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Civil Society, Legislatures, and Budget Oversight


 

This theme page provides access to current information on the role of legislatures in the budget process.  It is targeted at civil society organizations and researchers that are interested in working with legislatures towards more effective budget oversight.  The page may also be useful to members and staff of executives and legislatures, public audit institutions, and international organizations interested in this theme.


Go to Section 1 for general information on the state and lessons of civil society– legislature relationships with regard to the budget. 

Go to Section 2 for specific resources, tools, and materials.

 

Section 1

·     Guidelines to the Cooperation between Civil Society and Legislatures in Budget Oversight

·     What is the Role of the Legislature during the Different Stages of the Budget Process?

·     Can Legislatures Be Both More Independent and Fiscally Prudent?

·     Proceedings of the Workshop “Legislatures and Civil Society reconsidering Strategic Relations in the Budget Process”

 

Section 2

·     News and Activities

·     The Open Budget Index (OBI) Questions Relevant to CSO-Legislature Relations

·     Annotated Literature

·     Additional Literature

·    Relevant Links

·     Who to Contact


Guidelines to the Cooperation between Civil Society and Legislatures in Budget Oversight

Interaction between legislatures and civil society organizations is increasing in many countries.  Many legislatures now open their proceedings to the media and the public, or call for submissions and outside experts to testify.  For civil society organizations, the parliamentary approval process provides a primary channel for influencing budget decisions.  The growing budget role of legislatures in many countries therefore represents an opportunity for civil society to use this channel for advocacy purposes.
 

Increased legislative participation can:
 

·     Boost transparency and help to curb corruption.

·     Give rise to incentives to enhance efficiency in departmental spending.

·     Foster consensus about difficult budget choices, and foster accountable and democratic government.

 

However, there are also concerns that increased parliamentary activism may undermine prudent fiscal policy.  Hence, strengthening legislative financial scrutiny has many potential benefits, but also some risks.

 

 

Steps To Strengthen Civil Society Participation in the Legislature

·     Open the legislature and its committees to the media and the general public.

·     Make information before the legislature publicly available, including committee reports.

·     Call for submissions on the budget and legislation, and invite outside experts.

·     Educate civil society about legislative procedure, and needs.

·     Engage with civil society about what is needed to establish a cooperative relationship.


From a parliamentary perspective, the input of civil society can help to make the legislature's engagement with the budget more effective.  Some civil society organizations have provided budget training to legislative staff and members, and have produced accessible guides to the budget process.  In addition, civil society organizations can contribute expertise and independent analysis of the budget.  This is particularly important when adequate legislative research capacity is not available.
 

Moreover, civil society input to parliamentary deliberations can help to ensure a balance of views on the budget, and provide an important opportunity for new perspectives to be developed.  One example is gender budgeting initiatives, which in several countries have emerged as a result of a partnership between parliamentarians interested in gender issues and civil society organizations able to provide the relevant research.  Some civil society organizations have supported legislative bodies in ensuring follow-up to recommendations and cases of corruption highlighted in audit reports.

 


What is the Role of the Legislature During the Different Stages of the Budget Process? 

 

Most public budgeting cycles can be separated into four different stages: drafting, legislating, execution, and audit.  This basic process is applicable to most countries with democratic governments, although there can be significant variations in terms of the timing of the different stages, and the relations between different actors.

 

The drafting stage takes place mostly within the executive.  It usually involves departments submitting budget proposals to a central budget authority, such as a Ministry of Finance or Treasury, to come to an agreement within the executive on how available funds for the upcoming year (and sometimes beyond) should be allocated among departments.  The role of legislatures tends to be minimal at this stage.  Some receive briefings on how the drafting process is developing and on central issues that have emerged. In some countries, medium term budget policy statements are presented to the legislature several months before the budget itself is, and a few countries have formal consultations between the legislature and the executive during this stage.

 

Once a comprehensive budget has been drafted, it has to be approved by the legislature to become effective.  The role of the legislature is arguably most obvious during this second or legislative stage, when the legislature scrutinizes the expenditure and revenue proposals of the executive and decides whether to approve, reject, or amend them.  The principle of legislative authorization of all public spending and taxation is also called the ‘rule of law’ in public finance.  The presentation of the budget in the legislature is usually the first time that the details of the draft budget are reported widely in the media and become known to the general public.  Often, legislative committees have responsibility for in-depth scrutiny at this stage.

