IV. SPAIN

administrations in the event of a breach of the obligations assumed by the Stability and Growth Pact.

The Constitution formally establishes the COA as the organ responsible for auditing the State’s accounts and financial management. The Constitution sets out the governing principles for the COA and makes provision for further legislation. Accordingly, the OACA was passed in 1982 to regulate the COA’s composition, organisation and duties. This law elaborates on the powers reserved to the COA by the Constitution. It also ratifies the status of the COA as completely independent in the performance of its functions and subject only to the law. Furthermore, the COA (Functioning) Act 1988 contains provisions on the managerial, financial and operational independence of the COA, the institutional coverage of audits, the types of audits, the Court’s powers of investigation, and the enforcement of its findings.

Finally, the Constitution allows Parliament to have its own rules – Standing Orders – to govern parliamentary budgetary processes, notably budget review and adoption (Art. 72). The Standing Orders establish a standing Budget Committee in both houses and define their roles in budget processes. The Standing Orders bind the government as well as Parliament.

1.2. Reforms of budget system laws

The main reforms of budget system laws were initiated following Spain’s joining of the European Union, which requires prudent fiscal policy under the constraints imposed by the Maastricht Treaty and the Stability and Growth Pact. The Maastricht Treaty specifies that countries must keep general government deficits under 3% of GDP, except for exceptional and temporary reasons, and that gross general government debt must be below 60% of GDP. Subsequent council resolutions require members to attain a fiscal position “close to balance or in surplus” in the medium term. Fiscal challenges facing Spain over the medium term have also contributed to reforms. Like some other EU member countries, Spain also needs to manage high levels of outstanding public debt, the consequences of a rapidly aging population for future social spending, and the need to ensure adequate scope for reduction of a high tax burden, while maintaining an adequate level of public sector capital spending (Daban, et al., 2003; OECD, 2003a).

The adoption of the GABS was the first important measure incorporating the principles of stability of the Stability and Growth Pact into domestic law. Taking into account EU requirements as well as the strong degree of regional autonomy, the central authorities needed new laws to govern public administration and achieve budgetary stability at all levels of government (OECD, 2003a).3 Pursuant to the provisions of the Constitution (Art. 149.1.13 and Art. 149.1.18),4 the GABS established the budgetary stability framework,