PFM Law Reforms: Balancing Legislative and Executive Powers

Kubai Khasiani, Florence Kuteesa

May 28, 2013

Posted by Kubai Khasiani and Florence Kuteesa

A growing number of Parliaments in Commonwealth African countries are casting off their Westminster inheritance and demanding a greater role of parliaments in budget decision-making. The last decade has seen restive backbenchers in some of  these countries bring forward Private Member’s Bills which look to enhancing the legislature’s powers over the public purse at the expense of the executive. This approach has sometimes been fiercely contested or not fully supported, and the product of this struggle between the branches of government leaves many unresolved issues and, in some cases, an outcome that is fiscally challenging to the country.

For almost half a century after achieving their independence, former British colonies in Africa implemented a budget preparation system that enshrined a weak legislature and a strong executive in the decision-making process. Ian Lienert examined the British influence on budget systems in Tanzania, as an example, and noted that the  parliament was engaged only very late in the budget preparation process, had limited powers to alter the government budget after it was presented, and was often not consulted about changes made by the government during the budget execution phase. As a result, parliaments seldom had a significant impact on the size or distribution of government revenue or expenditure.

These constraints on parliamentary engagement in budget decision-making have served the executive well during the past decades and sustained the power of ministers of finance within the cabinet of ministers.  Given their lack of formal powers over the ex ante formulation and approval of the budget, parliaments focused their financial oversight function with mixed success on holding the government to account for the ex post  performance of the budget. With the support of the auditor general, for example, some African parliaments have drawn attention to examples of waste, corruption, or other misuse of funds. 

During the last decade or so, restive  parliamentarians in a few African countries have taken the initiative to reform the legal frameworks and traditions they inherited to give them more influence of the budget process. In particular:

While this “backbench revolt” provided parliament with a stronger voice in budget decision-making, it did not achieve a fully satisfactory legal basis for managing public finances. In Uganda, for example, the roles and responsibilities of the executive and legislative branches were not clearly stated, and there were inconsistencies in the treatment of supplementary appropriations, and budget execution. In Kenya, the comments made by parliament on the executive’s draft budget were not binding on the government.

In the last few years, however, there are encouraging signs that countries may be arriving at more coherent and lasting settlement of the issue of how to balance the legitimate financial interests of government and parliament. This new settlement is reflected in the enactment of comprehensive public finance laws that deviate substantially from the Westminster tradition:

Policy makers in other African countries who have been watching developments in Kenya, and Uganda, should be careful to draw the appropriate lessons from recent history. Creating an appropriate balance in the respective powers of the various branches of government is fraught with difficulty and potential risk. It is better that all branches of government work together to achieve a legal outcome that is balanced and fair, rather than acting unilaterally with the result that efforts to deal efficiently with the many fiscal challenges facing these countries are compromised. 

Note: The posts on the IMF PFM Blog should not be reported as representing the views of the IMF. The views expressed are those of the authors and do not necessarily represent those of the IMF or IMF policy. 

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