The legislature plays a crucial role in the budgetary process and is ultimately responsible for approving the executive’s budget. In turn, the presentation of the budget and related documentation in the parliament is normally the first opportunity for public scrutiny of a government’s priorities, thus it becomes an essential component for transparency and public financial accountability. While amendments by the parliament to the budget can contribute in balancing priorities and incorporating people’s views in spending choices, they could also have negative consequences on fiscal policy outcomes. Members of the legislature could have a short-term horizon (influenced by electoral cycles) when deciding on resource allocation and may be focused on maximising budget spending for constituencies. Misalignment of incentives between the executive and the legislature is often the biggest concern at the budget parliamentary approval stage.
Budget system laws establish the formal powers of the legislature and the mechanisms for decision making throughout the budgetary process. Legal constraints and budgetary practices vary across Western Balkan governments. In Albania, Montenegro and the State level of Bosnia and Herzegovina, the legislature has unrestricted powers to amend the budget proposed by the executive. In Serbia, Kosovo, and North Macedonia, the legislature can amend the budget without deviating from the fiscal balance targets. For OECD countries, the most common arrangement, in place in 53% of countries, is for the legislature to have unrestricted powers for amending the budget.
To meaningfully engage in the budget process, rather than simply serving as a rubber stamp, legislatures require reliable unbiased information that could inform budget discussions. In addition to the budget proposal, all Western Balkans have to submit to parliaments for approval any supplementary budgets containing proposed amendments to the main annual budgets. This is the mechanism with which the government seeks legislative approval for spending that differs from the original budget and appropriations. However, it is important to bear in mind that the frequent approval of supplementary budgets may reflect poor budget preparation procedures, inappropriate costing of programmes, macroeconomic shocks, wrong forecast or governmental failure to adhere to announced budgetary policies.
The submission of other types of reports to parliament, beyond the executive’s budget proposal, is uneven among the Western Balkans. Kosovo, North Macedonia and Serbia share the largest amount of information as they submit to parliament for information purposes the pre-budget fiscal policy statement, the mid-year implementation report, the year-end budget execution report and reports on fiscal risks. In turn, according to the information available, no countries in the region prepares and submits to parliament, even for information, the long-term fiscal sustainability report. This is in stark contrast to OECD countries where over two thirds of countries submit such long-term reports to parliament and in the majority of cases; the submission is for either parliamentary discussion or approval by the legislature.
