Proposal for a
State Budget Act
in Sweden
summary and proposal -
Report (SOU 1996:14)
from the
Government Commission on
Budget Law
1
Summary
The task of the Commission
The Commission has had the task of analysing the areas in which an expanded
legal regulation of the state budget process would be desirable and making
proposals to that effect.
The existing legal framework
The Constitution (regeringsformen) deals only briefly with the state budget, its
focus being primarily on basic provisions on the state budget and on the
authority of Parliament and the Government in the sphere of financial power.
The concept of financial power refers primarily to the power to decide how
state revenues are to be estimated, and to decide on expenditure and other ways
of using the assets of the state.
The Parliament Act (riksdagsordningeh) contains provisions on the fiscal year,
the contents of the budget proposal, and when this bill is to be presented. It
also contains provisions on how Parliament is to deal with the budget proposal
and other Government bills. The recently adopted provisions on the frame
decision model and on areas of expenditure are of special interest in this
context.
Decisions by Parliament on the state budget and financial power do not
necessarily have to have the form of legislation. No special legislation has been
promulgated in this area except for the State Borrowing Act (1988:1387).
Instead, for decades now. Parliament has adopted special decisions on financial
power and the state budget in response to proposals from the Government or on
its own initiative. In these ways, decisions have been reached on important
issues concerning, inter alia, types of appropriations and conditions for the use
of appropriations, sale of state property, financing of investments, and
accounting.
Regulations in other countries
In most countries the provisions on financial power and the state budget are
distributed between the constitution and a special budget act.
As a rule the constitution establishes that the Government's right to tax and to
incur expenditure on behalf of the state shall be subject to parliamentary
decisions. As regards the budgetary process, the date when the budget proposal
is to be submitted is usually established, as well as various solutions for
situations where the state budget has not been decided upon before the
beginning of the fiscal year.
In most countries, detailed provisions on the distribution of authority and
responsibilities in the area of financial power between Parliament and the
Government and on the state budget are contained in a Budget Act.
As a rule the Budget Act prescribes that the state budget shall, in principle,
include all government revenue and expenditure, and that gross accounting shall
be applied. Usually the areas of operations are specified that are not required to
be included in the budget, as well as those where net accounting may be
applied. Often there are also provisions for how the state budget is to be
arranged and presented.
There are provisions on the various ways in which the Government may exceed
appropriations, save appropriations for coming fiscal years, and transfer
appropriations between various areas of the state budget. Most budget acts
contain an authorisation for the Government to enter into financial
commitments that exceed the appropriations granted.
As a rule there are provisions on the accounting principles that are to be
applied and on when and how the outcome of the state budget is to be reported
to parliament.
Research on the budget process
In recent years, theoretical and empirical research has been carried out with the
aim of shedding light on how large budget deficits have arisen in a number of
countries, and especially to explain the significant differences with regard to the
growth of central government debt between different countries.
Increasing unemployment has naturally been an important common part of the
explanation of the growth of government debt. However, the differences in
development in various countries can also be explained by the organisation of
political institutions and the state budget process. The budget process consists
of three phases; the Government's preparation of the budget proposal, the
decision by Parliament on the state budget, and implementation by the
Government of the operations decided upon. Many researchers have drawn the
conclusion that there are strong indications that the organisation of the budget
process is an important factor for explaining the differences between countries
as regards the budget policies actually carried out. A budget process which can
be described as stringent, due to various detailed characteristics, is considered
as being able to contribute to a lower deficit in public finances and a more
sustainable development of the state debt.
In an analysis carried out at the beginning of the 1990s, the Swedish budget
process was regarded as being very weak compared with the then twelve EC
member states. Since then, the process has been reinforced in a number of
ways. The prospects for a long-term approach have been improved by the
change in Parliament's mandate period from three to four years. There will be
changes in the way in which the state budget is dealt with given the use of the
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"frame decision" model. Furthermore, it is intended that a ceiling for public
expenditure will be used. Altogether, these changes entail a considerable
strengthening of budgetary discipline. However, even after these changes there
are still weak points in the Swedish budget process in a broader sense. These
are primarily located in two phases of the budget process - the way in which
the budget proposal is prepared by the Government, and the implementation of
the state budget adopted.
