/ world today news/ The reporting of millions and billions of excesses of revenues over expenses becomes an end in itself. Society continues to not know exactly what capital investments the state is making
The Ministry of Finance for another month boasted of a significant budget surplus – BGN 1,746.7 million as of June 30. He also announced preliminary data, according to which by the end of July the surplus will be almost BGN 2 billion. These are data on the consolidated fiscal program. The implementation of the Law on the State Budget, which should be leading, is mentioned among others. But the size of the surplus is not always a source of pride and does not necessarily mean good news for the economy.
According to the published data, as of June 30, the implementation of revenues in relation to the approved law on the state budget is 50.5%. This is a very good result, provided we have no doubts about the amount of revenues provided for in the law. The comparison with the income from the same period of the previous year convinces us that the result towards the middle of the year is really good and this is indisputable for direct taxes. The NRA deserves to be praised – the implementation compared to the annual plan for the corporate tax is 58%, and for the personal income tax – 51.8%. Revenues from excise taxes, however, lag behind – as of June 30, 45% of what was determined in the Budget Law was collected. Implementation of expenditure and transfers is also low at 45%.
The revenue and expenditure performance data show that
the surplus is not due to more revenue collected,
and significantly less funds were spent than those provided for by the law on the state budget. The question is what this means – high efficiency in spending or planning to spend more than necessary. It is difficult to give a definite answer in the middle of the year. But it is disconcerting that, with a total of BGN 2.078 billion in capital expenditure, only BGN 180 million has been implemented by the half-year. The official announcement of the Ministry of Finance has no comment on this situation.
It is useful to establish the reasons for the reduced costs, as well as whether this does not adversely affect the implementation of the relevant budget policy. What are the costs whose reduced performance has led to the sizeable surplus?
Let’s go back to capital expenditure. During the adoption of the 2017 budget, no information was presented to what types of expenses the intended amount refers to. It was not clear what goals will be solved with this spending of public money. We can assume that the amount is a kind of government reserve and is not related to specific projects and intentions of actual spending.
This approach – to foresee more than BGN 2 billion in the annual budget for capital expenditures and to spend only 30% of the amount, has been repeated over the years. Only 2010 and 2014 make an exception – there the amounts for the government’s reserve – BGN 1 billion, and the amount for capital expenditures – also BGN, are listed separately. In the other years, no reserve is foreseen, but only about two billion for capital expenditure. The suspicion that this is not related to real projects is also confirmed by the reported data on capital expenditures in the period 2009 – 2017. For 2016, 78% implementation of capital expenditures is reported, for 2015 – 65.5%, for 2014 d. – 60%. Only in 2010 did the capital investments exceed the funds provided for in the law. But again, there is no information on what the budget units have invested in. It is also not clear during the discussions on the adoption of the annual budgets in the parliament. After all, for years it has not happened that reports on the implementation of the state budget are discussed at plenary sessions in the National Assembly, which in itself is a violation of the Law on Public Finances and good European practice.
It is worth going back to the data on the lag of about BGN 300 million in excise revenue.
Claims of great success in the fight against smuggling are not confirmed
from what was achieved in the first six months. It is possible that there is some factor that will be removed by the end of the year, and the anticipated BGN 5.038 billion will be collected. Unfortunately, the authorities do not say anything about it. There is no comment from the new head of the Customs Agency. If he had, the public might learn what his conception was of the management and restraint of theft and all the acts which we are accustomed to sum up under the word smuggling.
The Ministry of Finance, which leads the general methodology on taxes, should again review the regulations for the control of fuel sales, especially in the so-called departmental gas stations, as well as everything related to charging from mobile devices.
Another defect in cost management is that funds are transferred from the central budget to municipalities and other units in amounts that exceed those provided for by law. This is how surpluses are created under the consolidated fiscal program – for example, as of June 30, the total surplus is BGN 1,746.7 million, which also includes the surplus of municipalities in the amount of BGN 368 million. This happens because for the half year the central budget transferred to the municipalities not 50% of the annual amount, but 55%.
All this shows why it is important that the estimates and conclusions about the state’s income and expenses are mainly related to the implementation of the state budget, and that the data on the fiscal program have an auxiliary meaning and role. Only in this way will the efforts of the administration for effective management of public funds receive their useful direction, without reaching a self-serving advertisement of the large surpluses under the consolidated fiscal program.
The effective management of public money will be greatly facilitated if the authorities review and amend some texts in the Law on Public Finances, using the experience of implementing the law during 4 budget campaigns. The frequent changes during the year to the budgets of the individual departments continue – with expenses shifting both by type and from one budget unit to another. This is related to the statutory rights of the Minister of Finance and the Council of Ministers to reshape the law on the state budget adopted by the National Assembly. It is unlikely that there will be time for such changes until the 2018 budget, and public pressure for such changes is lacking. It has already been accepted as normal with decisions of the Council of Ministers to distribute additional budget money, as well as to change the budgets of the various ministries and agencies. It is good that media and analysts are more interested in how the budgets of individual institutions are implemented during the year.
USELESS
From the beginning of 2014, according to the requirements of the new law on public finances, the approval of separate budgets for each ministry and department, both by revenue and expenditure elements and by budget programs, began. But in practice, the benefit of this serious innovation is negligible so far. The program objectives, as they are defined for most ministries, show only formalism, which starts with the meaningless names of the programs. It is imperative to think about all this and put an end to formal program budgets, or make changes to fill this part of the budget process with substance.
It is understandable that program budgets require a lot of time to make appropriate amendments. But there are other, relatively faster and easier changes to another form of presentation of cost elements. Our proposal is to establish costs that will facilitate the analysis and evaluation of the use of funds. This presupposes mandatory listing as an annex to the budget law of capital expenditures, various subsidies, “other transfers” and so on. In this way, the high degree of transparency of the budget process required by the Directive on budget frameworks will be achieved.
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Photo: BGNES Borisov is very pleased with his finance minister. |
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