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Budgeting in Greece: Overview, Preparation, Approval, Execution, and Audit

This presentation provides a comprehensive overview of the budgeting process in Greece, including preparation, parliamentary approval, execution, and accounting and audit procedures. It also highlights the challenges and features of Greece's budgeting system.

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Budgeting in Greece: Overview, Preparation, Approval, Execution, and Audit

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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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