 

The execution of the budget is in the hands of the executive.  Funds are apportioned to spending departments in line with the approved budget.  However, it is not uncommon that funds are shifted to purposes other than those for which they were approved.  Frequent ad hoc adjustments to budgets can reflect uncertainties in the macroeconomic and fiscal environments, but the need for continuous revisions is also a symptom of a weak and ill-disciplined budgeting system.  For this reason, legislatures might closely monitor implementation of the budget by scrutinizing information on actual spending.  Under normal circumstances, any significant changes in spending should be approved in adjustment appropriations.

 

Following the implementation of the budget, government accounts and financial statements are audited by an independent audit institution, often an auditor general or audit court.  Usually, the results of the audit are presented to the legislature and consider by one of its committees, such as a public accounts committee.  In this way, legislators can use the insights gained from audit reports to assess future draft budgets.

 

The oversight demands on the legislature are challenging because budget cycles overlap.  At any one time, the legislature might be approving one budget, monitoring the implementation of a previously approved budget, and considering an audit report on a budget that has already been implemented.


Can Legislatures Be Both More Independent and Fiscally Prudent?

Concerns have been raised that an expansion of legislative influence on budgets can lead to a deterioration of fiscal discipline.  Can legislatures be more disciplined as well as more independent in budget matters? Not all legislatures will be successful in striking this balance, but there is evidence that institutional engineering can help to reconcile legislative activism with fiscal prudence.

In particular, spending can be kept under control by having the legislature fix overall spending level before considering sectoral spending.  Several OECD country legislatures proceed in this way, some of them by passing a separate piece of legislation to fix the aggregate totals before the annual budget is considered.  This decision making structure can be complemented with a legislative process that tasks the budget committee with enforcing the overall spending limit and dividing the total among sectors.

Other devices are available to safeguard fiscal prudence in the face of rising legislative activism.  For instance, some countries have adopted fiscal rules that constrain budget makers, such as fiscal responsibility legislation and balanced budget requirements, albeit with varying levels of success.  In addition, legislatures should have reliable estimates of the budget effects of amendments over the short and medium term, and when appropriate, the long term.  The costing of amendments can stimulate a transparent and thorough consideration of their fiscal effect in particular when these projections are made publicly available.  Professional costing requires strong budget research capacity in the legislature, and access to relevant data.


Legislatures and Civil Society Reconsidering Strategic Relations in the Budget Process


Most recently the International Budget Project (IBP) and the London School of Economics (LSE) hosted a workshop on ‘Legislatures, Civil Society and the Budget Process’ at the LSE in June this year.  This workshop is the second of a series of thematic reflections on key aspects of applied budget work that are intended to support experienced budget groups.

 

The workshop provided a unique opportunity for civil society groups in the IBP network to learn from each other, from members of the legislature, from academics and from international organizations supporting legislatures. Its aim was to contribute to the strategic rethinking of the civil society relationships with the legislature.  As part of this reflection Fundar (Mexico), ISODEC (Ghana), Adva (Israel), CIPPEC (Argentina) and IPF (Croatia) presented their experiences of engaging with legislatures.

 

Reflecting on the experiences of civil society groups, participants agreed that the central challenge is to engage with the political and party political dynamics that form a central part of legislatures’ decision-making processes. Similarly workshop participants further identified a number of factors that limit the relationship between themselves and legislatures.  Very few legislatures have the skills and the resources to support their budget oversight role and to provide meaningful interaction during budget debates and committee hearings with the executive.  Legislatures also often do not take up the full extent of their legal and constitutional power because of the role of other actors such as political parties, strong ministries of finance, international financial institutions and the private sector.  In many cases these ‘external influences’ prove to be stronger than the influence of the electorate and as a result the legislature’s incentives to provide independent scrutiny of the executive is diluted. These ‘external influences’ therefore hamper the extent to which the information provided by civil society is utilized, and dilutes the full potential of legislative oversight. 

 

Joachim Wehner, lecturer at the LSE, reminded participants of the central role that institutional arrangements continue to play in the ability of the legislature to provide independent oversight of the budget process. The familiar institutional constraints include the nature of amendment powers, time or legislative scrutiny, structure of the committee system, access to budget information, etc. 