The need for a Budget Act
It is the responsibility of Parliament to decide upon the fundamental issues
concerning the state budget. For a long time Parliament has, in fact, made a
number of such decisions. However, these decisions have not been adopted in
the form of legislation, or in any particular statutory form. This can be
explained by the fact that the Constitution does not require that this type of
decision be given the form of legislation.
One consequence of this procedure is that it can be difficult to find the
decisions of topical interest, and to get a comprehensive view of the rules that
apply. As a result, the distribution of responsibility between Parliament and the
Government in the area of financial power is not always as clear as would be
desirable.
On several occasions, the Government has needed to give instructions
concerning fundamental issues of government financing that fall within the
decision-making sphere of Parliament. In these cases, the Government has
obtained the approval of Parliament by summarizing the main content of the
intended provisions in a report to Parliament. This is a complicated and
unpractical way of acquiring the necessary authority from Parliament.
This procedure contains two risks that may partially be contradictory. One risk
is related to the Government describing a new procedure at such length and in
such detail that it may tie its own hands in relation to Parliament in matters of
detail that may be considered as properly belonging to the Government's sphere
of authority. The other risk is connected with the fact that a general account of
an envisaged regulation is less precise than legislation. This may result in a lack
of clarity as to what Parliament has, in fact, approved, especially when a
proposal in a report has not been explicitly approved by Parliament, but has
been allowed to pass without comments, or has been put aside without action
being taken.
The problems arising from the lack of legislation in the area of financial power
become especially difficult when Governmental powers in a particular area are
based on authorisations which have been provided and changed over the course
of decades.
It may also be the case that Parliament, in conjunction with dealing with a
particular factual issue, has decided that a particular technical budget procedure
shall be applied to some area. There is a risk that such decisions may fall into
oblivion over the course of time.
In the absence of special decisions, particular practices have developed in some
areas, which are not unambiguous and clear in every respect.
In other areas no appropriate practices whatsoever have been developed. This
has led to uncertainty as to the appropriate procedure in some areas of central
importance.
The account just given shows that it is desirable that the rules that are actually
applicable in the sphere of financial power, be clarified, and that appropriate
regulations be created in areas where provisions are lacking, or where the rules
are no longer appropriate.
The lack of a law regulating the state budget and the distribution of authority
between Parliament and the Government in the sphere of financial power is
very unusual in an international perspective. The existing arrangements in
Sweden cannot be justified with reference to the Constitution and the
Parliament Act since these provisions are not sufficiently detailed to make
further regulation in a Budget Act unnecessary.
Insights obtained from theoretical and empirical research show that the
organisation of the budget process is important for the development of a budget
deficit and government debt. Appropriately drafted regulations may contribute
to a further reinforcement of the stringency of the Swedish budget process.
EU member states are required to avoid excessive public financial deficits, and
to have appropriate budgetary regulations to fulfil this obligation. Therefore,
EU membership provides one reason for creating regulations that may serve to
reinforce budget discipline.
The circumstances described have led the Commission to the conclusion that
significant benefits would be obtained if the decisions on the state budget, and
on the details of the Government's authority and responsibility in the area of
financial power were to be gathered in a special Budget Act.
Drafting of the Budget Act
The provisions on financial power and the state budget contained in the
Constitution and the Parliament Act are a natural starting point for drafting a
new Budget Act. A Budget Act should contain regulations that supplement and
clarify the provisions contained in the Constitution and the Parliament Act. This
would provide a basis for government action and create a bridge between the
provisions contained in the Constitution and the Parliament Act on one hand,
and the multitude of detailed regulations which the Government is required to
issue on the other hand.
The Budget Act should consolidate the budget process in a broad sense by
regulating certain fundamental circumstances. At the same time, Parliament and
the Government should retain the necessary degree of freedom of action.
