Budget is the accounting document that systematically describes the source and use of public
resources as defined in the existing legislation, thus representing the main point of reference for
the allocation, management and monitoring of the revenues and expenditures of the State.
In compliance with the provisions of the public accounting and finance law (Act no 196 of 31
December 2009 and subsequent amendments), the budget is drawn up every year with a three-year time
horizon (even though the allocations authorize spending only for the first year) and is approved
with an ordinary law by Parliament. Indeed, every year the budget law incorporates the variations
there have been during the year in revenues and expenditures ascribable to a number of factors: the
adoption of new rules and the repeal of others, refinancing and cutting of funds under previous
laws, redistributing the resources across the various expenditure items (within the limits set by
the law), changes in fundamental exogenous parameters for determining the actual figures of major
Up until 2015, the drafting of the budget Act for the subsequent three years was based on two
distinct bills, submitted by Government to the Chambers by 15 October and discussed in parallel at
the so-called budget session (period from mid-October to the end of the calendar year): the budget
bill (DLB) and the stability bill (DLS). The Dlb contained the budget as per the legislation, a
definition that included also any variation arising from changes in the scenarios underlying the
budgeted revenues and expenses (described in the economic and financial planning documents) and
compensatory spending adjustments within individual programmes or across programmes of the same
mission, without altering the balances of public finance.
Instead, the DLS included the new regulations as well as the refinancing and cuts to funding and
the amendments to existing regulations, namely all the actions taken to substantially amend the
existing legislation contained in the DLB. In other terms, the two documents set out the three-year
public finance policy (Article 11 of Act 196 of 2009) given that the DLS mostly contains the
measures required to amend the existing legislation (DLB) in order to reach the policy objectives
laid down in the DEF (and in the Notes Updating the DEF).
At the end of the budget session, the simultaneous approval of the two bills – with amendments
made as a result of the discussion in Parliament – constituted the origin of the budget law (LB),
namely an accounting document that represented the new legislation in force.
Given this regulatory procedure, the budget law was defined as a formal law, namely a law that
does not change the substance of the existing expenditure law, since this would require a dedicated
regulatory instrument (the stability act), it too drawn up on an annual basis to adapt the dynamics
of the budget to the policy objectives defined in the economic and financial planning documents
(DEF and relevant Notes Updating the DEF).
Starting from the budget Act for the 2017-2019 three-year period, as a result of Article 15 of
the reinforced Act no 243 of 2012, Act no 196 of 2009 was amended by Act no 163 of 2016,
eliminating the stability Act and giving a substantive nature to the Budget Act and breaking the
latter down into two distinct sections: Section I, dedicated to legislative innovations and Section
II containing the budget according to the legislation in force including the variations not
determined by new legislation: vertical compensatory measures (during the same year across
expenditure items) and horizontal compensatory measures (across various financial years on the same
expenditure item) provided for in the new Article 23, paragraph 3, letter a), as well as
refinancing, cuts to funding and rescheduling expenditure provided for by pre-existing rules, as
described in letter b) below of the new regulatory text.
Since Section I of the new budget law is reserved exclusively to legislative innovations, the
public financial measure (namely all the interventions aimed at amending the existing legislation)
is not limited to the latter but also includes the amendments to the existing legislation provided
for in Article 23, paragraph 3 made directly with Section II. Moreover, the latter must describe
the overall allocations obtained from the integration of the two Sections, showing up the financial
effects that are attributable to the regulatory novelties contained in Section I and the other
interventions amending the legislation in force.
The new budget bill is submitted to Parliament by 20 October of each year and marks the
beginning of the regulatory procedure that by 31 December ends with the approval of the final text.
The amendments made to the budget during the discussions in Parliament are reported in a Note on
STRUCTURE OF THE STATE BUDGET
The budget of the State comprises an estimate for revenues and an expenditure forecast for each
Ministry endowed with a portfolio.
Revenues are grouped under four titles: Tax revenues, Non-tax revenues, Conveyance and
Amortization of Assets and Collection of Receivables, Borrowing. Each heading (that may have
recurring and non-recurring revenues) is broken down into different types and the latter constitute
the aggregate on which Parliament expresses its vote. Each type is then further broken down into
categories and chapters.
