Act No. 23 / 2017 Coll.
Law on the Rules of Budgetary Responsibility
Valid
Effective from 01.01.2017
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23
THE LAW
of 17 January 2017
on the rules on budgetary responsibility
Parliament has decided on this law of the Czech Republic:
GENERAL PROVISIONS
Subject matter
This law implements the relevant European Union1), building on the directly applicable European Union2) and laying down rules on the budgetary responsibility of public institutions in the public institutions sector and on the competence of the National Budget Council (hereinafter the Council).
Preliminary provisions
(1) The State and the local authorities are in charge of sound and sustainable public finances, with appropriate support for economic and social development, employment and intergenerational cohesion.
(2) The State, the local authorities and other public bodies referred to in Article 3 comply with the rules on transparency, effectiveness, economy and efficiency of the management of public finances in the exercise of their activities.
(3) The State, the local authorities and other public institutions referred to in Article 3 ensure that the debt development of the public institutions sector does not undermine the long-term sustainability of public finances.
Public institution
The public institution in the public institution sector for the purposes of budgetary responsibility shall be:
(a) a State, an organisational component of a State and an establishment of a State having a similar status to that of a State;
(b) a state contribution organisation;
(c) the State Fund;
(d) a public research institution;
(e) public university;
(f) a legal person whose founder or founder is a public institution referred to in points (a), (c) to (e), (g) and (m), and which is:
1. mainly financed by the revenue from public institutions referred to in points (a) to (e) or the income from taxes, fees and other similar cash transactions; and
2. managed by a public institution as referred to in points (a) to (e), or in which such a public institution may enforce the appointment, election or removal of a majority of persons who are a statutory or management body or a member thereof, or of a majority of persons who are members of the supervisory body of a legal person,
(g) health insurance company;
(h) a territorial body,
(i) voluntary association of municipalities;
(j) a contribution organisation set up by the local authorities, a voluntary association of municipalities or a municipal part of the capital of Prague,
(k) a legal person whose founder or founder is a local authority, a voluntary association of municipalities or a municipal part of the capital of Prague; and
1. which is financed mainly by its founder or founder or by the income of taxes, fees and other similar cash transactions; and
2. in which the public institution referred to in points (h) to (k) may enforce the appointment, election or removal of more than half of the persons who are the statutory, management or administrative body or its member, or most of the persons who are members of the supervisory body of the legal person,
(l) another economic entity that meets the characteristics of a general government institution under the directly applicable European Union law governing the European system of national and regional accounts in the European Union3),
(m) public cultural institutions;
if it is also registered as a unit of the general government sector in accordance with the directly applicable European Union law governing the European system of national and regional accounts in the European Union3) in a register of economic operators maintained and managed by the Czech Statistical Office under the State Statistical Service Act.
RULES ON BUDGET RELIEF
Budget and medium-term public institution outlook
(1) The breakdown of a public institution is the plan governing the financing of the activities of a public institution. The budget shall include a revenue and expenditure and financing plan for the balance, or a revenue and cost plan.
(2) The number of health insurance companies is a health insurance plan which contains a health insurance scheme for income and expenditure.
(3) The medium-term outlook for the public institution's budget is the revenue and expenditure plan, or the revenue and cost plan, for each of the financial years for which the medium-term outlook is drawn up.
(1) The public institution shall draw up a draft budget for the financial year and a medium-term outlook for at least two subsequent financial years, taking into account all economic facts, including its economic and financial situation.
(2) The public institution shall publish on its website or by any other means at the usual place
(a) the draft budget and the medium-term budgetary outlook for at least 10 days before the date of its discussion by the competent authority, unless otherwise provided for by other legislation;
(b) the budget and the medium-term outlook of the budget no later than 30 days after the date of its discussion or approval by the competent authority, unless otherwise provided for by other legislation.
(3) With the draft budget for the financial year, the public institution shall publish information on the approved budget for the financial year preceding the year for which the draft budget is submitted (hereinafter referred to as the previous year) and on the expected or actual implementation of the budget for the previous year. This obligation shall not apply to a public institution for which the requested information is published under another legislation or through the Ministry of Finance (hereinafter referred to as "the Ministry ') in a way that allows remote access.
