Sri Lanka: Parliamentary control of public finance

by Raja Wickramasinghe

Parliament has appointed opposition (JVP) MP Sunil Handunnetti as the chairman of the Parliamentary Committee on Public Enterprises (COPE). He was appointed the Chairman of the COPE, after August 2015 Parliamentary election deviating from the practice of appointing government Ministers as Chairmen of these Committees. MP Lasantha Alagiyawanna (UPFA), another opposition MP, is appointed the Chairman of the Committee on Public Accounts (COPA). The Committees with oversight responsibility for financial discipline of government institutions are chaired by Opposition MPs, strengthens the Parliamentary control and oversight of Public Finance.

Parliament; the “Custodian of the public purse” exercises oversight in the financial performance in the Public Sector institutions. The Parliament is the sole authority to approve spending of people’s money and collection of taxes from the people. It cast upon the parliament the responsibility to scrutinize how the government Ministries, Departments and other government agencies spend money approved by the Parliament. The annual Budget and other finance bills presented to parliament for approval provides the opportunity to Parliamentary scrutiny of Public finance.

The annual Budget (Appropriation Bill) is presented to the parliament each year and the budget document contains information that outlines the policies underlying tax and spending proposals. The Budget debate provides the Members of Parliament the opportunity to exercise this most crucial function of the Parliament. The standing orders allow for not more than Twenty-six days for the consideration (debate) of the Appropriation Bill, of which not more than seven days and not more than twenty two days are allotted to the Second reading and the Committee stage discussions respectively. This provides approximately 200 hours of discussion and final approval of over 300 Heads of expenditure relating to government Ministries, Departments and other government Agencies.

The financial information is provided by the Treasury and Government Agencies. The MPs sometimes question the accuracy and the reliability of the information. The Parliament’s role demands Parliamentarians to take an active role in this process. It allows the Parliament to keep a check on government’s spending of public money and hold the government to account. Lack of access to accurate, reliable and in-depth budgetary information, time constrains and multitude of other constrains is a significant challenge to this crucial function of Public Finance Oversight and it has become less effective. In this challenging situation, scrutinizing, as supposed to do, with due diligence 300 Expenditure Heads is a daunting task and hardly ever the MPs could go into the fiscal implications of the proposals.

This is a sharp disconnect between the formal power and the actual budgetary role of the Parliament. Key reasons for this disconnect may be, apart from other constrains, is the limited knowledge and capacity of legislators to scrutinise fiscal matters; most Parliamentarians don’t possess the knowledge and skills to understand a complex budget and to analyse it. Research capacity in the legislature is almost non-existent. Budget related information remains the monopoly of the executive; the Treasury. The legislature depends on the information provided by the executive.

PARLIAMENTARY BUDGET OFFICE (PBO)

These challenges are addressed by taking measures to provide parliamentarians with institutional capacity to carry out their legislative and public finance oversight functions more actively and effectively. To that end, establishing PARLIAMENTARY BUDGET OFFICE (PBO) would strengthen the MPs’ role of carrying out financial oversight. The PBOs in OCED countries, many Asian, African and South American countries have been successful in their role.

The Parliamentary Budget Officer (PBO) is an independent position similar to the Auditor General, reports to the Parliament. The Auditor General and the Parliamentary Committees; COPE and the COPA, all take a retrospective view of the public accounts and play an assurance role. The Parliamentary Budget Officer’s work is largely prospective in nature and in a decision support role for Parliament. The PBO provides un-biased, independent analysis on the state of the nation’s finances and the government’s estimates to the Parliament independent of the executive; the Treasury.

ROLE OF PARLIAMENTARY BUDGET OFFICE (PBO)

The PBO’s main functions would be Economic and Fiscal analysis and expenditure and revenue analysis and improve budget transparency. PBO will support Parliament in exercising its oversight role in the government’s stewardship of public funds and ensures budget transparency with an aim to implement sound economic and fiscal policies. PBO advices independently, objectively and is non-partition. PBO’s reports are made openly available to committees and Parliamentarians; and with the permission of the Parliament, to the public.

The PBO’s work involves financial analysis and broadly on fiscal policy, analyses programme costs and estimates and provide cost estimates on Parliamentary proposals. Upon request from a committee of the Parliament or any Parliamentarian (MP), estimates the financial cost of any proposal over which Parliament has jurisdiction. PBO provides distinct complementary service to support Parliament and Parliamentary Committees; especially financial expertise to COPE and COPA. It provides research and analytical support to individual MP’s and complies with their requests and works with Parliamentary committees.

The PBO plays an important role helping Legislators (MPs), and can significantly assist MPs in understanding the budget process, assists legislators to critically analyze program budgets, performance indicators and results (annual performance reports) to evaluate the Budget proposals, making the Budget to become more effective and meaningful.

ADVANTAGES OF PARLIAMENTARY BUDGET OFFICE (PBO)

The Parliament, through the PBO is able to scrutinize the results of the approved spending. The Legislature is afforded increased opportunity to examine the effectiveness of government policies and programs and greater transparency and accountability of the Executive for the results of public spending. It leads the Executive to driving performance improvements in the public sector, including explanations for not achieving results and alert committee members to poor performance. The issues raised in PBO’s reports would have a substantive impact on the country’s economy. It would contribute to improvement in financial decisions and improved value for money in public services. Control wastage and extravagant expenditure in Public Sector Institutions.

The PBO strengthens and reassert MPs role as more active players in budget process and raises the quality of debate. Improve government transparency and accountability and brings financial accountability on public spending. PBO in the Parliament is a measure to strengthen the role of parliament in budgetary governance and to enhance the credibility of the whole budgetary process.