39 Pages Posted: 16 Jan 2006
Date Written: December 18, 2005
Can parliaments make an effective contribution to the budget process while preserving fiscal discipline? Increasing budget transparency and anchoring fiscal responsibility are critical tasks for emerging economies seeking to enhance fiscal governance and curb corruption. Largely neglected in the first stage of economic reform, legislative budget institutions are being re-discovered as part of a second wave of reform in governmental financial administration, in particular as it pertains to their role in overseeing public finances and enforcing government accountability. Nevertheless, parliaments' role in the governance of the budget is often subdued and dysfunctional, partly as a result of executive predominance, but also because of their own deficiencies. While they possess a wide range of formal budgetary powers, they often fail to exercise them effectively or responsibly, lacking the necessary institutional capacities and individual incentives.
This article explores the contribution of parliaments to the budget process in presidential systems of government with highly centralized budgetary systems. It offers a political economy perspective on the budget process in Latin America to assess the constraints to and conditions for enhancing the role of parliaments in public budgeting. It underscores the risks of excessive executive discretion and potential benefits of increased external scrutiny and legislative oversight. It argues that a greater role for parliaments in the budget could improve transparency and accountability in public finances. Ultimately, the governance of the budget reflects a delicate balance between executive prerogatives and legislative oversight. The key challenge of legislative budgeting in Latin American is how to retain the advantages of strong executive authority required to ensure fiscal discipline while providing the institutional checks and balances that guarantee effective accountability.
Keywords: Parliaments, public budgeting, budget oversight, fiscal control, fiscal governance, emerging economies, Latin America
JEL Classification: D72, H11, H61, P16
Suggested Citation: Suggested Citation