Publication of information
(1) If this Act imposes an obligation on the Ministry to publish information on compliance with the rules on budgetary responsibility by public institutions, the Ministry shall publish it on its website.
(2) The Ministry will publish by 31 October each year a list of public institutions on the basis of information provided by the Czech Statistical Office to the Ministry on 30 September of the same year.
(1) The Ministry shall publish, at least once a year, information on:
(a) contingent liabilities under the laws governing account4) and other potential obligations to comply with the expected significant impact on public finances, at least broken down into guarantees, debts arising from the activities of public companies as defined in the directly applicable European Union law governing the European system of national and regional accounts in the European Union5), including their valuation;
(b) loans, loans and repayable financial assistance granted by public institutions whose repayment of principal or interest is 90 days or more after the due date;
(c) equity interests in commercial corporations and other interests held by public institutions, at least in respect of assets and shares of a value exceeding 0,01% of the nominal gross domestic product declared for the same period in the Ministry's most recently published macroeconomic forecast;
(d) estimates of the effects of tax concessions which can be considered as expenditure effected through the tax system on the revenue of the public institutions sector.
(2) For the public institutions referred to in § 3 (h) to (k) or for each group of such institutions, the Ministry shall publish at least the total revenue, expenditure and balance or total revenue and costs or their estimates for each calendar quarter by the end of the following quarter.
(3) For the public institutions referred to in Article 3 (a) to (f) and (l), or for the various groups of such institutions, the Ministry shall publish for each calendar month at least the total revenue, expenditure and balance or total revenue and / or their estimates by the end of the following month. For public institutions referred to in § 3 (g), the Ministry shall publish these data separately within the same time limits.
(4) Public institutions shall provide the Ministry with the information necessary to fulfil the information obligations referred to in paragraphs 1 to 3 which are not known to the Ministry from its activities through the central system of state accounting information.
(5) Prior to the publication of the information referred to in paragraphs 2 and 3, the Ministry shall publish a description of the differences between the published data and the data under the directly applicable European Union law governing the European system of national and regional accounts in the European Union3). The Ministry will prepare a description in cooperation with the Czech Statistical Office.
(6) The Ministry, together with the information referred to in paragraphs 1 to 3, shall publish the manner in which those data have been established.
Forecasts
(1) The Ministry's macroeconomic and fiscal forecasts include a comparison with the European Commission's forecasts, including their assumptions, and other forecasts. The Ministry shall publish and justify substantial differences.
(2) The Ministry's fiscal forecasts include an analysis of the sensitivity of the development of the main fiscal variables to different assumptions regarding at least the rate of growth of gross domestic product and interest rates.
(3) The Ministry shall carry out a regular comprehensive ex post evaluation of the macroeconomic and fiscal forecasts used to prepare the State budget in accordance with objective methods. The results of the evaluation will be published by the Ministry, together with the opinion of the Committee on Budgetary Forecasts (Section 19), taking into account their future forecasts.
(4) In the event of significant distortions of the macroeconomic forecast for at least four consecutive years, the Ministry shall take the necessary measures and publish them.
(5) The Ministry will publish macroeconomic and fiscal forecasts, the methodology and assumptions used to produce macroeconomic and fiscal forecasts.
Budget strategy of the public institutions sector
(1) The budgetary strategy of the public institutions sector (hereinafter referred to as the strategy) is based on the macroeconomic forecast and the fiscal forecast of the public institutions sector. The strategy includes convergence programme 6). The strategy shall be drawn up annually by the Ministry for at least the following three years.
