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2007 Assessment

Ecuador: Integrity Indicators Scorecard

Ecuador: Integrity Scorecard Report > Sub-Category: Budget Processes
Indicators		Score
37	Can the legislature provide input to the national budget?	50
38	Can citizens access the national budgetary process?	33
39	In law, is there a separate legislative committee which provides oversight of public funds?	100
40	Is the legislative committee overseeing the expenditure of public funds effective?	31

Indicator and sub-Indicator Details

Can the legislature provide input to the national budget?

37a: In law, the legislature can amend the budget.

Score:

YES

Comments: The Constitution authorizes to the National Congress to approve the budget, but the same Constitution does not authorize to deny it. The laws indicate that the National Congress will not be able to increase the amount of income and expenditures in the pro forma. During the execution of the budget, the Executive branch needs the prior approval of the Congress to increase expenses beyond the percentage determined by the law.

References: National Constitution: Article 130 No. 13 and Article 258

Article 75 Ley Orgánica de Administración Financiera y Control (LOAFYC).

Peer Review Comments: The Congress is required by law to approve or modify the budget proposed by the executive.

37b: In practice, significant public expenditures require legislative approval.

Score:

100

$Scoring Criteria :: 100 Score Criteria: All significant government expenditures (defined as any project costing more than 1% of the total national budget), must be approved by the legislature. This includes defense and secret programs, which may be debated in closed hearings. 50 Score Criteria: Most significant government expenditures (as defined) are approved by the legislature, but some exceptions to this rule exist. This may include defense programs, an executive\'s personal budget, or other expenses. 0 Score Criteria: The legislature does not have the power to approve or disapprove large portions of the government budget, or the legislature does not exercise this power in a meaningful way.$

Comments: The National Budget must be approved by the Congress. The law indicates that this institution must "watch" the execution.

It is important to emphasize that there is a difference between "to approve" and "to execute" the budget. The approval is a duty of the Congress and the execution corresponds to Ministry of Economy and Finance (MEF--Ministerio de Economía y Finanzas).

References: Article 3 lit (a) Ley No. 18 R.O. 1992/11/30.

Article 4 lit. (a) Ley No. 18 R.O. 1992/11/30.

Article 130 of National Constitution, No. 13.

Interview with M.Sc. Fabián Carrillo, expert in budget process. Carrillo, F.: Los Recursos en el Presupuesto 2007: nada Nuevo bajo el sol, Ciudadanizando las Políticas, Grupo FARO, Quito, abril 2007.

37c: In practice, the legislature has sufficient capacity to monitor the budget process and provide input or changes.

Score:

100

Comments: The Budget is developed and executed by the executive branch, and one of the characteristics in the budget is the little gap to make changes by the National Congress. Almost all expenditures are pre-assigned, this leave little margin to make big changes in the National Budget by the National Congress. The National Congress participates with little input in the approval.

References: Article 4 lit. (a) Ley No. 18 R.O. 1992/11/30.

El Congreso Nacional aprobará el presupuesto únicamente por sectores de ingresos y gastos y no podrá incrementar el monto estimado de ingresos y egresos previstos en la proforma presupuestaria presentada por el Ministerio de Finanzas y Crédito Público.

Peer Review Comments: In practice, members of Congress can monitor budget processes and provide input, however, the Ecuadorian Congress is strongly influenced by political and economic interests that have hindered the performance of its duties. A better information source would be the Fiscal Policy Observatory (Observatorio de la Política Fiscal), which is a CSO.

Can citizens access the national budgetary process?

38a: In practice, the national budgetary process is conducted in a transparent manner in the debating stage (i.e. before final approval).

Score:

100

Comments: The National Congress in not a political "arena" to discuss economic topics, especially budgetary ones, because this is a political branch. Additionally, the political parties are fragmented in Ecuador, the necessity to make coalitions are crucial to approve it.

References: Interview with M.Sc. Fabián Carrillo, expert in budget process. Carrillo, F.: Los Recursos en el Presupuesto 2007: nada Nuevo bajo el sol, Ciudadanizando las Políticas, Grupo FARO, Quito, abril 2007.