Expenditure forecasts are arranged into missions and programmes. The missions describe the
general purposes pursued through the expenditure of the State, while the programmes are the
divisions of the missions into areas of uniform activities for the achievement of the purposes of
each mission. Starting with the draft budget act for the 2017-2019 three-year period, in pursuance
of the delegation as per Article 40 letter e), the programmes are in turn broken down into actions
which describe in detail the allocation of the resources to the various activities that make up the
programme. Mainly for management purposes, the actions are further divided into chapters and the
latter into management plans. From the economic and functional standpoints, the items of
expenditure are qualified on the basis of the classifications that comply with the national
Each budget forecast begins with the Notes to the Budget. The Notes describe the contents and
goals of the various items of the budget and indicate the criteria used to formulate the budget.
Regarding revenues, the recurring and non recurring quotas of each item are specified. For
the budget forecasts, the Administrations indicate the goals pursued through the expenditure
programmes and the indicators that quantify the results expected in accordance with the resources
assigned to the programmes.
Each budget forecast contains fact sheets for each programme as well as the allocations made for
the three-year period, and the provisions that authorize the funding of the programme.
Besides the financial budget, each budget forecast of expenditures also includes the budget of
the costs of the relevant Administration. The budget is drawn up in compliance with the accrual
principle and it measures the costs incurred by the administrations, intended as monetary value of
the human resources and capital equipment (goods and services) actually used over a certain
time-period, irrespective of the incoming or outgoing cash flows they generated (cash principle).
The budget forecasts are described by programme and cost centre. A schedule reconciling the
financial forecasts and the cost forecasts is also drawn up.
The document is made up of two sections: Section I, comprises the new legislation which amended
previous provisions, and Section II contains the legislation in force with amendments made without
passing a new law (remodulations, refinancing, cuts to funding, and reprogramming of pre-existing
laws). Structured into missions and programmes, it defines the functional allocation of spending
and collects all the financial forecasts (by accrual, cash and carry-overs) produced by the
legislation in force. It is broken down into forecasts. It has a three-year horizon, but the
allocations constitute limits to spending authorization only for the first fiscal
The simplified budget offers a concise presentation of the forecasts of the Budget Act. It is
broken down into three sections: the first presents the differential results (effects on the public
finance balance); the second contains an analysis of the revenues, and the third part contains an
analysis of expenditure by economic items and by missions and programmes.
The Financial Budget in a Nutshell
This is an annual document for dissemination that provides a summary of the main information
about the management of public finance and the impact of the public finance measures on the
financial budget of the State.
Notes to the Budget
The Notes are present in each forecast; they enrich the information of the budget and, as
regards expenditure, they are the instrument whereby each Ministry, consistently with the
socio-economic and institutional framework of reference within which it operates, and with the
political priorities assigned to it, illustrates the criteria used to formulate the financial
forecasts in relation to the expenditure programmes, the objectives to be achieved and the
indicators to measure them.
Missions and programmes of the Administrations of the State
The Missions are the “main functions and the strategic goals pursued through expenditure” and
they constitute a representation that is useful in ensuring greater transparency of the larger
allocations to expenditure items. They are broken down into Programmes, uniform groups of
activities carried out within each Ministry, to pursue well-defined objectives within the framework
of the institutional purposes attributed to the relevant Ministry.
This is an analytical accounting document that gathers the forecasts based on the accrual
principle according to three different perspectives of representations: by Cost Centre, by Nature
of the cost and by Missions/Programmes. It is presented for each forecast consistently with the
allocation of resources made by the financial budget.
The Budget in a Nutshell
This is an annual document for dissemination purposes that provides a summary of the contents of
the State Budget illustrating the main items that make up the cost structure that each Central
Administration of the State expects to incur consistently with the financial allocations approved
by Parliament with the Budget Act.
The Environmental Evaluation of the State is an accounting document that presents the
expenditure that the Central Administrations of the State expect to incur for activities or actions
aimed at protecting the environment or at using and managing natural resources.