(2) The strategy includes:
(a) the total expenditure of the public institution sector determined in accordance with Article 10 or Article 10a, by one amount for each of the financial years;
(b) the expenditure framework of the State Budget and the State Funds referred to in Article 12, by one amount for each of the financial years;
(c) the procedure for determining the total expenditure of the public institutions sector pursuant to Sections 10 and 10a and the procedure for determining the expenditure frameworks of the state budget and of the state funds pursuant to Section 12;
(d) forecasts of the main items of revenue and expenditure of the public institutions sector in the context of unchanged economic policies, one for each of the financial years;
(e) a description of the impact of the planned medium-term economic policies (7) on the public institutions sector, broken down by the main items of revenue and expenditure, showing the procedure for achieving the medium-term budgetary objective established under the directly applicable European Union Regulation (8) as compared to forecasts for unchanged economic policies;
(f) assessing the impact of the planned economic policies on the sustainability of public finances;
(g) the financial relations of the State budget with the budgets of the local authorities;
(h) the financial relations of the state budget with the budgets of the public institutions referred to in Article 3 (g) and the special public health insurance account (9).
(3) The Ministry submits the draft strategy to the Government in order to discuss it and, if necessary, approve it by 30 April of the same year.
(4) In the draft strategy, the draft state budget and the medium term, the Ministry will provide summary information on the management of public institutions and their non-budgetary accounts and funds, at least to the extent of their aggregate impact on the balance and debt of the public institutions sector.
Determination of total expenditure of the public institution sector
(1) The Ministry shall determine the amount of the total expenditure of the public institution sector as the sum of not more than 1% of the forecast nominal gross domestic product, unless otherwise provided for in Section 10a, and the forecast total consolidated revenue of the public institution sector adjusted for the impact of the economic cycle and for the effect of one-off and transitional operations for the following financial year. The total expenditure of the public institutions sector shall be consolidated on their mutual financial relations and shall be determined in accordance with the directly applicable European Union provisions governing the European system of national and regional accounts in the European Union3).
(2) One-off and transitional operations are revenue and expenditure of the public institution sector which have only a short-term limited impact on their budgets. The Ministry will discuss with the Council (Paragraph 21) the impact of one-off and transitional operations on the revenue and expenditure of the public institutions sector. The Council shall, without undue delay, issue an opinion which the Ministry shall publish on the impact of the operations. If the Ministry does not agree with the Council's position, it shall publish the reasons for the disagreement.
(3) The amount of the total expenditure of the public institution sector is reduced by one third of the amount of the correction component referred to in Article 11, which in that year exceeds 2% of the nominal gross domestic product for the previous financial year, which is last published by the Czech Statistical Office in the current year.
(4) The Ministry may increase the total expenditure of the public institutions sector by:
(a) expenditure of the public institution sector resulting from the deterioration of the security situation of the State associated with the government declared by exceptional measures to improve its defensibility, on the basis of an emergency state, a state of threat or a state of war;
(b) the sum of the expenditure of the public institution sector associated with the elimination of the consequences of natural disasters and of the expenditure of the public institution sector resulting from the performance of international treaties and other international obligations of the Czech Republic, if, according to the Ministry's forecast, it exceeds 3% of the nominal gross domestic product forecast for that period,
(c) additional expenditure relating to the forecast significant deterioration of economic developments where the Ministry forecasts a quarterly annual decline of at least 3% in the gross domestic product adjusted for price effects in a given year.
(5) The Ministry shall determine the amount of expenditure referred to in paragraph 4 (c) only with the Council opinion published by the Ministry. If the Ministry does not agree with the Council's position, it shall publish the reasons for the disagreement.
(6) The Ministry, together with the Council, will draw up and publish a procedure for the establishment of one-off and transitional operations and the adjustment of total revenue by the impact of the economic cycle.
The percentage of the nominal gross domestic product forecast pursuant to Paragraph 10 (1) shall not exceed:
(a) 2,75% for 2024;
(b) 2,25% for 2025;
(c) 1,75% for 2026;
(d) 1,25% for 2027.
Corrective Folder
(1) The adjustment component serves to adjust the deviation of the actual profit or loss of the public institution sector from that expected.
