IV. FOUR NORDIC COUNTRIES

responsibilities” (Finland) or “delegate administrative functions” (Sweden) to local governments. Local government acts, whose provisions are beyond the scope of this study, supplement the relatively few constitutional provisions.

4. Constitutional and other legal requirements for budgeting

4.1. Authority of Parliament

The supremacy of Parliament in budget decision making is stated explicitly in the constitutions of all four countries. For Finland and Sweden there is a general statement concerning the budget, whereas for Denmark and Norway, there are separate constitutional provisions specifying that taxation is to be by law and that expenditure is only made on the basis of law (Table 4). In Finland and indirectly Norway, constitutions also state that non-tax revenues must be on the basis of law. Sweden’s constitutional laws authorise delegation of “matters other than taxes” (provided the authority is based on law). Norway is the only country whose Constitution specifies particular expenditures to be

Table 4. Nordic countries: Constitutional provisions for the authority of Parliament

IV. FOUR NORDIC COUNTRIES

authorised by law (for example, the amount to paid annually to the royal household; travelling allowances and remuneration for Members of Parliament).

Only in Finland’s Constitution is there a generally-worded balanced budget rule, which requires that the revenue forecasts in the budget cover the appropriations included in it. A more important constitutional requirement in Finland is that, following elections, the government shall without delay submit its programme to the Parliament in the form of a statement. Although the government’s “statement” is non-binding, sections of it provide the basis for guiding fiscal policy during the life of the government or until the composition of the government is essentially changed. For example, the new government of April 2003 aimed at maintaining balanced central government finances through to the end of the electoral period, at which point the general government surplus would reach around 3% of GDP and the central government debt ratio would decline (Finland Ministry of Finance, 2003).

All four countries’ constitutions require parliamentary approval of public loans. Finland’s Constitution elaborates that parliamentary authority concerns both debt levels and government-guaranteed debt. Finland’s Constitution also specifies that the management of government assets and debts must be decided by Parliament. Sweden’s Instrument of Government Act (s. 9:10) requires parliamentary consent for the government to issue guarantees.

In Denmark and Sweden, constitutions are supplemented by separate debt-related laws. Denmark’s Act on the Authority to Raise Government Loans, 1993, empowers the Minister of Finance to raise loans on behalf of the central government, up to a maximum (Denmark National Bank, 2004). Sweden’s State Borrowing and Debt Management Act does not specify upper limits for borrowing (Sweden National Debt Office, 2002). Parliament authorises the Danish government to borrow specific amounts in the context of the budget. In Sweden Parliament annually authorises the government to borrow what is needed in order to implement Parliament’s decisions. Sweden’s State Budget Act allows the government to issue guarantees for purposes and amounts that are approved by Parliament. In Norway, with large oil reserves, debt and asset management necessarily have to be viewed together. The Government Petroleum Fund Act, 1990, provides a legal basis for oil revenue to be used for acquiring financial assets from outside Norway and to fully finance non-oil budget deficits.

Related to the principle of budget universality, Finland’s Constitution is the only one that specifies that Parliament elects its trustees of the social insurance institution in order to monitor its administration and operations. Finland also has a strong constitutional restriction on the creation of extrabudgetary funds, which “may be created by law, adopted by a