The Azerbaijani parliament has essentially finished discussing the 2020 budget – the next two sessions are formalities. For many years, civil society institutions specializing in budget issues have proposed increasing the effectiveness of budget discussions and strengthening parliament’s overall role in budgeting. But the official position has not changed – as in all areas in Azerbaijan, parliamentary debate on the budget is flawless, an example, in fact, for the rest of the world. In reality, however, by international standards, the current practice in Azerbaijan is far from perfect: the lightning-fast discussions of excessively voluminous budgetary documents submitted to parliament by the executive branch show that the process is not effective.
The role of the Azerbaijani parliament in budget discussions – legal aspects
According to Article 13 of the Law on the Budget System, the draft state budget for the next fiscal year, along with other documents, must be submitted to parliament no later than October 15 of the current year. However, the law does not regulate how and in what format discussions should take place. There are no rules for how many readings of the budget bill there should be, what aspects of the budget document should be analyzed at each reading, at least how many plenary sessions should be held for discussion, or what the time limit should be for MPs, factions (if any), or political parties to express their positions on the budget. Article 15.1 merely states that the discussion and approval of the draft state budget for the next fiscal year should be carried out in accordance with parliament’s Internal Regulations. But what exactly do these Regulations say?
The document does not contain any specific norms or procedures regulating the discussion of budgetary documents, establishing instead a single discussion procedure for all legislative bills. According to Article 14 of the Regulations, draft laws and resolutions submitted to parliament are registered, after which the chairman of the parliament sends the draft to the relevant committee and sets a deadline for consideration of the draft. According to Article 16, with some exceptions, bills should normally be passed in 3 readings. At the same time, according to Articles 17, 18, and 19, in the first reading the overall concept of the bill is evaluated and differing opinions on the draft are debated, in the following reading specific articles are discussed in detail, and in the final reading the bill is voted on and either passed by majority vote or returned for further discussion.
The actual budget discussion practice of the Azerbaijani parliament
Parliament does not discuss the budget in terms of concepts and programs, or in terms of the medium- and long-term strategic plans of institutions. Azerbaijan has neither the experience nor any legal foundations for such discussions. The government has declared that, starting from 2021, it will transition to results-based budgeting. It is hoped that if this transition occurs, we will witness parliamentary debate based on programs and strategies. It is unrealistic, however, under current circumstances, to expect these reforms to take place, even starting from 2021. Neither the government, which does not have a result-based program or strategies, nor parliament, which is entirely dependent on the executive branch and lacks the necessary professional capacity to hold discussions, are ready for such debate. Currently, the actual state of things is that the budget documents will be discussed twice at committee meetings and at best at two or three plenary sessions. The speeches of the MPs are strictly regulated – each MP has the opportunity to speak for 5 or 10 minutes at most. As there is very little time, as a rule only half of MPs at best actually have the opportunity to speak. Bear in mind that the largest part of the sessions is taken up by the presentation of the budget by the government representatives.
There is another interesting detail: although by law the budget bill must be submitted to parliament no later than October 15, in practice, budget documents are usually distributed to lawmakers on October 25 at best. Debates are held in parliamentary committees in the first days of November, and the plenary session is held only 3-5 days later. MPs have at most only 7-10 days to familiarize themselves with the voluminous budget documents. For most lawmakers, who do not have access to the services of a professional budget office or budget experts, this is a very short time to analyze the budget.
In addition, although each MP represents a region, budget discussions are not conducted on the needs of specific regions. In general, the budget is drawn up in a format so untransparent that no MP can see how much money has been allocated overall to their region, or the amount of expenditures for education, ecology, and health in that region.
Examples of budget debates from parliaments around the world
Let’s start with an interesting post-Soviet experience. Moldova’s public finance regulation law defines how many readings there should be of the draft budget and what issues each reading should cover. The first reading involves only the presentation of reports and a discussion of general budget indicators. Specific articles are discussed at the second reading. Moldova has had a very interesting experience with respect to budget debates and the role of parliament in the process. The government submits to parliament 2 draft budgets over the course of 6 months:
- The government must submit to parliament a draft law on macro-budgetary parameters by June 1. The legislature conducts discussions and research on the validity of these parameters and passes them by July 15. Parliament’s discussion of bills and documents for the next fiscal year begins at least six months in advance.
- The budget for the following year must be submitted to parliament no later than October 15. The legislative body must discuss and pass the bill within 45 days.
Estonia, another post-Soviet country, can be an example, although experts say that the budgetary powers of parliament in Estonia are not very broad compared to developed countries. The main regulations for budget discussions are explicitly defined in the constitution. According to Article 115 of the Constitution, the draft budget must be submitted to parliament no later than October 1.
The Parliamentary Finance Committee plays a crucial role in budget debates, and three of its experts provide analytical support to the legislature in budget discussions. The first reading is held in October. At this time, the parliamentary committee holds several budget hearings with the participation of various ministers and representatives from the Central Bank and the private sector. All members’ comments and suggestions on the budget are collected and sent to the Ministry of Finance for the second reading. That reading is focused directly on proposed changes and specific clauses.
Although it has a natural resource-based economy like Azerbaijan, Norway is a crucial example in this regard with its very strong parliamentary democracy. The Committee on Financial and Economic Affairs of Norway’s parliament (known as the “Storting”) plays the main role in parliamentary budget discussions. A draft budget is submitted to this committee at the beginning of October. The abovementioned committee immediately organizes budget debates in other parliamentary committees. The duration of the debates is strictly regulated. The shortest debates last 4-5 hours, and the longest 9-10 hours. Sometimes, in a single day 2-3 debates are held with different audiences. Sometimes, during a single discussion period, 80-100 debates are held with the participation of different interest groups. These debates are held by both the parliamentary leadership and the Committee on Financial and Economic Affairs. Invitees from civil society organizations, academia, or lobby groups are allowed to preside over the debates. Parliament must prepare and submit its recommendations on the draft budget to the government by November 20. The Norwegian Parliament has extensive resources for budgetary discussions. In addition to professional advisers, there is a permanent secretariat in which each committee is represented by its own experts. In addition, a special research department has been operating under the auspices of parliament since 1999. There are currently 7 researchers working in the department. They answer an average of 250-300 budget inquiries per year.
One could cite many examples of such practices. However, the government of Azerbaijan, which aims to transition to a results-based budgeting system incorporating strategic planning by 2021, must already be prepared to shift the format of budget discussions to that system now. The results-based budgeting model requires a discussion format such as the Norwegian practice.