IV. SPAIN

1.Overview

1.1.The legal framework governing budget processes

Spain has a comprehensive hierarchical legal framework for its budget system,1 comprised of the Constitution, organic laws,2 general laws, and regulations (Cabrero, 2002). The 1978 Constitution provides the fundamental principles governing budget processes and specifies the roles of the key budget actors (the executive, the legislature, the Self-Governing Communities, and the Court of Accounts). The government drafts and submits the State budget while Parliament examines, amends and adopts it. The Constitution recognises and guarantees the rights of the Self-Governing Communities (SGCs), provinces, and municipalities. The Constitution establishes the Court of Accounts (COA) as the superior audit organ of the accounts and financial transactions of the State and the public sector. In order to elaborate on constitutional principles and procedures, various key budget system laws have been legislated, including the General Budgetary Act (GBA) 47/2003, the General Act on Budgetary Stability (GABS) 18/2001, and the Organic Act on the Court of Accounts (OACA) 1982 (Box 1).

The GBA (effective as from 2005) is the most important pillar of the legal framework regulating the financial operations of the State sector. The law is comprehensive. Title I provides a complete listing of the bodies comprising

Box 1. Spain: Main budget system laws

●The Constitution 1978, as amended.

●The General Budgetary Act 47/2003.

●The General Act on Budgetary Stability 18/2001.

●The Organic Act Supplementary to the General Act on Budgetary Stability 5/2001.

●The Organic Act on the Court of Accounts 1982 and the Court of Accounts (Functioning) Act 1988.

●Standing Orders of the Congress of Deputies and of the Senate.

Sources: The Congress of Deputies (www.congreso.es/ingles/index.html); the Senate (www.senado.es/ info_g/index_i.html); the Court of Accounts (www.cagindia.org/mandates/index.htm), English versions of laws from the Ministry of the Economy and Finance.

IV. SPAIN

the State sector in accordance with the definition of the Organic Act on the Organisation and Functioning of the Central State Administration (OAOFCSA) 1997. Title II is devoted to the general State budget, which is referred to as “a series of economic rights and obligations that must be executed by the general State administration and its autonomous bodies in a budget year” (Art. 5). This section confirms budget stability as a fundamental principle for the annual budget process. It also provides for the procedures for elaborating and approving the contents of the budget within the government. The GBA is structured and oriented towards achieving budgetary stability. The law defines the medium-term budget programme (MTBP) and the details of its content (objectives, means, activities, investment processes and monitoring indicators). Title III covers financial transactions with other administrations including the EU and Spain’s autonomous regions. Title IV contains provisions for the management of State debt and guarantees. Title V provides general principles for State sector accounting. Finally, Title VI governs the oversight of financial management by the General Controller of State Administration (GCSA).

The GABS provides guiding principles for budgetary policy in the public sector including the general State administration as well as for local councils. It sets out the necessary procedures for the effective application of the budgetary stability principle incorporated in the EU Stability and Growth Pact. Title I sets out the budgetary stability principles: budgetary balance or surplus, medium-term budget scenarios, transparency and efficiency in the allocation and use of public resources. Title II includes provisions to achieve the objective of medium-term budgetary stability, which is applicable to all public administrations and the State public sector. Common provisions set out basic guidelines on budgetary policy for achieving stability objectives at each level of government.

Following the enactment of GABS, the Organic Act Supplementary to the GABS (OAGABS) 5/2001 was enacted. It amended the Organic Act on the Financing System for the SGCs 8/1980 and established co-ordinating mechanisms between the State and the SGCs in budgetary matters. Despite similarities to the GABS in terms of the content, it is a constitutional requirement for laws related to the autonomy of SGCs (for example, the GABS) to be legislated as an Organic Act (Art. 81). As the title of the OAGABS implies, the interpretation and enforcement of the OAGABS must be made in line with the GABS because both acts are instruments which serve identical economic policy purposes. The OAGABS confirms that the budgetary principles stated in the GABS (budgetary stability, medium-term budget scenarios, transparency and efficiency) are applicable to the SGCs. It also sets out the measures needed to be taken by SGCs in order to comply with the budgetary stability principle, and the principles of joint responsibility of the SGCs with other public