(2) The correction component in the current financial year shall consist of the sum of the corrective component of the previous year and the difference between the actual total expenditure of the public institution sector for the previous year and the total expenditure of the public institution sector calculated in the current year for the previous year in retrospect according to § 10 or § 10a in the years 2025 to 2028 on the basis of the data published by the Czech Statistical Office. The actual total expenditure of the public institution sector published by the Czech Statistical Office in the current year and communicated by the Czech Statistical Office to the Ministry by 1 April and 1 October of each current year at the latest shall be determined in accordance with the directly applicable regulation of the European Union governing the European system of national and regional accounts in the European Union3).
(3) The correction component shall be reduced by the amount applied under Paragraph 10 (3) in the previous year.
(4) The Ministry may reduce the corrective component in the current financial year by the amount of expenditure incurred on the basis of external facts other than those referred to in Section 10 (4). The inclusion of such expenditure and the determination of its scope shall be possible only after having received the Council's favourable opinion. The Ministry shall publish the opinion of the Council.
Issuing framework of the State Budget and State Funds
(1) The Ministry, together with the Council, shall draw up and publish a description of the procedure for determining the expenditure framework of the State Budget and the State Funds from the total expenditure of the public institutions sector.
(2) The Ministry sets out a binding overall consolidated expenditure framework for the state budget and state funds. It shall be based on the total expenditure of the public institution sector on which the forecast result of the management of public institutions, with the exception of the State budget and State funds, shall be excluded.
(3) The Ministry is based on the expenditure framework of the State Budget and State Funds when determining the total expenditure of the State Budget in the draft State Budget Act under the law governing the budgetary rule (10).
(4) The establishment of an expenditure framework for the State Budget and State Funds will be made public by the Ministry.
(5) The Council will issue, without undue delay, an opinion published by the Ministry to determine the expenditure framework of the State Budget and the State Funds. If the Ministry does not agree with the Council's position, it shall publish the reasons for the disagreement.
Amount of debt of the public institution sector
In order to determine the amount of the debt of the public institution sector after deduction of the reserve of funds in the financing of the public debt, expressed as a percentage of gross domestic product (hereinafter referred to as "debt '), the debt of the public institution sector incurred by the end of the previous calendar year and the nominal gross domestic product for the previous calendar year, as notified by the Czech Statistical Office to the European Commission in the first half of the current year under the directly applicable European Union law governing the application of the Protocol on the excessive deficit procedure (11), shall be used.
If the amount of the debt of the public institution sector after deduction of the reserve of funds for the financing of sovereign debt is at least 55% of the nominal gross domestic product, the following measures leading to the long-term sustainable state of public finances shall apply from the first day of the second calendar month following the date of publication of the debt thus adjusted
(a) the Government shall approve and submit to the Chamber of Deputies a proposal and a medium-term outlook for the State budget and the budgets of the State Funds which lead to a sustainable state of public finances; If the draft State Budget Act or the draft State Fund Budget has already been submitted without the fulfilment of this condition, the Government shall withdraw such a proposal and submit a new draft without delay;
(b) the Government shall submit to the Chamber of Deputies proposals for balanced budgets of health insurance companies; draft deficit budgets may be submitted only if the conditions laid down by the laws governing public health insurance (12) are met,
(c) the territorial body shall approve its budget for the following year as balanced or surplus; the budget of the local authority may be approved as deficit only if the conditions laid down by law governing the budgetary rules of the territorial budgets are met. 13),
(d) public institutions not covered by points (a) to (c) may not, for a period where the amount of the debt is at least 55% of gross domestic product, create new obligations under contracts, except those relating to projects co-financed by the budget of the European Union or those necessary for the execution of decisions by a court or a public authority, leading to an increase in the debt of the public institution sector for more than one calendar year.
