General Budget Law 47/2003 of 26 November 8 (Head of State)
Budgetary
Law
OFFICIAL STATE GAZETTE
PRESIDENCY MINISTRY
CONTENTS
Pages
General Budgetary Law 47/2003 Of 26 November
Statement Of Reasons...... 11
Tit.I.On the scope of application and the Public Finance 30
Cap. I.Scope of application and organisation of state sector:
Art. 1.Object...... 30
Art. 2.State sector...... 30
Art. 3.Administrative, commercial and foundation public sector 32
Cap.III.On the legal framework of Public Finance...33
Sec.1.Rights Of Public Finance...... 33
Art.5.Concept and rights of public finance...... 34
Art.6.Common rules for rights of Public Finance...34
Art.7.Limits to the rights of Public Finance...... 34
Art.8.Exercise of legal actions by Public Finance.35
Sec.2.Juridical Framework Of Public Rights Of Public
Finance...... 35
Art.9.General regulations...... 35
Art.10.Prerogatives of public rights of Public Finance 35
Art.11.Birth, acquisition and extinction of public rights of Public Finance 37
Art.12.Order of final demand and notice and Suspension of an order of final demand and notice...... 38
Art.13.Postponement or payment in instalments of sums owed to Public Finance...... 39
Art.14.Compensation of debt...... 40
Pages
Art.15.Expiration of rights of Public Finance...... 41
Art.16.Economic rights of small sums...... 41
Art.17.Late payment interest...... 41
Art.18.Public Rights of Social Security and Public Sector Entities Outside the Public Finance. 42
Sec.3.Private Rights Of Public Finance...... 42
Art.19.Private rights of Public Finance...... 42
Sec.4.Obligations Of Public Finance...... 44
Art.20.Sources of obligations...... 44
Art.21.Collectibility of obligations...... 44
Art.22.Settlement of obligations...... 44
Art.23.Prerogatives...... 44
Art.24.Late payment interest...... 45
Art.25.Expiry of obligations...... 45
Tit.IOn the General State Budget...... 46
Cap.I.Principles and rules of budgetary programming and management 46
Art.26.Principles and rules of budgetary programming 46
Art.27.Principles and rules of budgetary management 47
Cap.III.Budgetary programming and the objective of stability 48
Art.28.Multiyear planning projections and stability..48
Art.29.Multiyear ministerial programmes...... 49
Art.30.Multiyear plans in management centres....50
Art.31.Budgetary allocation and objectives...... 50
Cap.III.Contents, elaboration and structure...... 51
Sec.1.Content And Principles Of Framework.....51
Pages
Art.32.Definition...... 51
Art.33.Subjective scope and content...... 51
Art.34.Time scale...... 52
Art.35.Credits and budgetary programmes...... 53
Sec.2.Elaboration Of Budget...... 54
Art.36.Procedure of elaboration...... 54
Art.37.Submission to Parliament...... 56
Art.38.Extension of the General State Budget.....57
Sec.3.Budgetary Structures
Art.39.Budgetary structure of the state sector.....58
Art.40.Structure of the expenditure statements of the General State Budget. 58
Art.41.Structure of revenue statement...... 59
Cap.IV.On credits and their modification...... 60
Sec.1.General Provisions...... 60
Art.42.Specialty of expenditure...... 60
Art.43.Specification of State budgets...... 60
Art.44.Budgetary specification of autonomous bodies and Social Security. 60
Art.45.Liquid availabilities of autonomous bodies and other entities in the state sector. 61
Art.46.Limitations of expenditure commitments....61
Art.47.Multiyear expenditure commitments...... 62
Art.48.Acquisitions, works with delayed payment and other multiyear commitments. 63
Art.49.Time scope of credits...... 63
Art.50.Contingency Fund for budgetary execution..64
Sec.2.On Credit Modifications...... 64
Art.51.Modification of initial credit...... 64
Art.52.Credit transfers...... 65
Art.53.Generating credit...... 66
Art.54.Extensible credits...... 67
Art.55.Extraordinary and supplemental State credits. 69
Art.56.Rules for extraordinary and supplemental credits of autonomous bodies. 70
Art.57.Extraordinary credits and supplemental credits of Social Security. 71
Pages
Art.58.Incorporations of credit...... 72