Therefore, the rules should be sufficiently general to permit various technical
budget solutions without requiring a change in the Act. When required, changes
in certain provisions of the Act may be made in conjunction with considering
and deciding upon the state budget.
It has not been the ambition of the Commission to influence the distribution of
authority between Parliament and the Government. Instead, the aim has been
that the Act should include the existing arrangements as far as possible.
However, in some areas there has been a lack of clarity regarding the rules that
should apply. In other areas the existing arrangements have not been
satisfactory. Development work has taken place in some areas. In these cases
the intention has been to draft appropriate provisions on the basis of the
expressions of intent contained primarily in the reports of the Parliamentary
Standing Committee on Finance and the Government bills.
The Budget Act clarifies the authority and responsibility of the Government in
the area of financial power. The Act applies primarily to the Government.
However, it is unavoidable that the forms of action of Parliament, as well as
agencies, will be affected in some cases.
The following pages present the main content of the proposed law.
Effectiveness and results
There are general demands on how the Government should conduct the
implementation of state activities. These requirements are expressed in the
introductory section of the Act, which states that a high level of effectiveness is
to be aimed at and good economy observed in state activities. This provision
provides a basis for, inter alia, provisions on management by results, accounting
and audit.
Objectives must be formulated, and results need to be measured if operations
are to be directed towards greater effectiveness. The Act prescribes that the
Government give an account to Parliament of the objectives aimed at, and the
results achieved in various areas of activity. Performance reports enhance the
ability of Parliament to follow up and evaluate the results in the areas of
operations that have been decided upon.
Appropriations and state budget revenues
By granting appropriations Parliament decides how public funds are to be used.
Various types of appropriations exist which differ with regard to the right of
the Government to exceed the amount appropriated, and to make use of unused
funds in a subsequent fiscal year.
The types of appropriations used, and the conditions attached to these are
regulated in the Budget Act. Rules are accordingly laid down for fixed
appropriations (obelecknade anslag), multi-annual appropriations
(reservationsanslag) and flexible appropriations (ramanslag). The use of the
present estimated appropriation (forslagsanslag) is discontinued since it is
difficult to combine this type of appropriation with the ideas on which the
ceiling for government expenditure and limits for expenditure areas are based.
To promote high effectiveness and good economy, the Government is given the
authority to restrict the use of appropriations by subordinate agencies.
Moreover, a right is established for the Government to abstain from using
appropriated funds, should this be justified by reasons of public finance or other
special circumstances.
The concept of state budget revenue is not included in the Constitution. This
concept is now consolidated by a provision being included in the Act to the
effect that government revenues that are estimated by Parliament shall be
accounted for as state budget revenues.
Financial commitments
The Government may not make financial commitments on behalf of the state
without the approval of Parliament. The Budget Act stipulates conditions on
which the Government may make such commitments.
The Government may, for a purpose and up to a maximum amount decided
upon by Parliament, order goods and services, and decide upon grants and the
like that entail expenditure under fiscal years subsequent to the year to which
the budget refers. On the same conditions, the Government may issue credit
guarantees. A risk-related fee shall be charged for guarantees.
The Government is also given explicit authorisation to enter into such financial
commitments that are essential for the satisfactory conduct of its current work.
Financial commitments entered into by the Government shall be reported
annually to Parliament.
The scope of the state budget
Bearing in mind the central role of the state budget, the Commission proposes
rules for the government revenues and expenditure that shall be included in the
state budget. The proposed state budget shall, in principle, include all
government revenue and expenditure, as well as other payments that affect the
state's borrowing requirement.
Revenue and expenditure shall be entered gross in the state budget. However,
net accounting may be applied if the revenue in an area of operations is
intended to cover only part of the expenditure.
Areas of operations where the revenue is intended to cover completely the
expenses of the state shall not be accounted for in the state budget.
The authority of the Government to decide on the disposition of certain
revenues from fees is confirmed.
Financing of investments
Public investments vary in character, and can be financed in several ways.
Rules are needed in this area.
The Budget Act stipulates that the need for operating capital in central
government activities may be financed by credits from the National Debt
Office, and that Parliament is to set an annual limit for such credits.
