23, June, 2014
NON-ELLA PUBLICATION

Strengthening the Capacities of Parliaments in the Budget Process

This policy brief from the Inter-American Development Bank looks at how parliamentary budget offices (PBOs) can enable parliaments in Latin American and Caribbean countries to more effectively influence budgetary matters and fiscal policy.

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In the past decade, parliaments have shown increasing activism in the budget process by demanding more information about the government's performance in managing public resources. Nevertheless, in Latin America and the Caribbean (LAC), parliaments face important challenges, taking an effective part in the budget process and in fiscal policy management. Their capacity to influence budgetary matters and more generally fiscal policy and public financial management is hindered not only by the centralized nature of the budget process, but also by the lack of technical and institutional capacity of parliaments themselves to exercise their budgetary powers. This policy brief argues that the creation of parliamentary budget offices (PBOs) can help strengthen their effectiveness and accountability in budget processes. Several countries in the region have created or are considering creating this type of mechanism. These offices can help strengthen the parliament as a competent and constructive partner with the finance ministries and compensate for the legislature's limited technical capacity and credibility in budget matters through a series of effects, including reducing asymmetries in fiscal information; simplifying fiscal information and improving the quality of budget analysis; enabling a more constructive budget debate, and improving the alignment of incentives among government branches. This paper analyzes the conditions for creating and maintaining these offices, evaluates the effectiveness of such institutional changes, and weighs the lessons learned from recent experiences in various countries of the region. The conclusion is that parliaments can strengthen their impact on the budgeting process not necessarily by increasing their budgetary powers, but by improving their institutional capacity to exercise those powers more effectively and responsibly.
 
 

Authors: Carlos Santiso and Marco Varea
Orginal publication date: October 2013
Publisher:  Inter-American Development Bank (IDB)

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Other ELLA knowledge materials relating to Budget and Public Policies:

GUIDES AND BRIEFS

SPOTLIGHT SUMMARIES

MULTIMEDIA

REVIEWS

LEARNING ALLIANCE HIGHLIGHTS

NON-ELLA PUBLICATIONS

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