and the public entity involved. Finance Inspection is involved September Political level. Members of Amended proposals are discussed in the so-called government and their staff and the post-bilateral meetings. These meetings are Secretary for the Budget. reserved for hot items or difficult points on which no agreement has been reached. Baseline = no Finance Inspection is involved. policy change October Political level. Council of Ministers. Decisions on the final budget in a so-called “conclave” meeting. New policy is introduced in the budget Before Political level. Parliament Introduction and approval of the budget by December Parliament 31th
Budget law • House of representatives votes two documents : – Ways and Means Budget – General Budget of Expenditures • House of representatives receives a third document : – General statement (General Report)
Budgetary implementation • Task of the executive power; each minister for his own department • Powers are not unlimited • Internal budgetary control (Finance Inspection and Engagement officer) as well as external parliamentary control (Court of Audit)
No legal link between revenues and expenditures • If the gross domestic product (GDP) is lower than expected and revenues are also lower, government still can spend as authorised by parliament. This means there will be a deficit, if no measures are taken. • Therefore, in the first quarter of the year, a budget control is held.
Budgetary adjustment 2 reasons : 1. Macro adjustment (government takes into account the most recent macro-economic figures (inflation, GDP-growth, unemployment, …) 2. Create possibility for the government to make minor changes in the programmes
Budgetary adjustment • Imposed by law in the Budget and Accounting Acts • If necessary, the gouvernment can introduce other adjustments of the General Budget of Expenditures.
THANKS FOR YOUR ATTENTION Questions? Tom De Bue
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