ECONOMY

New system of controlling public expenditure

Greece yesterday unveiled a draft bill setting out a new system of monitoring public spending with the aim of bringing ballooning expenditure under control and at the same introducing greater accountability at all levels of government. The move came after the government admitted a massive slippage in ordinary budget revenues in the first four months of the year, with primary expenditure overshooting the annual target by a big margin. Spending rose 18.6 percent in the January-April period, against an annual goal of 6 percent, as wages and healthcare costs soared. International agencies and the EU have been vocal about the shortcomings of the Greek budgetary system. In its public finance report released two months ago, the European Commission warned that Greece’s higher-than-projected spending could slow efforts to reduce the debt-to-GDP ratio, among the highest in the region. It called for additional measures to curb spending before the costs of an aging population kick in. The Finance Ministry said the overhaul, with the assistance of the US Internal Revenues Service, was in response to EU monitoring of public finances and the immense size and diversity of public expenditure. It said the new system of checks and control is needed to rein in spending and to ensure that public funds are used for legal and conventional purposes. The draft legislation proposes a framework for cost-benefit analysis of public expenditure at all levels of government. This means setting up internal monitoring bodies for every entity handling public funds, which will review the progress of each project. The entities will be responsible for making sure that the programs produce results, both during execution and at the end. Partly in response to charges of corruption in government, the draft bill also specifies the powers of a newly set-up internal affairs department. The unit will monitor Finance Ministry divisions and look into property owned by public employees. The legislation will come into effect once it is published in the Government Gazette.