(1) The measure provided for in Article 14 does not apply
(a) in the event of a significant deterioration in economic development for 24 months from the first day of the calendar month following the calendar month in which the Czech Statistical Office publishes, in quarterly national accounts, a quarterly decline in the gross domestic product adjusted for price and seasonal effects and the number of working days for the last quarter by at least 2% or a year-on-year decrease in the gross domestic product adjusted for the last quarter by at least 3%;
(b) in the event of an emergency, a state of danger or a state of war;
(c) during the period of emergency measures announced by the Government to increase the State's defensibility in the event of deterioration of the State's security situation; or
(d) for a period of 24 months from the first day of the calendar month following the calendar month in which the Ministry publishes that the sum of the necessary expenditure of the state budget associated with the elimination of the consequences of natural disasters affecting the territory of the Czech Republic and the expenditure resulting from the implementation of international treaties and other international obligations of the Czech Republic exceeded 3% of the nominal gross domestic product.
(2) Measures limiting the establishment of new obligations under the contracts provided for in Article 14 (d) shall not apply to public institutions which establish new obligations relating to the fulfilment of the legal obligations of the financial market guarantee system under the law governing the activities of bank14, the law governing the activities of savings and credit cooperatives in 15) or the law regulating recovery and resolution of crises on the financial market16).
If the debt of the public sector is more than 60% of the nominal gross domestic product, the government will propose measures to reduce this level).
Management of the local self-government unit
(1) In the interests of sound and sustainable public finances, the Land Authority shall manage the unit so that the amount of its debt does not exceed 60% of the average of its revenue over the last 4 financial years on the balance sheet date.
(2) Where the debt of a local authority exceeds 60% of the average of its revenue for the last 4 financial years on the balance sheet date, the local authority shall reduce it by at least 5% in the following calendar year from the difference between its debt and 60% in the average of its revenue for the last 4 financial years.
(3) If the territorial government does not reduce its debt and its debt on the following balance sheet date exceeds 60% of the average of its income over the last 4 financial years, the Ministry shall decide, in the following calendar year, on the budgetary determination of taxes to suspend the transfer of its share of tax revenue under the Act.
(4) For the purposes of this Act, the revenue of the local authority is the sum of all cash transactions received in budget13) during the financial year consolidated under another legislation18).
(5) For the purposes of this Act, the debt of the local government is the value of outstanding liabilities from:
(a) bonds issued;
(b) loans, loans and repayable financial assistance received;
(c) performance of the guarantee;
(d) the bills issued;
(e) public and private relations with a maturity of more than 1 year, with the exception of transfers and liabilities which were not intended to postpone repayment of debts.
Each year, the Ministry evaluates the income and debt of the local authorities and the Minister of Finance informs the government of the results of the evaluation. At the same time, for each territorial unit, the Ministry shall publish the ratio of the amount of debt to the average of its revenue over the last 4 financial years and, where applicable, the amount of the compulsory debt reduction referred to in Article 17 (2).
COMMITTEE FOR BUDGETARY PROGNOSIS
(1) A Committee on Budgetary Forecasts (hereinafter referred to as the Committee) is hereby established.
(2) The Committee, for the purpose of preparing the State budget, the State Fund budget and the health insurance undertaking's budget and their medium-term prospects, regularly and collectively assess in advance the macroeconomic and fiscal forecasts of the public institutions sector prepared by the Ministry, in particular in terms of the likelihood of their implementation. The results of the assessment shall be made public by the Ministry and taken into account in its forecasts.
(3) Public institutions, with the exception of the public institutions referred to in points (h) to (l) of Article 3, will use a macroeconomic and fiscal forecast prepared by the Ministry on the basis of the most recent information, as last published by the Ministry and assessed by the Committee, to prepare their budget and the medium-term outlook.
(1) The Committee shall consist of the Chair of the Committee, the Vice-President of the Committee and at least five other members.
(2) The President of the Committee and the members of the Committee shall be appointed by the Government on a proposal from the Council for a period of 3 years.
(3) Membership of the Committee is an honorary function.
(4) The preconditions for the function of President of the Committee and members of the Committee, the election of Vice-President of the Committee, the deliberations of the Committee, the rights and obligations of the members of the Committee, the establishment of criteria for assessing macroeconomic and fiscal forecasts and the internal organisation of the Committee shall be governed by the Statute and by the Rules of Procedure of the Committee approved by the Government on the basis of a joint proposal from the Ministry and the Council.
