Government justifies delay in the implementation of the new Budget Framework Law with a "very ambitious" deadline – The Economic Journal


The Government considers that the deadline for implementing the Budgetary Framework Law (LEO) was "very ambitious and unrealistic", which justifies the postponement of its entry into force. The Secretary of State for the Budget, João Leão, said that, on average, these processes take between "five to seven years" and that the Government has worked to fulfill the goal of 2021.

"From the outset, it was clear to everyone that the stated three-year deadline was too ambitious and unrealistic. It was referred to by everyone, including the previous government officials and the Court of Auditors, and everyone was aware that the deadline was not going to be met, "said João Leão in the Committee on Budget, Finance and Administrative Modernization.

João Leão said that international experience itself shows that this process takes between five and seven years. The Secretary of State took three examples to explain the situation: in the case of France, the process took five years, in the United Kingdom ten, and eight in Lithuania. "The LEO is a very ambitious reform, which affects all the services of the Public Administration," he said, adding that it is "very demanding at the legislative and IT level."

Regarding the implementation of the new accounting framework, João Leão emphasizes that this instrument will allow Portugal to have a better international credibility, taking into account that "allows international comparison of public accounts". "Portugal has passed since 2018 to apply this new accounting framework throughout Central Administration".

"This report is going to be simplified for the first time and for the first time will be done in a uniform and simultaneous way to the Ministry of Finance and the Court of Auditors," explained João Leão.

In Local Government, as are several institutions, not all "were still prepared for this implementation". "In some Local Government entities, the Government has opted to make a phased process", so that in 2020 they definitely transit to the Accounting Standardization System for Public Administrations (SNC-AP).

This is a process that has to be done with "rigor and seriousness, involving everyone". The Secretary of State says that the Government has been providing training to make the transition smooth and uninterrupted. "In 2020, the process is finished in Local Administration," he says.

The new LEO was adopted in 2015 and was partially implemented at the time. The measure was expected to enter fully into force for the budget year 2021. Among the changes envisaged in the LEO is the SNC-AP, which provides for a standardization of accountability applicable to the whole public administration, and the State Accounting Entity ( ECE).

The Court of Auditors' report warns that "over the next three years, between 2016 and 2018," progress has fallen far short of what was planned "and" constraints and risks remain "in the implementation of the Public Finance reform. The Court of Auditors also recalled that the new LEO should have entered fully into force in March 2018 and was postponed until 2021.

"The rescheduling of the LEO did not reduce the risks already identified, together with the lack of proper designation of those responsible for each project and a phasing in with defined priorities", the Court of Auditors' report indicates.



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