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Ian Hawkesworth, Budgeting and Public Expenditures Division, GOV

Budgeting in Greece Presentation at the annual meeting of Senior Budget Officials, Vienna, June 2008. Ian Hawkesworth, Budgeting and Public Expenditures Division, GOV. Agenda. General overview Budget preparation Parliamentary approval Budget Execution Accounting and Audit. General overview

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Ian Hawkesworth, Budgeting and Public Expenditures Division, GOV

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  1. Budgeting in GreecePresentation at the annual meeting of Senior Budget Officials, Vienna, June 2008 Ian Hawkesworth, Budgeting and Public Expenditures Division, GOV

  2. Agenda • General overview • Budget preparation • Parliamentary approval • Budget Execution • Accounting and Audit

  3. General overview • Budget preparation • Parliamentary approval • Budget Execution • Accounting and Audit

  4. General Overview • Founding member of OECD • Joined EC in 1981 • 12th member of the euro zone • Per capita GDP at 89% of the euro zone average • Services is the dominant contributor to GDP • Rapid GDP per capita growth; on average more than 4.0% per year during 2002-2007

  5. General Overview • Under the Stability and Growth Pact Excessive Deficit Procedure 2006/2007 • Successful in reducing the deficit below 3% of GDP in 2006 • Greece is projected to continue keep the deficit below recommended 3% of GDP

  6. Source: OECD Economic Outlook, Vol.2007/2, No. 82, December

  7. General Overview • Future challenge lies in reducing government debt • Currently, Greece has one of the highest general government debt ratios among OECD members (over 90% of GDP, Maastricht definition) • Correspondingly Greece pays significant interest payments in terms of GDP share

  8. Source: OECD Economic Outlook, Vol.2007/2, No. 82, December

  9. General Overview • Situation is projected to be exacerbate with growing current account balance deficit. • Explanations for the “dip”: • Eurozone entry lowered borrowing costs which then led to consumer spending boom • Surge of public and private investment increased demand for imported goods and services * Because Greece is service-oriented economy, demand for durable goods translates to a current account balance deficit

  10. Source: IMF

  11. General overview • Budget preparation • Parliamentary approval • Budget Execution • Accounting and Audit

  12. Key Features • Weak top-down budgeting • Lack of unitary budget process (special accounts, capital budgeting) • Detailed input orientation • Little performance information • One year budgeting perspective • Program budget reform in pipeline

  13. The preparation process

  14. General overview • Budget preparation • Parliamentary approval • Budget Execution • Accounting and Audit

  15. Institutional features • Unicameral legislature with 300 members elected for a four-year term by proportional representation. • Presently a centre right majority • Traditionally majority governments • No independent research capacity

  16. Parliamentary process • Pre-budget consultation (early October) • Tabling • Committee on Economic Affairs examination • Plenary debate • Approval of the budget – block vote (end of December) • In-year oversight – weak • The definition of “Significant”

  17. General overview • Budget preparation • Parliamentary approval • Budget Execution • Accounting and Audit

  18. Key Features • Extensive focus on ensuring the legality and propriety of expenditure • Very extensive use of ex ante control • Execution involves a large amount of actors which confuses responsibility • Reallocation very time consuming (6650 in 2007, half < € 5000) which burdens MOEF • New framework law places more emphasis on ex post control, reducing the FAOs role, but effect too early to say

  19. Execution process Ministry of Finance * Excludes Salaries and Pensions Body (Ministry, Region, etc) Fiscal Audit Office Tax and Payment Office Supreme Audit Court 3rd Party

  20. General overview • Budget preparation • Parliamentary approval • Budget Execution • Accounting and Audit

  21. Accounting • On a cash basis, no plans for accruals • Responsibility for central government accounting is centralized in GAO’s Directorate of Public Accounts • Five different accounting systems for public sector: hospitals, social security funds, municipalities, public law entities, central government • Modernization project

  22. The Hellenic Court of Audit • Inspired by French Cour des Comptes • About 650 staff • Ex ante and as ex post control take up the same amount of resources • Less than 1 pct. of ex ante controls result in changes • No performance or value for money audits • Some defense and foreign affairs expenditure is excluded from HCA audit • Little dialogue with Parliament on basis of HCA’s annual report

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