 

In addition to the weaknesses of legislatures the weaknesses of civil society were also explored.   Scott Hubli of the United Nations Development Program (UNDP) remarked on the underdeveloped civil society advocacy strategies which hamper the effectiveness of our relationship with legislatures.  He argued that more attention should be given to engaging with party caucuses and to developing civil society workers that specialize in engaging with the legislature. Civil society could also take greater advantage of non-budget opportunities for changing budget priorities such as PRSPs and the MDGs.

 

Despite these limitations, workshop participants agreed that legislatures remain a strategic core relationship for successful civil society budget work; as Scott Hubli puts it: “It sometimes works.” In the short term the relationship with legislatures continue to provide access to information and provides opportunities to influence specific budget allocations, to monitor budget execution and auditing, and to curb corruption and excesses.  In the long term this relationship provides the opportunity for democratic participation in the budget process and opportunities for legal reform for greater transparency and accountability.
 


Section 2

News and Activities

During April and May 2007, the Overseas Development Institute (ODI) and the Africa All Party Parliamentary Group in the UK Parliament organized a series of public meetings entitled "Parliaments and Development: How Can Parliaments in Developing Countries Contribute to Poverty Reduction?" The proceedings are recorded here.

 

In May 2007, the UK Department for International Development (DFID), the United Nations Development Programme (UNDP), and the World Bank Institute (WBI) hosted the first "Donor Consultation on Parliamentary Development and Financial Accountability". Background material and papers, as well as presentations, are available here.

The OECD Budget Practices and Procedures Survey now covers industrialized, developing and transition economies.  This groundbreaking and comprehensive survey includes a number of questions about the role of the legislature in the budget process, and it is currently being extended to several dozen non-OECD countries.  The latest results are available here.

The Open Budget Index (OBI) Questions Relevant to CSO-Legislature Relations

 

70. Does the executive hold consultations with the public as part of its process of determining budget priorities?
 

75. How far in advance of the start of the budget year does the legislature receive the budget? 

 

76. Does a legislative committee (or committees) hold public hearings on the macroeconomic and fiscal framework presented in the budget in which testimony from the executive branch and the public is heard? 

 

77. Do legislative committees hold public hearings on the individual budgets of central government administrative units (that is, ministries, departments, and agencies) in which testimony from the executive branch is heard? 

 

78. Does a legislative committee (or committees) hold public hearings on the individual budgets of central government administrative units (that is, ministries, departments, and agencies) in which testimony from the public is heard? 

 

79. Do the legislative committees that hold public hearings release reports to the public on

these hearings?

 

81. Is the legislature (or the appropriate legislative committee or members of the legislature) given full information for the budget year on the spending of all secret items relating to, for instance, national security and military intelligence?

 

82. Does the legislature have authority to amend the budget presented by the executive?

 

83. What is the most detail provided in the appropriation (expenditure budget) approved by the legislature?

Annotated Literature

  • Parliamentary Strengthening and the Paris Principles: Case Studies of Ghana, Tanzania, Uganda, and Cambodia
    The aim of this research project is to generate better evidence about parliamentary strengthening to inform decisions about whether and how development partners can best support parliaments in developing countries. The project is a collaboration between ODI and the Parliamentary Centre. It has involved four country case studies in Cambodia, Ghana, Tanzania, and Uganda. To review the synthesis of this report, click here.
     

  • Assessing the Power of the Purse: An Index of Legislative Budget Institutions
    By Joachim Wehner
    This paper compares parliamentary capacity for financial scrutiny on the basis of an index using data for 36 countries from a 2003 survey of budgeting procedures. The index captures six institutional prerequisites for legislative control, relating to amendment powers, reversionary budgets, executive flexibility during implementation, the timing of the budget, legislative committees, and budgetary information. Various methods of index construction are reviewed.

    The results reveal substantial variation in the level of financial scrutiny of government by the legislature among contemporary liberal democracies. The US Congress has an index score that is more than three times as great as those for the bottom nine cases, predominantly Westminster systems. Even allowing for US exceptionalism, the top quartile legislatures score twice as high on this index as the bottom quartile. These findings suggest that the power of the purse is a discrete and non-fundamental element of liberal democratic governance. For some countries it is a key safeguard against executive overreach, while others maintain a constitutional myth.
     