Acquisition of fixed assets - material, intangible as well as financial assets which are used in government activities may be financed by loans from the
National Debt Office. Parliament shall establish limits for such loans annually.
Acquisition of assets of an infrastructural nature shall be financed by
appropriations.
Parliament may decide on exceptions from these rules for particular investments
or agencies.
Sale of state property
The state owns real estate, shares and other chattels. Rules are needed for the
conditions on which these may be sold, and by whom. Furthermore, regulations
are required as to how the revenue from sales may be used.
The Budget Act states that the Government may sell real estate with a
maximum value of SEK 50 million, unless there are special reasons for the
property being owned by the state. Sales to municipalities for urban
development purposes may take place without restriction.
The Government may sell shares in a company where the state has less than
half of the votes, unless Parliament has decided otherwise for a particular
company. The Government may not sell shares in a company where the state
has half, or more than half of the shares without parliamentary approval.
Other goods and chattels, apart from shares, may be sold by the Government if
they are no longer needed or have become unusable.
The following provisions are made as regards the use of sales revenue.
If Parliament has decided on the sale, the revenue shall be accounted for as
state budget revenue, unless Parliament has decided otherwise.
If the Government has decided on sale of property that is used in an area of
operations for which Parliament has approved an investment plan, the revenue
may be used for financing investments included in the plan.
If there is no investment plan, and the property has been financed by
appropriations, funds equivalent to the book value of the property shall be
accounted for as state budget revenue. If the property has been financed by a
loan, the loan shall be redeemed. With certain exceptions, the remaining
revenue may then be used in the same area of operations where the sold
property has been used.
If the property has been financed in any other way than by appropriations or
loans, the entire revenue may be used in the same area of operations.
The Government may always decide that funds are to be accounted for as state
budget revenue to a greater extent than stated above.
Follow-up, forecasts and outcome
Control over public finances in the follow-up phase needs to be reinforced. The
Budget Act therefore includes a provision that the Government shall follow up
carefully how the state's revenue, expenditure and borrowing develop in
relation to the estimated amounts.
Furthermore, on at least two occasions during the fiscal year, the Government
shall submit forecasts to Parliament on the the outcome of state budget
revenues and appropriations, and on the public borrowing requirement.
Important discrepancies in relation to budgeted amounts are to be explained.
An annual report for the state relating to the preceding financial year shall be
presented to Parliament at the latest by September. The report is to contain an
operational statement, a balance sheet and a cash-flow statement, as well as the
final outcome of state budget revenues and appropriations.
The development of public finance
To reinforce budget discipline, Parliament has decided on a frame decision
model, which comprises limits for areas of expenditure. Moreover, it should be
possible to impose a ceiling for government expenditure.
If the Government decides to introduce a ceiling for government expenditure in
the preparation of the following year's state budget, and when implementing the
operations decided upon, the the Budget Act stipulate that the Government shall
present proposals on such an expenditure ceiling in the spring finance bill.
Furthermore, if Parliament decides to allocate government expenditure to areas
of expenditure, provisions are given in the Act that the Government shall
present guidelines in the spring finance bill for how central government
expenditure is to be allocated to areas of expenditure in the coming proposal for
the next year's budget.
To reinforce the long-term focus of budgetary policy, provision is made that
proposals on ceilings for state expenditure and on guidelines for areas of
expenditure may be applicable for a longer period than one fiscal year.
If there is a risk that an adopted ceiling for central government expenditure will
be exceeded in the course of implementation of the budgeted activities, or that
the limits set on expenditure areas will be exceeded, the Government shall take
action to avoid this, or propose necessary measures to Parliament.
Accounting and audit
Parliament puts state funds at the disposal of the Government, and commissions
the Government to carry out the activities of the state. It is therefore natural for
the Budget Act to stipulate that the Government is accountable to Parliament.
In order to comply with this obligation, government accounting shall abide by
generally accepted accounting practices, taken into consideration the special
nature of the public sector. The accounts shall provide a true and fair picture of
the outcome of operations, assets and liabilities. The Government shall be
required to issue instructions on how accounting is to be carried out.