(5) The Ministry provides the Committee with the necessary information to evaluate the forecasts and the substantive conditions for its activities.
(6) Expenditure on the Committee's activities shall be borne by the Ministry's budget.
COUNCIL
(1) The Council is an independent expert body operating in the field of fiscal and budgetary policy.
(2) Council
(a) assess the implementation of numerical fiscal rules, which are in particular the rule of the limit on the amount of debt, the determination of the total expenditure of the public institutions sector pursuant to Article 10, the derivation of the expenditure framework of the State Budget and the State Funds pursuant to Article 12 and the management of the local self-governing body, and draw up and submit to the Chamber of Deputies a report on their implementation;
(b) establish the amount of the debt and declare it in the Collection of Laws and International Contracts within 1 month of the date of the first publication of the amount of the debt of the public institution sector for the previous calendar year by the Czech Statistical Office;
(c) monitor the development of the management of the public institutions sector;
(d) drawing up and presenting to the Chamber of Deputies a report on the long-term sustainability of public finances, taking into account economic and social development, employment and intergenerational cohesion, which includes an assessment of how the planned government policies are likely to affect the sustainability of public finances by their direct long-term effects;
(e) prepare an opinion on the calculation of the value of the corrective component in accordance with Article 11;
(f) draw up and submit an opinion to the Government and the Chamber of Deputies on the impact of the proposed pension arrangements on the sustainability of public finances, provided that these proposals, as assessed by the Council, significantly affect the long-term financial sustainability of public finances.
(3) The Council will publish opinions and reports on its website without undue delay.
The Council may request information and synergies between public institutions relating to the performance of activities within its competence and shall, within the limits of its competence, provide synergies and information to the Council.
(1) The function of a member of the Council shall be a public function.
(2) The members of the Council shall perform their duties in person and shall not receive or require instructions from any other authority or person for their execution.
(3) The Council shall each year draw up and publish its activity plan on its website.
(4) The Council approves the draft budget of the Office of the Council, including its amendments, the medium-term outlook for the budget for the following two financial years and the final account of the chapter of the State Budget.
(5) The Council adopts the Council's Rules of Procedure.
(1) The Council shall consist of the President and two other members.
(2) The President of the Council shall act externally on behalf of the Council.
(3) The President of the Council is hereby authorised to take part in an advisory meeting of the Government and the Committee. If the President of the Council asks for the floor, he must be given the floor.
(4) The President of the Council shall attend meetings of the Chamber of Deputies, the Senate or their bodies when reports or opinions of the Council are discussed. If the President of the Council asks for the floor, he must be given the floor.
(1) The President of the Council is elected by the Chamber of Deputies on a proposal from the Government.
(2) The other 2 members are elected by the Chamber of Deputies, one after the Senate and the Czech National Bank.
(3) If a member of the Council is not proposed by those who are entitled to propose it within 6 months of the date of expiry or termination of office of a member of the Council, it may be proposed by one fifth of all Members of the Chamber of Deputies.
(4) If a member of the Council is not elected pursuant to paragraphs 1 and 2 within 60 days of the date of submission of the proposal to the Chamber of Deputies only because the Chamber of Deputies has not voted on this matter within that time limit, the Chamber of Deputies shall agree to the proposal.
(1) Only a natural person may be elected as a member of the Council who:
(a) is fully competent;
(b) has not been convicted of an intentional offence;
(c) has completed a university degree in the Master's study programme; and
(d) is recognised and experienced in finance or macro-economics with experience in the field of at least 10 years.
(2) No one may be elected more than twice as a member of the Council.
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Regulation Information
| Citation | Act No. 23 / 2017 Coll., on the Rules of Budgetary Responsibility |
|---|---|
| Regulation Type | - |
| Author | - |
| Collection | Code of Laws |
| Date of Promulgation | 06.02.2017 |
|---|---|
| Effective from | 01.01.2017 |
| Effective until | - |
| Status | Valid |
The regulation text is for informational purposes only.
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