Art.59.Application of certain modifications to the Contingency Fund. 73
Art.60.Advances from Public Finance...... 73
Sec.3.Authority In Credit Modifications...... 74
Art.61.Authority of Government...... 74
Art.62.Authority of Ministry of Treasury...... 74
Art.63.Powers of ministers...... 75
Cap.V.On semi-public commercial entities, state companies and state sector foundations 77
Art.64.Budget...... 77
Art.65.Multiyear plan...... 78
Art.66.Processing...... 79
Art.67.Budgetary modifications...... 80
Art.68.Agreements with the State...... 81
Cap.VI.On budgetary management...... 82
Sec.1.General Principles Of Budgetary Management. 82
Art.69.Operating principles of financial management. 82
Sec.2.Administration By Objectives Of State Administrative Sector. 83
Art.70.System of objectives...... 83
Art.71.Balance sheet and management report.....83
Art.72.Evaluation of spending policies...... 84
Sec.3.Management Of General State Budget.....84
Art.73.Procedural phases in expenditure management. 84
Art.74.Authority in budgetary management...... 85
Art.75.Ordering payments...... 86
Art.76.Embargo of collection rights...... 87
Art.77.Undue payments and other returns...... 87
Art.78.Fixed cash advances and working funds....88
Art.79.Payments to justify...... 90
Art.80.Management of revenue budgets...... 91
Art.81.Returns...... 91
Tit.III.On financial relations with other administrations 92
Pages
Cap.I.Financial transactions with the European Union 92
Art.82.Public Finance transactions with the European Union. 92
Art.83.Co-financed projects...... 93
Art.84.Reimbursement of assistance and financial responsibility for managing funds from the European Union. 93
Cap.II.Financial transactions with autonomous regions 93
Art.85.General principles of financial relations resulting from application of the system of financing of autonomous regions. 93
Art.86.Managed subsidies...... 94
Cap.III.Financial transactions with local entities....97
Art.87.Participation in state taxes...... 97
Art.88.Final liquidations...... 97
Art.89.Offsetting fiscal benefit...... 97
Tit.IV.On Public Finance, state debt and financial transactions 98
Cap.I.General principles...... 98
Art.90.Public Finance...... 98
Art.91.Functions of Public Finance...... 98
Art.92.State debt...... 99
Art.93.Information to Parliament on transactions of Public Finance. 99
Cap. II.On State Debt...... 100
Sec.1.General Principles...... 100
Art.94.Legal authority to create debt...... 100
Art.95.Budgetary coverage of debt expenses.....100
Art.96.Complete application of revenues and expenses originating in Debt and exceptions. 101
Sec.2.State Debt Transactions...... 101
Art.97.Debt transactions...... 101
Art.98.Authority to formalise debt transactions....102
Art.99.Securities issues...... 103
Art.100.Credit transactions...... 104
Pages
Art.101.Debt-related financial instruments...... 104
Art.102.Other debt-related transactions...... 104
Sec.3.Juridical Framework Of State Debt...... 105
Art.103.Framework of values representing State Debt. 105
Art.104.Framework of debt conveyance...... 105
Art.105.Prescription...... 106
Cap.III.Management of State Treasury...... 107
Art.106.Monetary budget...... 107
Art.107.Criteria for ordering payments...... 107
Art.108.Treasury accounts and transactions to facilitate treasury administration. 108
Art.109.Relation to lending institutions...... 109
Art.110.Payment methods...... 110
Cap. IV Debt and treasury management of autonomous bodies and semi-public commercial entities 111
Art. 111. Debt transactions of autonomous bodies and semi-public commercial entities. 111
Art. 112. Treasury management of autonomous bodies. 112
Cap.VState guarantees...... 112
Art.113. Object of guarantees...... 112
Art.114. Authority to provide guarantees...... 112
Art. 115. Guarantees provided by the Council of Ministers. 113
Art. 116. Formalisation of guarantees...... 113
Art. 117. Commissions...... 114
Art. 118. Risk limitation...... 114
Tit.VState sector accounting...... 114
Cap.. IGeneral norms...... 114
