Bill 502.

Summary.

The bill gives its budget rules the status of a framework law, taking precedence over ordinary legislation while respecting the Political Constitution (Constitución Política) and the macrofiscal limits of the Fiscal Social Responsibility Law (Ley de Responsabilidad Social Fiscal). It defines the General State Budget, current and investment expenditure, subsidies, tax expenditures, discretionary appropriations, low execution and the Medium Term Fiscal Framework. The Executive Branch (Órgano Ejecutivo) would prepare the budget in accordance with that framework and the Government Strategic Plan. Annual growth in the Central Government’s (Gobierno Central) primary current expenditure would be limited by potential real Gross Domestic Product growth, subject to the stated exceptions. From the third year, subsidies and current transfers would be capped at twenty percent (20 %) of primary expenditure, with exclusions for specified benefits and social programs.

Budget preparation would require verifiable data, program costing, indicators, prior evaluations and risk analysis. The Ministry of Economy and Finance (Ministerio de Economía y Finanzas) would submit to the National Assembly (Asamblea Nacional) an annex covering macroeconomic assumptions, forecasting methods, sensitivity scenarios and contingency measures. Investment projects would require information on scope, financing, results, evaluation and future costs; exceptional inclusion without complete information would require reasons and a plan to complete it. The proposed budget would identify reallocations and reconcile approved, amended and proposed figures.

Amendments to an approved budget would have to comply with fiscal rules and, when legislative approval is required, include a technical report from the Ministry of Economy and Finance. The National Assembly would assess their necessity, financing, effects and consistency with public priorities. Approved amendments would be published within ten (10) working days, and the ministry would report quarterly on them. Laws creating or expanding tax incentives would specify their cost, objective, duration and evaluation arrangements; the Economy and Finance Committee (Comisión de Economía y Finanzas) would periodically review tax expenditures using reports from the ministry and the Fiscal Council (Consejo Fiscal).

New borrowing would be directed primarily to investment, strategic projects, refinancing or emergencies. Borrowing to finance payroll and ordinary operating costs would be prohibited, subject to limited exceptions for emergencies authorized by law; the Office of the Comptroller General of the Republic (Contraloría General de la República) would not endorse debt commitments contrary to that prohibition. The ministry would identify investments financed by debt. Discretionary appropriations for the Office of the President of the Republic (Presidencia de la República) and other entities would have caps, permitted purposes, prohibited uses and quarterly disclosure of beneficiaries and expenditure.

Entities subject to the law would execute at least eighty-five percent (85 %) of their funded investment appropriations, unless justified causes apply. Repeated low execution would lead to a budget reduction, an appearance before the Budget Committee (Comisión de Presupuesto) and administrative investigations. Breaches of the rules would constitute a serious administrative offense for the specified officials. The Executive Branch would publish a Citizens’ Budget and open data, and include public participation in budget preparation consultations. The Fiscal Council would issue public opinions on compliance and execution.

The bill coordinates its rules with Law 34 of 2008 (Ley 34 de 2008) and provides for gradual implementation of budget ceilings and floors. It amends Article 266 of Law 47 of September 24, 1946 (Ley 47 de 24 de septiembre de 1946), in the wording introduced by Law 362 of February 2, 2023 (Ley 362 de 2 de febrero de 2023): it links the budget of the Ministry of Education (Ministerio de Educación) to per student cost and projected enrollment, and subjects education expenditure to the proposed fiscal rules. It provides for implementing regulations and a subsequent comprehensive evaluation. Its provisions concern the named public bodies and could affect subsidy recipients, businesses using tax incentives, the education sector, civil society organizations, trade unions and business associations.