The proforma can be modified 5% when it is executed; the current cap is 15%. A committee for late payments will be created.
A total restructuring of the way in which the General State Budget is prepared and executed. On the eve of May 1, the Ministry of Economy and Finance (MEF) presented its Action Plan to Modernize Public Finances.
Within the framework of the agreement with the International Monetary Fund (IMF), the State portfolio indicated that the plan includes structural changes to strengthen management in the components of fiscal programming, the budget cycle, treasury management and the application of rules fiscal incentives, planned and predictable, in the medium and long term.
One of the points of the initiative, according to the MEF, is to determine a strategy to honor outstanding payments to state suppliers. A committee will be appointed to deal with the changes that are expected to be implemented between 2019 and 2020.
A lower limit to exceed The MEF is preparing a reform of the Public Planning and Finance Code (Coplafip) to restrict up to 5% the increase or reduction of the Budget by the Executive.
Exceptions that will be excluded from the increment limit will be considered limited. Currently, the allowed limit of 15% and governments have used that possibility in recent years (see chart) to increase their spending.
Goals and milestones will be established to have greater budgetary clarity. Better management of arrears Another proposal is to legally regulate the definition of arrears: “financial obligations in which no payments have been made on the due date”.
The monitoring and reporting to civil society and markets of the situation of late payments is mandatory. A Committee on Arrears will be established to work on reducing the amounts payable. Reserve for emergencies As of 2020, a contingency line will be established, that is, a fund that allows flexibility in budget execution.
Conditions and limits for the use of these resources will be established. The MEF will also establish budgetary ceilings for permanent and non-permanent expenses. Copaflip reforms will be presented in the first half of the year, according to the schedule set.
Perfecting reports It also aims to improve the presentation of budgetary, accounting and treasury reports. The objective of this policy is to improve transparency and the contents and strategies of fiscal risks.
In addition, the responsibilities and specific attributions of each of the MEF’s secretariats and coordinations will be defined. To follow up on the reforms to be carried out at Copaflip, a committee will be appointed to report the progress of the modifications to the Minister of Economy and Finance, Richard Martínez. (I)