News Column

'Umbrella bill' aims to regulate public finances

January 20, 2014

By Angelos Anastasiou AN 'umbrella bill' to facilitate the consolidation of public finances by setting rules for fiscal discipline and transparency was the object of discussion on Monday at the House finance committee. Finance minister Harris Georgiades stressed that the proposed bill creates the "institutional framework for much more efficient management of public finances." Addressing the committee members, Georgiades described the MoU-mandated bill as important and reformist, claiming that "to some extent, had the bill's provisions been followed in previous years, we could perhaps have avoided fiscal derailment." "This is a comprehensive bill that covers the entire legal and institutional framework of fiscal policy", he said. Auditor-general Chrystalla Giorkadji argued against the "stringent timeframes" set out in the bill regarding checks performed by the audit service, describing the bill's relevant provisions as "unattainable." In reference to the bill's main provisions, Georgiades pointed out that they clearly define the areas of responsibility for each of the institutions involved in managing public finances the finance ministry, other ministries, the cabinet, the House of Representatives . Georgiades announced the establishment of an independent Fiscal Council which will monitor public finances and offer advance policy advice. The Fiscal Council's mandate includes assessing macroeconomic and fiscal projections and providing policy advice based on the analysis of fiscal projections and review of results. Committee president Nikolas Papadopoulos exalted the fact that the three-member Council will "publicise its suggestions, meaning the Finance minister will be required to publicly defend any disagreement." Georgiades also announced the implementation of a three-year medium-term fiscal framework setting a 'ceiling' on both ministry and government budgets. The ceiling will be mandatory for the first year of the framework for both ministry and government budget spending levels. For the second year, the ceiling will be binding only to the government budget, whereas for the third year the framework will be indicative only. "This way, each year's budget will not be cut-off from the other two years of the framework there will be an overarching plan", Georgiades said. Papadopoulos commented on the provision of a 'budget ceiling', saying that the bill will include conditions on the submission of supplementary budgets, making it harder for government departments to resort to the House with requests for additional funding. Georgiades described the proposal as an 'umbrella bill' that consolidates provisions previously found on several items of legislation, with an important provision in place to regulate the evaluation and approval of investment plans and public works, whether conventionally executed or by joint ventures between the public and private sectors. He also listed general government provisions relating to local governance, semi-state and state-owned organisations, noting that "without monitoring, these pillars of government could derail public finances." Auditor-general Giorkadji declared some of the bill's provisions relating to the auditing service as "completely unattainable and impossible to implement", arguing against the "stringent timeframes" set out in the bill. Giorkadji explained that "it is impossible for all organisations in the auditing service's remit to be audited within six months", noting that the service's staff, once 110 in number, has been reduced to 80 and assigned twice the workload compared to recent years. With regard to submitting a fiscal report, Giorkadji said that submission within three months is unfeasible, wondering when the Accountant-general's report would be submitted and "when would the Service audit all the ministries so that we can formulate a position in the fiscal report." She argued that the Constitution sets no timeframe for completion of the report, usually submitted in the fall. "Submitting the report in time would be impossible even if the audit service's staff were to double in number", the Auditor-general said. She said that "the Ports Authority has not yet submitted its 2011 and 2012 financial statements to the Audit Service", noting that the authority's accounting staff "may be 20 per cent of the audit service's staff." The bill provides for additional government organisations to be audited further, Giorkadji argued. Send to Kindle


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Source: Cyprus Mail


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