This content is from: Local Insights

Macau: New budgetary framework

The new law on the budgetary framework was presented before the Legislative Assembly of Macau (the Assembleia Legislativa, or the AL) on January 29 2016

Frederico RatoJosé Filipe Salreta

The new law on the budgetary framework was presented before the Legislative Assembly of Macau (the Assembleia Legislativa, or the AL) on January 29 2016. This followed a public consultation that ran from July 7 until August 20 2015. The Macau Finance Department (the Direcção dos Serviços de Finanças, or the DSF) presented the results of the public consultation. The DSF stressed the main points of the legislative proposal, which aims to reinforce the monitoring of public finances and enhance transparency in the preparation and execution of the budget.

The legislation establishes several new principles intended to ensure the sustainability and budgetary balance of Macau. These new principles are in addition to the existing principles of annuity, unity and universality, non-compensation, non-assignment and specification. The new law also mandates that any change in the appropriations allotted by the budget which involve an increase in spending must be done through a legislative proposal submitted to the AL. Any change that does not involve an increase must nevertheless be approved by the chief executive.

The proposal also caps the limit of the provisional appropriation at three percent of the budget's global expenditure, whether that be the central budget or private budgets of autonomous institutions within the government. When public interest or public security is at stake, the chief executive may authorise the transfer of surplus funds to reinforce provisional appropriations.

The budget for investment projects for public services must be itemised by programmes in the budget drafting. The budgetary estimate for public works contracts that extend over one year must take into account the global budget expenditure and the years necessary for their execution.

Finally, the proposal foresees the introduction of a mid-year intermediate report of the budget execution at the end of July of each year. This will be presented to the AL so that it can scrutinise the budget's implementation

The public consultation showed that the general population's main concern was budgetary slippage in public works. It highlighted the general consensus that the AL should be able to review and monitor the budget in a more effective way, namely by the submission of public works projects over a certain value for the approval of the Chamber. This matter was echoed by its president, who stated that the delay in presenting the necessary information rendered the timely assessment of the budget impossible.

The legislative proposal reinforces the political role of the budgetary powers of the AL vis-a-vis the government and increases the AL's responsibility in the administration of public funds.

On the other hand, the proposal also has the merit of minimising the sidelining of the AL in the hierarchy of constitutional bodies that is set out in the Basic Law. It is therefore a welcome upgrade to the current budgetary framework.

However, its enforcement must be accompanied by the strengthening of DSF's human resources to allow for effective implementation.

Frederico Rato and José Filipe Salreta

© 2021 Euromoney Institutional Investor PLC. For help please see our FAQs.

Instant access to all of our content. Membership Options | 30 Day Trial