Topics Covered
  Legal framework in OECD countries for 
  1. Budget preparation within the 
    Executive.
  2. Submission of draft annual budget law 
    & content of accompanying documents 
    to Parliament.
  3. Adoption of annual budget law by 
    Parliament.
 Budget preparation within the Executive
   •Budget preparation process and calendar within 
   the Executive—no need to specify in the BFMSL 
   Nonetheless, Japan’s and Korea’s BFMSLs include provisions for some 
   steps prior to budget submission to parliament. 
   •These steps can be covered by Government or 
   MOF Regulations and the Annual Budget Circular for 
   preparing draft budget for approval at technical and political levels.
   Key for the BFMSL: 
   •
   Fiscal rules, if considered necessary. 
   •
   Date of submission of draft budget law to Parliament.
   •
   Format of draft budget law (especially the appropriations 
   structure).
   •
   Documents accompanying draft annual budget, including 
   the Medium-Term Framework.
    What Does the BFMSL cover?     
      Is the “annual budget” a law?
    OECD practices vary:
    1.  Yes, the annual budget law covers “all” 
        revenues and spending, e.g., France (2001 Organic 
        Budget Law relates to “State” transactions, which are less than 
        40% of general government spending). 
    2.  Yes, but the “budget law” is limited to spending: 
        it is an Appropriations Act. Usually just a single Act (e.g., 
        Canada, UK, etc.), although there are12 Appropriations Acts in 
        USA and 23 in the Netherlands.
    •   Coverage of Appropriations Acts exclude 
        “mandated expenditures in some countries. 
        These can be very large, e.g., 2/3rds in USA Federal 
        budget. 
    Fiscal rules—Are they included in 
            law in OECD countries?
    Fiscal “rules” impose limits on deficits, spending etc. There 
        are varying OECD practices regarding fiscal rules.
    1.  Not included in law. E.g., Sweden (target=2% surplus, 
        2006); UK: (a) Net debt=40% of GDP over cycle; (b) a golden rule.
    2.  Qualitative rules in law. E.g., NZ: “reduce debt to a prudent 
        level”, “operating revenues and expenses in balance”
    3.  Quantitative rules in (limited-duration) laws. E.g., USA: 
        (i) Balance Budget Act 1985—targeted the deficit; largely a failure; 
        (ii) Budget Enforcement Act 1990. Ceilings on discretionary 
        expenditures. Worked well until a fiscal surplus, then circumvented; 
        BEA allowed to lapse in 2002.
    4.  Quantitative rules in “permanent” laws. E.g., Golden 
        rules: Germany’s Constitution; Laws in Spain & Korea.
 Date of submission of draft budget 
  to Parliament—OECD countries