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The Budget Law

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The Annual Budget Session

For both the Government and Parliament, the budget session is the most important decision process of the year. During it, crucial decisions are taken relative to governance of the economy and economic policy. These decisions have major consequences for the life of citizens.

According to the first paragraph of Article 81 of the Constitution, "each year, the Chambers approve the budgets and the final statement of accounts presented by the Government". In addition to establishing that the budget is annual, this constitutional requirement clearly subdivides the competencies of Government and Parliament, authorising the latter to approve the budget while it attributes to the former, and to no other body, the power (duty) to present the budget.

The government presents the Draft Bill approving the annual budget and the legislated long-term budget to the Chambers before 30 September. By the same date, the Bill is sent to the Regions. The Regions express their opinions on the Bill at the State/Regions Conference; these opinions are communicated to the Government and to Parliament before 15 October.

During the parliamentary procedure surrounding the Draft Bill approving the budget, the Government, the Budget Commission, the sponsor of the Bill and individual legislators or groups of legislators may present amendments to the Bill or change the choices originally made so as to focus on other priorities.

The budget is not only an accounting document, that is, a document detailing the revenue it is estimated will be ascertained and collected, on one hand, and, on the other hand, the expenditures to which it is estimated a commitment will be made and which must be paid, as well as the subsequent differential results (public saving, net balance to be financed, net debt and resource to the market). From the economic/financial perspective, the budget decisions, and those logically connected to the Budget Law, which implements the programmatic objectives delineated in the economic/financial programming document (EFPD), lead to various choices, including:

- the determination of the volume of resources that the public sector draws from the private sector;

- the distribution of wealth made available.

Thus, the budget is above all an instrument for the realisation of economic policy objectives.

The Government's work with regard to the preparation of the budget and to the subsequent relationship with Parliament during the process leading to approval of the annual Law begins with the drawing up of a series of expository documents. These documents must be presented to the Chambers in order to provide them with the maximum amount possible of knowledge concerning the country's economic/financial situation. The documents also serve to inform the Chambers about the State interventions, described in the EFPD, to be realised with the Budget Law and with the associated measures and to be implemented in the annual and multiyear budgets. To this end, the Italian system provides for the presentation of the EFPD before 30 June and of the budget, the Draft Budget Law, the forecast/programmatic report and the long-term programmatic budget before 30 September. The results of financial, economic and asset management are summarised a posteriori and presented before the month of June of the financial period subsequent to that to which each annual budget refers. For this purpose, the Government draws up the general statement of State accounts, which it presents to Parliament for legislative approval once the State Auditor's Department has certified it.

The annual budget decision is thus arrived at by means of a series of legislative and non-legislative acts generally defined as public-finance documents and that can be summarised as:

- the economic/financial programming document (EFPD)

- the forecast/programmatic report (FPR)

- the law approving the forecast budget

- the Budget Law

- one or more finance-related laws

- the State Budget

- the Stability Program.

These documents contain forecast data and are made available according to when they are drawn up or presented to/approved by Parliament. As far as disclosure and analysis of the results, including partial results, of the financial period are concerned, the documents completing the budget decision are:

- the annual report on cash-requirement estimates and the quarterly cash reports

- the general report on the country's economic situation

- the law approving the general statement of State accounts

- the annual budget-balancing law.

Examination of these documents reveals, from both the chronological and systemic points of view, the process on which the forecast of public-finance balances is based, as of when they are first prepared and during subsequent updates. The State Department of General Accounts is responsible for preparing the State Budget, the cash reports and Volume II of the FPR. It also contributes significantly to the other public-finance documents.