Art. 119. General principles...... 114
Art. 120. Aims of state sector accounting...... 115
Art. 121. Application of accounting principles...... 116
Art. 122. Public accounting principles...... 116
Art. 123. Receptors of accounting information...... 118
Cap. IIIAccounting authority...... 118
Art. 124. Authority of Ministry of Treasury...... 118
Pages
Art. 125. Authority of Public Accounts Auditing Department 119
Art. 126. Additional systems for objectives oversight.123
Cap. IIIAccounting information...... 123
Sec. 1. Annual Accounts...... 123
Art. 127. Formulation of annual accounts...... 123
Art. 128. Contents of annual accounts of entities required to apply public accounting principles. 124
Art. 129. Contents of annual accounts of other entities in state sector. 125
Sec. 2. General Account Of The State...... 125
Art. 130. Content of General Account of the State...125
Art. 131. Formation and submission of General Account of the State to Court of Auditors. 126
Art. 132. Examination and verification of General Account of the State. 127
Art. 133. Financial accounts of state sector...... 127
Art. 134. Monitoring of financial imbalances...... 128
Sec 4. Periodic Information...... 128
Art. 135. Information submitted to Parliament...... 128
Art. 136. Information to be published in the Official State Gazette. 128
Cap. IVSubmission of accounts...... 129
Art. 137. Obligation to submit accounts...... 129
Art. 138. Reporting persons...... 129
Art. 139. Procedure for rendering accounts...... 131
Tit. VI On oversight of financial management by General Comptroller of State Administration 132
Cap. I General principles...... 132
Art. 140.Oversight of financial management of state sector. 132
Art. 141.Oversight of subsidies and aid...... 132
Art. 142.Oversight objectives...... 132
Art. 143. Scope and exercise of oversight...... 133
Pages
Art. 144. Operating principles and prerogatives.....133
Art. 145. Duties and powers of auditing personnel, obligated collaboration and juridical assistance. 134
Art. 146. General reports on permanent financial control and public auditing. 135
Art. 147. Oversight of entities in Social Security system. 136
Cap. IIOn the auditing function...... 136
Art. 148. Definition...... 136
Art. 149. Scope of application...... 137
Art. 150. Modalities of exercise...... 137
Art. 141. Exemption from prior auditing...... 138
Art. 152. Prior auditing and oversight of basic requirements. 138
Art. 153. Prior auditing and oversight of payments pending justification and fixed cash advances. 139
Art. 154. Reservations...... 139
Art. 155. Discrepancies...... 141
Art. 156. Omission of auditing...... 142
Cap.III Permanent financial control...... 143
Art. 157. Definition...... 143
Art. 158. Scope of application...... 143
Art. 159. Content of permanent financial control...... 144
Art. 160. Reports on permanent financial control...... 145
Art. 161. Reports on procedures and monitoring of corrective measures. 145
Cap. IV. Public auditing...... 146
Sec. 1. General Principles...... 146
Art. 162. Definition...... 146
Art. 163. Scope...... 146
Art. 164. Forms of exercise...... 146
Art. 165. Annual auditing plan...... 147
Art. 166. Auditing reports...... 147
Sec. 2. Annual Account Audits...... 148
Art. 167. Definition...... 148
Art. 168. Scope of annual account audits...... 149
Sec. 3. Specific Public Audits...... 150
Pages
Art. 169. Compliance audits...... 150
Art. 170. Operative audits...... 150
Art. 171. Auditing of contracts and programs and follow-up of financial balancing plans. 151
Art. 172. Auditing of initial policy plans...... 151
Art. 173. Audit of state tax account...... 152
Art. 174. Auditing of companies collaborating with Social Security. 152
Art. 175. Auditing of privatisations...... 152
Tit. VII.Liability...... 153
Art. 176. General principle...... 153
Art. 177. Deeds that can generate financial liability....153
Art. 178. Types of liability...... 154
Art. 179. Liability of auditors and paymasters...... 154
Art. 180. Pertinent body and procedure...... 154
