PRESS RELEASE
18 November 2020
PUBLIC FINANCES AND ACCOUNTS
PUBLIC FINANCES:
WORK TOWARDS REFORMING THE
ORGANISATIONAL FRAMEWORK AND
GOVERNANCE
Against the backdrop of a health crisis with major and long-term implications on
public finances, the Cour des comptes has analysed the advantages and limitations
of budgetary framework law and the governance of public budgets in France.
Ten years after the framework was first implemented, when assessing how public
finances have been managed overseveral excercices, the results are disappointing,
as the objectives set out in the Planning Acts have rarely been achieved.
In addition, the fragmentation of the public expenditure framework makes choices
less clear and makes it difficult to properly understand how public funds are being
used.
Finally, the growing fragmentation of the government budget is leading to the
abandon of the principles of unity, completeness and efficiency.
Making no changes to the Constitution, the Cour des Comptes is putting forward 16
proposals aiming to improvethe governance, coordination and management of public
finances, in addition to the proposals investigating how Framework Law for Finance
Acts (LOLF) is being implemented.
Improving multi-year planning and coordination of public budgets
After recognising the importance of long term management in order to properly manage
public budgets, public finance programming bills were introduced in the Constitution in 2008.
In 2012, they were strengthened with the integration of the provisions of the European Union
Treaty on the Stability, Coordination and Governance of Public Budgets. However, 10 years
after it was first implemented, it has seemingly failed to deliver. The objectives set out by
the five Programming Acts adopted since 2008 have rarely been achieved, even during
periods where economic growth was close to its potential level.
The weak coordination between the budget acts has limited the approach’s effectiveness.
As a matter of fact, programming acts do not apply to annual Social Security Finance and
Budget Acts, and the multi-year fiscal periods are disconnected from one other and are
independent from public finance programming bills. Nevertheless, international comparisons
show that there are benefits to a solid multi-year framework.
In particular, the Cour des Comptes would recommend setting out multi-year allocations and
sub-allocations in Planning Acts, introducing three-year rolling budgets for the central
government, putting in place annual monitoring instruments, expanding the remit of the High
Council of Public Finances to cover continuous assessment of the multi-year trajectory and
hold annual discussions regarding debt and its sustainability.
Re-establishing an over-arching approach to fragmented public
finances Restoring a global approach of fragmented public finances
The fragmentation of the public expenditure framework reflects the fragmentation of the
institutional framework, which features more than 90,000 entities from the three sections of
general government (central government, social security and local public authorities), which
have overlapping and constantly changing jurisdictions. This has resulted in the
establishment of complicated and incomplete governance instruments. The resulting
multiple financial connections between the different areas of government action affect the
applicability of their respective balances.
In order to re-establish an over-arching approach for public finances, the Cour des Comptes
would recommend creating a permanent consultation body composed by central
government, social security and local public authority representatives; introducing general
discussions on central government revenue and requirements for rebalancing central
government and social security budgets, prior to scrutinising Social Security Finance and
Budget Acts; expanding the scope of the Social Security Financing Act to cover
supplementary compulsory pension schemes and unemployment insurance schemes; and
bringing together all the different types of funds contributing to the funding of
local
authorities within new budget priorities (the assessment of these funds would form the
framework of discussions around local finances in the French National Assembly).
Ensuring that the central government’s budget reflects the principles of
unity, universality and efficiency
The growing fragmentation of the central government’s budget makes it impossible to have
a consolidated approach for the resources allocated to each public policy. The principles of
unity and universality s have been increasingly abandoned in recent years (such as tax
expenditure, charges against revenue, tax allocations and use of funds with no legal
personality). This fragmentation has reduced the scope of Parliament’s authority by focusing
the debate purely on the budgetary allocations included in the central government’s general
budget assignments.
In order to increase the unity and the completeness of the central government’s budget, the
Cour des Comptes would propose expanding the scope of the budgetary priorities, by
adding all resources which would help to fund public policies to budgetary allocations, and
conducting a wholesale review of the exceptional funding mechanisms in order to assess
their efficiency and whether they are needed or not.
In addition, despite the LOLF, the central government’s budgetary framework and practices
still do little to ensure that public initiatives are efficient. The expenditure review processes
introduced by the LOLF have produced disappointing results and the performance analysis
has been inadequate.
In order to improve the efficiency of central government expenditure, , the Cour des Comptes
would propose applying the performance approach to all public policy resources and not
only to budgetary allocations, enhancing the multi-year budgetary approach by introducing
three-year enforcement reports for finance acts, holding managers more accountable by
reducing credit freezes and fully harnessing accounting data by taking greater account of
the management data for the central government’s assets.
Read the report
PRESS CONTACTS:
Ted Marx
Communications Director
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+ 33 (0)1 42 98 55 62
ted.marx@ccomptes.fr
Etienne Chantoin
Press relations
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+33 (0)1 42 98 59 45
etienne.chantoin@ccomptes.fr
@Courdescomptes
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