THE BUDGETARY SYSTEM

THE BUDGETARY SYSTEM

State Budget

Content and characteristics of the state budget

he state budget is a fundamental category of public finances upon the definition of which a juridical approach and an economic approach is applied.

The state budget under juridical aspect:

represents a deed providing and approving, by law, the annual incomes and expenses of the state;

is a deed by which the executive is authorized by the legislative to spend and to collect incomes according to the laws in force;

is a deed of foreseeing the public financial resources and the way of using them;

The state budget under economic aspect:

expresses the economic relations, in monetary form, appearing in the process of GDP allocation, according to the objectives of economic, social and financial policy; such relations are manifested in a double sense: on the one hand, as relations mobilizing financial resources on the other hand, as relations allocating such available to the state and, resources.

is a financial plan being elaborated at macroeconomic level;

Budgetary Principles

In the theory and practice of public finances the following budgetary principles are acknowledged and applied:

1. Universality of the budget is the principle according to which the public incomes and expenses have to be entered with the public budget in totality, in gross amounts. Thus, the Parliament has the possibility to know the total incomes to be received in the considered period, as well as their destination.

Budgetary incomes can not be directly affected to a certain budgetary expense, except for donations and sponsorships, which have precise destinations.

In budgetary practice, the requirements of budget universality are only partially respected complied with, because of the fact that instead of gross budgets they passed to the elaboration of some mixed budgets, where incomes and expenses of some public institutions appear with their total amounts in the budget, and others only with the balance amounts.

2. Principle of budgetary unity. Budgetary incomes and expenses are entered with a sole document, in order to ensure an efficient use and monitoring of public funds.

All incomes retained and used in the extra-budgetary system, under various forms and names, shall be introduced in the state budget, following the rules and principles of such budget, except for those for the establishing, according to the law, of personnel stimulation funds.

Reuniting within one sole document, of all public incomes and expenses, present the following advantages:

allows a clear presentation of state resources and of their destinations;

allows exactly knowing the sources of incomes;

allows the legislative to issue decisions regarding the structure and volume of expenses to be made;

Ensures a favorable framework for exercising a rigorous control over public incomes.

3. Principle of non-affecting the budgetary incomes refer to the fact that budget incomes are depersonalized, serving for covering the public expenses in their whole. Therefore, incomes, in their entirety, are used to cover all the expenses.

It is not allowed for a certain income to be used for covering a certain expense, because it can not be achieved a full concordance between the volume of an income and the level of expenses to be performed on the respectively assumed income.

4. Principle of annual budget. Political and technical reasons are at the basis of this principle.

This principle imposed on a first stage from political reasons, as the efficiency of parliamentary control over the financial administration of the Government is real only in the conditions of authorization for making public expenses for short periods of time, but also from technical reasons, in order to provide the necessary conditions for evaluating the budgetary allocations as close to reality as possible.

The budget is elaborated and approved for a period of 12 months. Upon expiration of such period a new Parliament authorization is necessary for a new budgetary year.

In Romania, the budgetary exercise is annual and matches the calendar year, and all the operations made within one year belong to the corresponding exercise for execution of the budget. Therefore, the budgetary year coincides with the calendar year, and the budgetary completion is made on December 31. Any income not received and any expense not made until December 31 shall be received or shall be paid in the budget account for the next year.

5. Principle of budgetary balance refer to the fact that the public budget has to be balanced, that is public incomes should integrally cover public expenses.

According to the law, it is forbidden to cover public budget expenses by monetary issue or by direct financing by the banks.

When temporary cash gaps appear they can be covered, until receiving the incomes, based on the resources in the state treasury accounts as established by the Ministry of Finances.

Also, by the Budget Act, the Ministry of Finances can be authorized to issue, throughout the budgetary completion, treasury bonds, interest bearing, with reimbursement term until the end of the financial year, in order to be able to manage the state expenses until receiving the incomes.

6. Budgetary specialization assumes entering the budgetary incomes with the annual state budgets per categories established in relation to the specific features of sources and expenses per categories expressing their real destination.

Therefore, according to such principle, incomes and expenses are entered and approved in the budget per sources and, respectively, per categories of expenses, grouped after their economic nature and destination, according to the budgetary classification.

By the Budgetary Act, taxes and fees are established, as well as the other incomes of the state that are to be charged. It is forbidden to charge direct or indirect contributions, others than those established by law.

7. Reality of the budget represents the principle according to which incomes and expenses entered in the budget have to be established on real bases, that is to correspond to the economic-financial situation of the budgetary year, so that the state would not have financial difficulties throughout the budgetary exercise.

8. Publicity of the budget is the principle according to which after it was submitted to debate and approval from the Parliament, the budget has to be brought to the knowledge of the public opinion. After the Parliament adopts the budget act and after such act is promulgated, it shall be published in the Official Gazette.

9. Principle of monetary unity. All the budgetary operations shall be expressed in the national currency.

Budgetary Process

The budgetary process is regulated by the Constitution and by the public finances Act, which regulates the way of concluding, approving, executing and completing the public budget.

Budgetary Calendar

The Ministry of Public Finances shall forward to the Government, until May -1, the objectives of the fiscal and budgetary policy for the budgetary year for which the budget project is elaborated and the following 3 years, together with the limits of expenses established by the main customers of credits, and the Ministry shall approve them until May 15 and inform the commissions for budget, finances and banks of the Parliament over the main orientations of its macroeconomic policy and public finances.