The accountability may be observed in various ways, for example through
accounts of the results achieved, through forecasts, through reports on the
outcome and through an annual report.
Ultimately it is the responsibility of Parliament to verify that the state activities
are carried out effectively and reliably, that the accounts provide a fair picture,
and that applicable regulations are being followed. Such controls takes place,
inter alia, through audit. The Budget Act therefore makes provision for
government activities to be examined through audit.
Delegation
The Budget Act primarily regulates the relationship between Parliament and the
Government. However, government operations are primarily carried out by
agencies subordinate to the Government. Provision must therefore be made in
the Budget Act for the Government to delegate authority. The Act, therefore,
provides the Government with the right to transfer authority to its agencies in
certain specified areas.
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Implementation
It is desirable that the Act comes into force on 1 January 1997. However, it
would also be desirable if the proposed regulations serve as a guide for the
preparation and adoption of the state budget which is to be implemented from
that same date. Older provisions in areas which are to be regulated by the
Budget Act and which do not have the form of legislation, shall cease to apply
when the Budget Act comes into force.
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Proposal for a State Budget Act
Effectiveness and result
1.
A high level of effectiveness and good economy are to be aimed at in
government operations.
Government operations shall, for the purposes of this Act, mean activities
carried out by the Government and by agencies subordinate to the Government.
2.
The Government shall report to Parliament on the objectives aimed at and the
results achieved in various areas of operations.
Appropriations and state budget revenue
3.
When Parliament grants appropriations for specified purposes in accordance
with Chapter 9, article 3, of the Constitution, these shall be in the form of fixed
appropriations, multi-annual appropriations or flexible appropriations.
The conditions for the use of appropriations are specified in sections 4-6.
Types of appropriations
4.
A fixed appropriation (obetecknat anslag) may not be exceeded, and unused
funds may not be used in subsequent fiscal years.
5.
A multi-annual appropriation (reservationsanslag) may not be exceeded.
Unused funds may be used for a maximum of three years after the year when
the appropriation was last taken up in the state budget.
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6.
A flexible appropriation (ramanslag) may be temporarily exceeded by use of an
appropriation credit amounting to a maximum of ten per cent of the
appropriation granted.
With the authorisation of Parliament, the Government may also decide that a
flexible appropriation may be exceeded if this is necessary in an area of
operations for meeting special expenditure that was unknown at the time the
appropriation was granted, or to ensure the fullfilment of a purpose decided
upon by Parliament.
Unused funds may be used during a subsequent fiscal year.
Other provisions relating to appropriations
7.
When the Government allocates an appropriation to an agency, the Government
may impose restrictions on the use of the appropriation.
8.
The Government may decide that appropriated funds shall not be used if there
are special circumstances in an an area of operations justifying this, or for
reasons of public finance.
Slate budget revenue
9.
Revenues of the state that have been estimated by Parliament shall be accounted
for as state budget revenues.
Accounting in relation to appropriations and state budget revenues
10.
Accounting in relation to appropriations for transfers shall be carried out
currently during the fiscal year as payment takes place. In relation to other
appropriations, accounting shall be carried out in the fiscal year to which the
expenditure relates.
Accounting in relation to state budget revenue for tax shall be carried out
currently during the fiscal year as payment is received. In relation to other state
budget revenues, accounting shall be carried out in the fiscal year to which the
revenues relate.
Parliament may decide that accounting in relation to a particular
appropriation or state budget revenue shall be made on other grounds.
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Financial commitments
11.
According to sections 12-14, the Government is authorised to enter into
commitments on behalf of the state pursuant to Chapter 9, article 10 of the
Constitution.
In the State Borrowing Act (1988:1387) the conditions are stated on which
the Government may incur debts on behalf of the State.
Commissioning of goods and services, and related matters
12.
For a purpose, and up to an amount decided by Parliament, the Government
may commission goods and services, and decide on grants, compensation, loans
and the like which entail expenditure during fiscal years subsequent to the year
covered by the state budget.
