IV. FOUR NORDIC COUNTRIES

2. Principles underlying budget system laws

The supreme authority of Parliament in budgetary and other matters is a fundamental constitutional principle in all four countries. For example, Sweden’s Constitution (Art. 1) states a fundamental principle: “all public power proceeds from the people.” Parliaments are citizens’ representatives elected to exercise power, including approving annual budgets.

The principle of annuality for the budget is usually incorporated into law, although changes in the duration and flexibility of appropriations allow exceptions to this principle. The principle of universality is espoused. However, exceptions to gross recording and reporting are made. For example, in Sweden for fully self-financing government agencies, the State Budget Act states that both revenues and expenditures are excluded from the annual budget and delegates the government to decide on the use of revenues. However, in the annual budget, Parliament is informed of the scope of estimated revenue and expenditure and the kind of self-financed operations carried out. In Denmark, the net principle has resulted in an expansion of the activities of government agencies (see Beck Jørgensen and Mouritzen, 1997).

Concerning budget unity, all countries adopt an annual budget that approves revenues and expenditures at the same time. The budget unity principle is incorporated in the Constitution of Finland, which requires that estimates of revenues, expenditures and appropriations be included in the annual State budget (s. 84). The State Budget Act in Sweden states that all revenue, expenditure and payments that affect the State net borrowing requirement shall be included in the draft budget submitted to Parliament. The principle of budget unity does not figure in law in Denmark and Norway.

The principle of specificity of expenditure is included in law. However, legal provisions in this area are not detailed. In recent years, the number of budget lines has been reduced considerably in all the countries, with a movement away from detailed inputs and towards outputs and outcomes. In general, legal constraints do not prevent the introduction of a new appropriation structure, although changes in the appropriation structure usually must be approved by law.

The principles of transparency, accountability, and performance are not new in Nordic countries, being espoused by society for some time. Constitutions place strong requirements on the political executive to be accountable to Parliament. By law, citizens are provided with substantial information on government activity. Accountability relationships are often worked out informally, rather than set out in law, a consequence of the importance attached to attaining consensus. The Nordic countries have not introduced strict contractual relationships between the political executive and budget managers to enhance budgetary performance. It is mainly the