  • Transparency and Accountability in Africa’s Extractive Industries: the Role of the Legislature
    By the National Democratic Institute (NDI)
    In 2995 NDI launched a program to improve the ability of African legislators in resource-rich countries to understand and respond to the political and economic challenges often posed by the exploitation of natural resources.  To achieve this NDI conducted a survey in Angola, Botswana, Chad, the Republic of Congo, Ghana, Nigeria, Sierra Leone and South Africa to identify best practices and other strategies to promote transparency in extractive industries.

    The report summarizes key findings of the interviews conducted and describes the challenges that African legislators face in overseeing their countries’ oil and mining industries.  It also highlights best practices and offers recommendations for legislators, civil society groups, and the international community.  One of the report’s conclusions is that legislatures are uniquely positioned to mitigate the political risks that may be posed by natural resource exploitation.  Informed and engaged legislators can also promote economic growth and development in ways that respond to the needs of civil society.

Additional Literature

Albert van Zyl, Vivek Ramkumar, and Paolo de Renzio (2009). Responding to the Challenges of Supreme Audit Institutions: Can legislatures and Civil Society Help?
 

Government of Belgium (2007). Donor Consultation on Parliamentary Development and Financial Accountability.

Anderson, B. (2005). The Value of a Nonpartisan, Independent, Objective Analytic Unit to the Legislative Role in Budget Preparation. Paper presented at the Annual Meeting of the Southern Political Science Association, New Orleans.
 

Hallerberg, M. and P. Marier (2004). "Executive Authority, the Personal Vote, and Budget Discipline in Latin American and Caribbean Countries." American Journal of Political Science 48(3): 571-587.
 

Santiso, C. (2004). "Legislatures and Budget Oversight in Latin America: Strengthening Public Finance Accountability in Emerging Economies." OECD Journal on Budgeting 4(2): 47-76. http://www.oecd.org/gov/budget/journal
 

Schick, A. (2002). "Can National Legislatures Regain an Effective Voice in Budget Policy?" OECD Journal on Budgeting 1(3): 15-42. http://www.oecd.org/gov/budget/journal
 

SIGMA (2002). Relations Between Supreme Audit Institutions and Parliamentary Committees. Paris, Organization for Economic Co-operation and Development. http://appli1.oecd.org/olis/2002doc.nsf/linkto/ccnm-gov-sigma(2002)1
 

Stapenhurst, F. C., V. Sahgal, W. Woodley, R. Pelizzo (2005). "Scrutinizing Public Expenditures: Assessing the Performance of Public Accounts Committees." World Bank Policy Research Working Paper 3613. http://ideas.repec.org/p/wbk/wbrwps/3613.html
 

Wehner, J. (2003). "Principles and Patterns of Financial Scrutiny: Public Accounts Committees in the Commonwealth." Commonwealth and Comparative Politics 41(3): 21-36.

Relevant Links

·     The Inter-Parliamentary Union (IPU) (list of the websites on national legislatures).

·     The Canadian Council of Public Accounts Committees (useful resources relating to ex post scrutiny).

·     The Association of European Parlamentarians for Africa (AWEPA)

·     United Nations Development Program (UNDP)/Democratic Governance and Parliamentary Development

·     Initiative on Strengthening the Role of Parliaments in Crisis Prevention and Recovery

·     World Bank Institute Parliamentary Program

·     Canadian Council of Public Accounts Committees

·     Commonwealth Parliamentary Association

·     International Organisation of Supreme Audit Institutions (INTOSAI)

·     Inter-Parliamentary Union

·     Organisation for Economic Co-operation and Development

·     Parliamentary Centre


Who to contact
 

General Questions

Warren Krafchik
International Budget Project

Joachim Wehner
London School of Economics

United States Legislatures

Ellen Nissenbaum
Center on Budget and Policy Priorities

OECD Legislatures

Jón R. Blöndal
OECD

Commonwealth Legislatures

Meenakshi Dhar
Commonwealth
Parliamentary Association

The World Bank and Legislatures

Rick Stapenhurst
World Bank Institute

United Nations Development Program (UNDP)

Scott Hubli
Global Programme on Parliamentary Strengthening (GPPN)

Inter-Parliamentary Union

Kareen Jabre
Inter-Parliamentary Union