13.
The Government may incur such debts on behalf of the state that are necessary
for the smooth running of the current work of government.
Guarantees
14.
The Government may issue credit guarantees and enter into similar
commitments for a purpose and up to amounts decided by Parliament.
When there are special reasons, commitments may be entered into without
the amount being limited, according to a decision of Parliament.
15.
A fee is to be charged for the commitments referred to in section 14. The
amounts to be charged shall correspond to the state's financial risk and other
costs for the commitment, unless Parliament decides otherwise for a particular
commitment.
The Government, or an agency appointed by the Government, shall decide
the amounts to be charged.
Reporting on financial commitments
16.
The Government shall report annually to Parliament on commitments entered
into on behalf of the state pursuant to sections 12 and 14.
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Scope of the state budget
17.
With the exceptions listed in sections 18 (2) and 19, the state budget proposed
by the Government pursuant to Chapter 9, article 6 of the Constitution shall
include all revenue, expenditure and other payments that affect the government
borrowing requirement.
18.
Revenue and expenditure shall be budgeted and accounted for gross in the state
budget.
If revenue in a certain area of operations is to cover partially the expenditure
of that area, expenditure may, however, be accounted for net in the state
budget.
19.
An area of operations where government expenses are to be covered completely
by the revenue of that area shall not be budgeted and accounted for in the state
budget.
20.
The Government may decide on the use of revenues deriving from goods and
services provided by the state if the demand is voluntary, and if the revenues
are to cover partially or completely the state's expenses for the operations
concerned.
Financing of investments
21.
Within the limits for internal loans decided annually by Parliament, the
Government may decide that fixed assets used in state activities shall be
financed by loans from the National Debt Office. The Government may decide
on the conditions for such loans.
22.
Within a credit limit decided annually by Parliament, the Government may
decide that operating capital in state activities shall be financed by credits from
the National Debt Office. The Government may decide on the conditions for
such credits, and on liquid assets at the disposal of agencies.
23.
Other assets than those referred to in sections 21 and 22 shall be financed by
appropriations or by revenues according to section 33(1).
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24.
Parliament may decide that assets shall be financed in a manner different from
the stipulations in sections 21-23 for a particular agency or for a particular
acquisition.
Sale of state property
25.
In conjunction with Chapter 9, article 9, of the Constitution, sections 26-36 of
the present Act state the grounds for the disposition of the state's property.
These provisions refer to property which is at the disposal of the
Government pursuant to Chapter 9, article 8, with the exception of such goods
referred to in section 20.
Real estate
26.
The Government may decide to sell real estate with a maximum value of SEK
50 million, if it is no longer required for government operations, or required
only to an insignificant extent, and when there are no special reasons for the
property still being owned by the state.
Notwithstanding the provisions made in the first paragraph, the Government
may decide upon sale to municipalities for purposes of urban development.
Shares
27.
The Government may decide upon sale of shares in a company where the
government holds less than half of the votes for all shares, unless Parliament
has decided otherwise for that company.
Without the authorisation of Parliament, the Government may not, by sale or
in any other way, reduce the ownership ratio of the state in a company where
the government controls half or more than half of the votes of all shares.
Other chattels
28.
The provisions on sale of real estate apply, as appropriate, to transfer of leased
property and sale of leasehold and similar buildings that are chattels.
29.
The Government may decide to transfer other chattels than such referred to in
sections 27 and 28 if this property is no longer required for government
activities, or if it has not been acquired with state funds.
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Certain common provisions
30.
Sales shall be carried out in a business-like manner unless there are special
reasons for not so doing.
31.
The provisions made regarding sales shall also apply to exchange of property.
Disposition of sales revenue
32.
If Parliament has decided upon sale of property, the revenue shall be accounted
for as state budget revenue unless Parliament decides otherwise.
In sections 33-36 rules are given concerning the use of the revenue when the
Government has decided upon the sale.
33.
If the property has been used in an area of operations for which Parliament has
approved an investment plan, the Government may decide that the revenue shall
be used to finance investments that are included in the plan.