Art. 181. Legal framework of amount of damages attributed. 155
Art. 182. Prior procedures...... 156
Additional provision one. Collaboration between the Public Accounts Auditing Department and autonomous regions and local entities. 156
Additional provision two. Collaboration in execution of Annual Auditing Plan. 156
Additional provision three. Access to information on audits performed by private auditors 157
Additional provision four. Delegate officers...... 157
Additional provision five. Administration of expenses and foreign payments. 158
Additional provision six. Administration of expenditure for electoral processes. 159
Additional provision seven. Current costs of non-university educational centres. 160
Additional provision eight. Payments to be justified to hydrographical federations. 160
Additional provision nine. Commercial companies and other entities controlled by the state sector. 160
Pages
Additional provision ten. Report on founding of state companies. 161
Additional provision eleven. Provisional financial control systems. 161
Additional provision twelve. Control functions...... 162
Additional provision thirteen. Framework for entities included in paragraphs g) and h) of section 1, article 2 prior to the coming into force of this law. 162
Additional provision fourteen. Regulatory framework of Development Assistance Funds (FAD), Foreign Investment Funds (FIEX), and Funds for Foreign Investment by Small and Medium-Sized Enterprises (FONPYME) 163
Additional provision fifteen. Regulatory framework of Bank of Spain. 163
Additional provision sixteen. Use of information technologies and communications. 164
Additional provision seventeen. State bodies with no legal status. 164
Temporary provision one. Framework of bodies covered by articles 60 and 61 of Law 50/1998 of 30 December, on fiscal, administrative and social order measures. 165
Temporary provision two. Budgetary modifications...... 165
Sole derogation. Regulatory derogation...... 166
Final provision one. Modification of article 57 of Law 21/2001 of 27 December, regulating fiscal and administrative measures of the new system of financing of autonomous regions and cities with an autonomy statute. 167
Final provision two. Modification of article 45 of Law 50/2002 of 26 December on Foundations 168
Final provision three. Financial control...... 168
Final provision four. Regulatory framework...... 168
Final provision five. Entry in force...... 168
GENERAL BUDGETARY LAW 47/2003 OF 26 NOVEMBER (HEAD OF STATE)
(OFFICIAL STATE GAZETTE 284, 27 November 2003)
STATEMENT OF REASONS
I
The process of budgetary consolidation of recent years, which has eliminated the deficit from public accounts, has not only had vitalizing effects on growth, but it has also substantially solidified our economic foundations, as revealed by the Spanish differential in economic behaviour in terms of growth in Gross Domestic Product and job creation, as compared to the average in countries of the European Union.
Our commitment to budgetary stability is one of the fundamental reasons that explain why the Spanish economy has been able to stay on the road towards real convergence with the rest of Europe, even in the low phase of the economic cycle. Indeed, Spanish per capita income in par purchasing power has gone from 78% of the EU average to 84% in 2002, according to the latest figures from Eurostat.
Budgetary stability continues to underpin, first of all, a scenario of macroeconomic stability that ensures a more efficient framework for economic activity; there continues to be improvement, furthermore, in the conditions of financing
in the Spanish economy, thereby generating a significant flow of private savings, reducing the expulsion effect on
private investment and lastly, giving the General State Budget a considerable margin of manoeuvre to deal with a context of international uncertainty: this is because, unlike other EU countries, Spain can allow itself to freely use automatic stabilizers without introducing procyclical elements into its fiscal policy.
