This presentation was made by Richard ADORJAN, ministry of Finance, Hungary, at the 9th OECD MENA-SBO meeting held in Kuwait City on 12-13 October 2016

1. 1
The Role Of Institutions In Hungary In Budget
Making Process
9th Annual Meeting of MENA-SBO
12-13 October, Kuwait City
Richárd Adorján Dr.
Deputy State Secretary

2. 2
Institutions that participate in budget process
Parliament
Fiscal Council
document: Report
Government
document: Budget Proposal
State Audit Office of
Hungary
document: Report
final document:
Budget Bill

3. 3
The main documents of the budget
Budget Proposal
SAO opinion on the Budget
Proposal
Opinion of the Fiscal
Council

4. 4
Role of Government
• the Government is the most important body of executive
power
• the primary director of public administration
• it implements decisions made by Parliament, as the
legislative organ,
• it pursues realization of the goals laid out in the
Government’s programme.
• the Government responsibilities and competences shall
include all matters not expressly delegated by the
Fundamental Law or other legislation to the responsibilities
and competences of another body.
• the Hungarian Government comprises the Prime Minister
and government ministers.

5. 5
Budget Proposal
2 volumes: main and chapter volumes 332 pages
• Parts of main volume:
− The bill
 central subsector
 the extrabudgetary funds
 the social security funds
− The bill annexes
− General explanation
− Detailed explanation
− Annexes to the explanatory statement
• Parts of Chapter volume
 36 chapters
 Chapters of justifications
 Economic and Fiscal outlook
 The chart of the budget expenditures and
revenues for the public

6. 6
Role of Fiscal Council
• imakes comments on the planning and execution of the
budget, the use of public funds and the state of public
finances
• makes comments on any issues related to the planning and
execution of the budget or the use of public funds
• evaluates the state budget and its execution and
developments of government debt
• supports Parliament’s legislative activities
• the acceptance of budget bill is dependent on the approval
of the Fiscal Council, thus it has veto power over budget
laws
• the State President could dissolve Parliament if it fails to
pass a budget law by the end of March (for any reason), so
there is time pressure to get the approval of the Fiscal
Council (two out of three council members is needed for
approval)

7. 7
Opinion of the Fiscal Council on the draft bill of the 2017
central budget of Hungary
• 13 pages
• Contents:
I. Antecedents, legal basis and publicity of the
preparation of the Opinion
II. The Council’s Resolution
III. Justification
o The Authenticity of the Draft
o The Expected Implementation of Budget 2015
and 2016
o Evaluation of the Goals and Conditions of
Budget 2017
 Expected Macroeconomic Indicators
 Revenues and Expenditures of the Central
Budget
 Public Finance Deficit
 Government Debt
o Other

8. 8
Role of State Audit Office of Hungary
• the State Audit Office of Hungary is the supreme financial and
economic audit institution of the National Assembly
• the State Audit Office is the only non-governmental body that
has an oversight of the budget from January to December
• the SAO also prepares analyses on budgetary processes of the
current year and the year preceding the current year
• It has a comprehensive and objective view on the final
accounts bill, the reliability of data in the budget
• it enforces the provisions of the Fundamental Law pertaining
to public debt and it monitors the calculations underlying the
planned public debt figure
• it provides an opinion on the budget proposal, and also
prepares analyses for the Fiscal Council

9. 9
SAO opinion on the Budget Proposal of Hungary
57 pages
Contents:
• Summary
• Purpose of the audit
• Field of audit
• The context and relevance of control
• Significant issues of report
• Scope and approach of control
• Attachments:
 I. Appendix: Glossary
 II. Appendix: A partially substantiated and risky budget revenues
 III. Appendix: Partly grounded in the budget, unfounded and risky expenditure
appropriations
 IV. Appendix: Trend Analysis: Compliance is required of a good government
based on requirements of some selected indicators

10. 10
The schedule of adoption of the 2017 budget law
I.
25 March 2016.
•Publication of the
detailed schedule for
planning of the budget
11-12 April 2016
•The Government
discussed the budget bill
in first reading
•After it, the main
volume of budget bill
was sent to the Fiscal
Council for its opinion
22 April 2016
•The Fiscal Counsil sent
its opinion to the
Government
26 April 2016
•The budget bill was
submitted to the
Parlament
18-20 May 2016
•In-depth debate in
committees,
submission of
amendments and
reports by the
committees
2015 and 2016: Spring time budgeting
Deadlines: autumn

11. 11
The schedule of adoption of the 2017 budget law II.
27 May 2016
•Consistent and unified
proposal is submitted
30 May 2016
•Debate on committee
reports, the summary report
and the summary of
proposed amendments
7 June 2016
•Vote on the summary of
proposed amendments in
the Committees
•The budget bill was sent
to the Fiscal Council for its
opinion
10 June 2016
•The opinion arrived from
the Fiscal council
13 June 2016
•Closing vote
2015 and 2016: Spring time budgeting
Deadlines: autumn

12. 12
Fiscal Councils in EU
Country name Name of the Fiscal Council Start of activity (Year)
Austria Fiscal Advisory Council 2002
Belgium Federal Planning Bureau 1994
Croatia Fiscal Policy Commission 2013
Cyprus Fiscal Council 2014
Denmark Danish Economic Council 1962
Estonia Fiscal Council 2014
Finland National Audit Office of Finland 2013
France High Council of Public Finance 2013
Germany German Council of Economic Experts 1963
Greece Parliamentary Budget Office 2010
Hungary Fiscal Council 2009
Ireland Irish Fiscal Advisory Council 2011
Italy Parliamentary Budget Office 2014
Latvia Fiscal Council 2014
Lithuania Budget Policy Control Institution 2015
Luxembourg Conseil national des finances publiques 2014
Netherlands Netherlands Bureau for Economic Policy Analysis 1945
Portugal Portuguese Public Finance Council 2012
Romania Fiscal Council 2010
Serbia Fiscal Council 2011
Slovak Republic Council for Budget Responsibility 2011
Slovenia Fiscal Council 2009
Spain Independent Authority of Fiscal Responsibility 2014
Sweden Swedish Fiscal Policy Council 2007
United Kingdom Office for Budget Responsibility 2010
Source: Strengthening Post-Crisis Fiscal Credibility: Fiscal Councils on the Rise—A New Dataset; Xavier Debrun and Tidiane Kinda

13. 13
The following tasks were typically present in forerunner IFIs:
Monitoring of fiscal policy and rules;
Policy costing;
Macroeconomic forecasting;
Analysis of long-run sustainability of public finances;
Promotion of fiscal transparency;
Normative recommendations on fiscal policy.

14. 14
Legal requirements for independent fiscal institutions originating from EU legislation
and intergovermental Treaties
AT, BE, CY, DE, EE, EL, ES, FI, FR, IE, IT, LT(*), LU, LV, MT, NL, PT, SK, SI
•Monitoring of national fiscal rules to be conducted by independent
bodies
Enhanced monitoring for the Fiscal Compact balanced-budget
rule
•Production or endorsement of macroeconomic forecasts used in
annual budget and medium-term fiscal plans
DK, RO, BG
Monitoring of national fiscal rules to be based on independent
analysis
Enhanced monitoring for the Fiscal Compact balanced-budget
rule
HR, CZ, SE, PL, HU
Monitoring of national fiscal rules to be based on independent
analysis (veto right in Hungary)
UK No requirements
Source: Commission services
Note: (*) When LT joins the euro area

15. 15
THANK YOU FOR YOUR ATTENTION!