Provisions on the use of sales revenue in other cases are given in sections
34-36.
34.
If the property has been financed with appropriations the part of the sales
revenue corresponding to the book value of the property shall be accounted for
as state budget revenue. The Government may decide that the residue of the
revenue shall be used in the area of operations where the sold property has been
used.
If the sales revenue is insignificant, the Government may decide that the
entire revenue shall be used in the area of operations where the sold property
has been used.
If real estate or shares have been sold, the entire revenue shall, however, be
accounted for as state budget revenue.
35.
If the property has been financed by loans, these loans shall be redeemed. The
Government may decide that the residue of the revenue shall be used in the
area of operations where the sold property has been used.
If real estate or shares have been sold the residue of the revenue shall,
however, be accounted for as state budget revenue.
36.
If property has been financed in any other way than by appropriations or loans,
the Government may decide that the entire revenue shall be used in the area of
operations where the sold property has been used.
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Follow-up, forecasts and outcome
37.
The Government shall carefully follow up how the state's revenues, expenditure
and borrowing develop in relation to the estimated or decided amounts.
38.
On at least two occasions in the course of the fiscal year, the Government shall
submit forecasts to Parliament concerning the outcome of state budget revenue
and appropriations, and the state debt. The Government shall explain significant
discrepancies between budgeted amounts and the estimated outcome.
39.
At the latest four months after the end of a fiscal year, the Government shall
submit a report to Parliament on the preliminary outcome of state budget
revenue and appropriations. The Government shall explain significant
discrepancies between budgeted amounts and the preliminary outcome.
40.
As soon as possible, but no later than nine months after the concluded fiscal
year, the Government shall have an annual report presented to Parliament.
The annual report shall contain an operational statement, a balance sheet, and
a cash flow statement. It shall also contain the final outcome of state budget
revenues and appropriations.
Development of public finance
41.
The guidelines for economic policy referred to in the supplementary provision
3.2.1(3) to the Parliament Act may refer to decisions on the maximum amount
for government expenditure (ceiling for government expenditure) or guidelines
for the maximum amounts of expenditure in different areas of expenditure, or
groups of areas of expenditure (expenditure limits).
42.
If the Government intends to introduce a ceiling for government expenditure in
the preparation of the proposed state budget, and in implementing the budgeted
activities, the proposal for such an expenditure ceiling shall be included in the
spring finance bill.
If Parliament has decided to assign government expenditure to particular
areas of expenditure, the Government shall present guidelines, in its spring
finance bill, as to how it intends to allocate government expenditure to areas of
expenditure, or groups of areas of expenditure, in the coming budget proposal.
43.
Proposals on a ceiling for government expenditure or guidelines for expenditure
18
limits may refer to a longer period than one fiscal year.
44.
If there is a risk for an overdraft of a ceiling set for government expenditure or
expenditure limits applied, the Government shall take such necessary measures
to avoid this as it has the authority to carry out, or propose necessary measures
to Parliament.
45.
If the Government does not present such a proposal as referred to in section 43,
it shall, instead, present a long-term estimate of how government revenue,
expenditure and borrowing will develop as a result of decisions already made,
and under well-defined macro-economic conditions.
Accounting and audit
46.
The Government is accountable to Parliament for the state funds and other
assets that are at the disposal of the Government pursuant to Chapter 9, article
8 of the Constitution. This accountability also includes operations carried out by
government and the state's liabilities and other financial commitments.
47.
Government accounting shall be carried out in accordance with generally
accepted accounting practice.
The accounts shall give a true and fair picture of the operations, the financial
outcome and position, and of the management of the state's funds and other
assets.
Detailed provisions on accounting shall be decided by the Government, or by
an agency appointed by the Government.
48.
The state's operations shall be subject to audit.
Concluding provisions
49.
The Government may delegate its rights according to sections 12-14, 20-22,
26-29 and 33-36 to the agencies as decided by the Government.
50.
This Act applies to Parliament and its agencies to the extent decided upon by
the Parliament.
This Act comes into force on...