Moreover, the exercise of budgetary stability is compatible with an orientation of the budget towards policies that foster long-term productivity and growth, such as investment in infrastructures and research, development and technological innovation, while ensuring broad coverage of social expenses and improvement of essential public services.
Laws of Budgetary Stability have expressly introduced a balanced budget into our legal framework, ensuring that budgetary stability shall henceforth be, the permanent outlook for public finances in Spain for both the central state and the regions. Thus, the policy goes beyond the State and fully involves regional governments and city councils, thereby making all public administrations, without exception, responsible for stability.
This discipline serves as an anchor for public accounts, which reinforces the credibility of the government’s economic policy. Such is the case with the tax reductions of recent years, which have been interpreted by the citizenry as definitive and permanent, thereby stimulating investment and consumption, as well as economic growth and employment.
Having established a general framework of budgetary stability, particularly through a ceiling on State expenditure – which prevents it from spending more and obliges it to spend better – the need arose to descend to a microeconomic realm and apply the guiding principles of the Stability Law to the different items in the budget. For instance, the final provision in the first chapter of the aforesaid law obliges the Government to submit to the Parliament a bill for General Budgetary Stability.
These guiding principles, all at the service of the general principle of budgetary stability, are three: multiple-year outlook, transparency and efficiency. The multiple-year outlook reinforces budgetary forecasting and standardizes the procedures in all public administrations with programmes of stability and growth; transparency guarantees verification and oversight of compliance of budgetary stability and, lastly, efficiency in the allocation and use of public resources must be the benchmark for orientating spending policy.
The new General BudgetaryLaw that flows from these basic principles aims to achieve greater streamlining of the budgetary process, thereby continuing the path undertaken by budgetary stability laws, which this law further develops.
Streamlining is achieved through a confluence of enhancements in terms of systematisation, in so far as the law undertakes an economic and financial ordering of the state sector and systematises its standards of accounting and control; in terms of effectiveness and efficiency, it provides for a goal-based management system that reduces rigidity in executing budget credits and introduces the principle of responsibility in institutions charged with the implementation of budget credits. All these measures are an integral part of the process of modernizing Public Finance, a process that is necessary to control the pace and strengthen the development of the Spanish economy.
The immediate precedent to this provision is the reworded text of the General Budgetary Law approved by Royal Decree 1091/1988, 23 December, which in turn originates from General Budgetary Law 11/1977, 4 January which, with modifications of greater or lesser importance, have been a framework of reference in budgets, accounting and control of expenditure in the public state sector for the last 25 years.
Although the 1977 General Budgetary Law and its subsequent reworded text represented a significant advance, as their application and implementation were immediate and satisfactory, both from a legal and technical perspective, there are unquestionably reasons that call for their revision and the enactment of a new law that would be more appropriate to the demands made today on the public state sector as regards management capacity of the financial resources made available to it.
The General BudgetaryLaw is the framework legal document for regulating the financial operations of the public state sector. Its promulgation arises from the need to improve and broaden the present law, the General BudgetaryLaw of 1977 and the subsequent reworded text of 1988, with a view towards attaining a more streamlined budgetary process that reflects the new conditions that underlay State financial operations.
There are several reasons that explain the appropriateness and timeliness of the new law. Among the most important are the following:
Addition to the law of the most modern and innovative theories and techniques of budgeting, control and accounting in the realm of public management, given that technological progress now allows for the introduction of these improvements in information and budgeting procedures to achieve efficient control without sacrificing the guarantees and security that the handling of public finances demands.
Correction of the dispersion of budgetary legislation that occurred after the enactment of the reworded text of the General BudgetaryLaw of 1988. First of all, the 1997 Law on the Organisation and Functioning of the General State Administration brought new forms of institutional organisation and control that were inconsistent with the forms of organisation and control envisaged in the General BudgetaryLaw.