Until June 15 the Ministry of Public Finances shall inform the main customers of credits the limits of expenses, thus re-dimensioned, in order to finalize the budget projects.

Budgetary proposals of the customers of credits

The main customers of credits are obliged to submit at the Ministry of Public Finances, until de 15^th of July every year, their proposals for the budget project and its attachments, for the following budgetary year, with the respective limits of expenses, and the estimates for the following 3 years, communicated, accompanied by detailed documentations and motivation.

The Chamber of Deputies and the Senate, upon consultation with the Government, shall approve their own budgets and submit them to the Government for including them into the state budget.

The Ministry of Public Finances shall examine the budget projects and bear discussions with the main customers of credits over such projects. The Government shall solve any divergences.

The budget projects and attachments thereto, finalized, shall be submitted to the Ministry of Public Finances until August -1 every year.

Transmission of budget project to the Government and the Parliament

The Ministry of Public Finances, on the basis of budget projects of the main customers of credits and the own budget, shall conclude the projects for budgetary laws and the budget projects, which it shall submit to the Government until the 30^th of September every year.

The project of the state budget law is accompanied by a report regarding the macroeconomic situation for the budgetary year for which the budget project is elaborated and its projection for the following 3 years. Such report shall include a summary of macroeconomic policies in the context of which the budget projects were elaborated, as well as the Government strategy in the field of public investments.

The report and the projects of annual budgetary laws shall express the fiscal-budgetary policy of the Government, as well as other relevant information in the field.

After the Government approves the projects of budgetary laws and the budget projects, it shall submit them for adopting by the Parliament until the 15^th of October every year.

Approval of the budget by the Parliament

Budgets shall be approved by the Parliament per ensemble, per parts, chapters, subchapters, titles, articles, as well as paragraphs, as the case may be, and per main customers of credits, for the budgetary year, as well as engagement credits for multi-annual actions.

Estimates for the following 3 years represent information regarding the financing necessary on medium term and shall not be subject to authorization for the respective budgetary years.

Elaboration of the budget

Projects of the budgetary laws and of the budgets shall be elaborated by the Government, through the Ministry of Public Finances, based on:

prognoses of macroeconomic and social indexes for the budgetary year for which the budget project is elaborated, as well as for the following 3 years;

fiscal and budgetary policies;

provisions of financing memorandums or of other international agreements with international financial organisms and institutions, signed and/ or ratified;

sector policies and strategies, of priorities established in formulating the budget proposals, presented by the main customers of credits;

detailed proposals of expenses of the main customers of credits;

programs drawn up by the main customers of credits for the purpose of financing some actions, which have precise objectives;

Possibilities of financing for the budgetary deficit.

Approval of the budget

The public budget shall be approved within 15 days since the date of publishing the annual budgetary law or the rectifying law in the Official Gazette of Romania.

Purpose of the Parliament

The Parliament adopts the annual budgetary laws and the rectifying laws, elaborated by the Government in the context of macroeconomic strategy assumed by it.

In case the annual budgetary laws submitted within the due term, were not adopted by the Parliament until the 15^th of December of the year proceeding the year that the budget project refers to, the Government shall require the Parliament to apply the urgency procedure.

During debates no amendments to the annual budgetary laws can be approved, determining the increase of the budgetary deficit level.

Purpose of the Government

The Government shall ensure the achievement of the fiscal-budgetary policy, which takes into consideration the economic perspectives and political priorities included in the governing program accepted by the Parliament.

Purpose of the Ministry of Public Finances

In the field of public finances the Ministry of Public Finances has, mainly, the following attributions:

coordinates the actions that are the responsibility of the Government regarding the budgetary system;

disposes the measured necessary for applying the fiscal policy;

issues methodological norms regarding the elaboration of budgets and their presentation form;

analyzes the budget proposals in the stages of budget elaboration;

providing the Parliament, upon its request, supported by the main customers of credits, with the documents for motivation of projects of annual budgetary laws;

ensures the monitoring of budgetary completion, and in case it finds breaches of incomes and expenses from the authorized levels, it proposes the Government the measures for regulating the situation;

collaborates with BNR to the elaboration of the foreign payment balance sheet, the credits balance sheet and the foreign debts balance sheet, the balance sheet of regulations in the monetary field;

Purpose of the customers of credits

The main customers of credits are ministries, leaders of the other specialty authorities of the central public administration, heads of other public authorities and heads of autonomous public institutions.

The main customers of credits can delegate such capacity to lawful substitutes, general secretaries or other persons authorized for such purpose. Through the act of delegation the main customers of credits shall mention the limits and conditions of delegation.

The main customers of credits shall distribute the approved budgetary credits, for the own budget and for the budgets of public institutions hierarchically inferior, whose leaders are secondary customers, in relation to their duties, according to the laws in force.

Execution of the budget

Execution of the budget means the achievement of provided incomes and making the approved expenses and it extends throughout the budgetary year.

Responsibility for the execution of the budget, under the terms approved by the Parliament, belongs to the Government, and the outcomes in such field depend on the financial procedures used.

The provisions of budget incomes are deemed minimum duties (except for those regarding the incomes from loans, which are maximum), and the approved expenses are maximum limits. Also, the expenses can be made only for the approved destinations.

Receiving incomes and making payments from the budget is accomplished through the specialized authorities of the Ministry of Public Finances and/ or through banks.

In Romania, the budgetary process is regulated by the Constitution of Romania and the Act of public finances. Thus, the public finances Act regulates the way of concluding, approving, executing and completing the public budget.