38b: In practice, citizens provide input at budget hearings.

Score:

100

Comments: In Ecuador has some CSOs that may have a voice, but they can not influence the endorsement of the budget.

Peer Review Comments: The Municipal Government of Cotacachi in the north of Ecuador has conducted budget hearings. Although citizens can demand that their local governments plan the budgets through public hearings, it is rare for such hearings to take place.

38c: In practice, citizens can access itemized budget allocations.

Score:

100

Comments: Once the National Budget is approved by the National Congress, it is published in the Official Register (RO-- Registro Oficial). This document has the budget allocation by group of expenditures. The common citizen can access to budget information in the Ministry of Economy and Finance (MEF-- Ministerio de Economía y Finanzas) too. But, it is important to indicate that there is a big difference between what is budget and what is executed.

Peer Review Comments: Citizens, journalists and CSOs may have to go through long procedures to obtain this type of information. A better information source would be the Coalition of Information Access (Coalición de acceso a la información).

In law, is there a separate legislative committee which provides oversight of public funds?

39: In law, is there a separate legislative committee which provides oversight of public funds?

Score:

YES

Comments: The committee of "Tributario, Fiscal, Bancario y Presupuesto" provides oversight over the national budget.

Article 211 establishes that the General Controller of the State (CGE--Contraloria General del Estado) operate like an organization of audit that observes that the budget is applied correctly.

References: [ LINK ]. (National Congress, Fiscalization Commission) National Constitution: Article 211 Article 31, No.1 and No. 2 Ley Orgánica de la Contraloría General del Estado

Peer Review Comments: There is a Fiscalization Commission that performs this oversight within the Congress.

Peer Review Comments: The Contraloria definitely is not a legislative committee. It is supposed to be the external auditor.

Is the legislative committee overseeing the expenditure of public funds effective?

40a: In practice, department heads regularly submit reports to this committee.

Score:

100

Comments: The Ministry of Economy and Finance (MEF--Ministerio de Economia y Finanzas) send tree times a year a document to the Commission on the Tributary, Finance, Banking and Budget (Comisión de lo Tributario, Fiscal, Bancario y Presupuesto )in the National Congress. . This gives information on cash flow and does not have a clear execution details.

40b: In practice, the committee acts in a non-partisan manner with members of opposition parties serving on the committee in an equitable fashion.

Score:

100

$Scoring Criteria :: 100 Score Criteria: The committee is comprised of legislators from both the ruling party (or parties) and opposition parties in a roughly equitable distribution. All members of the committee -- including opposition party members -- are able to fully participate in the activities of the committee and influence the committee\'s work to roughly the same extent as any other member of the committee. 50 Score Criteria: The committee is comprised of legislators from both the ruling party (or parties) and opposition parties although the ruling party has a disproportionate share of committee seats. The chairperson of the committee may be overly influential and curb other members\' ability to shape the committee's activities. 0 Score Criteria: The committee is dominated by legislators of the ruling party and/or the committee chairperson. Opposition legislators serving on the committee have in practice no way to influence the work of the committee.$

Comments: The Committees are integrated with all political parties, but the parties with bigger participation are usually the parties that obtained more votes in the preceding election, and they have the priority to integrate the Commission.

Peer Review Comments: In Ecuador, Congress has systematically acted under the influence of political and economic groups and therefore it has become one of the most discredited institutions in the country. In the past few months, citizens have demanded that members of Congress cease their functions.

Peer Review Comments: The committees do have some members from different parties, although it is dominated by the leading or ruling party. This is common in most legislatures.

40c: In practice, this committee is protected from political interference.

Score:

100

$Scoring Criteria :: 100 Score Criteria: This committee operates independently of the political process, without incentive or pressure to render favorable judgments on politically sensitive issues. Investigations are rarely praised or criticized by political figures. 50 Score Criteria: This committee is usually independent but is sometimes influenced by negative or positive political incentives. This may include public praise or criticism by the government. 0 Score Criteria: This committee is commonly influenced by personal or political forces or incentives. This may include conflicting family relationships, professional partnerships, or other personal loyalties that ultimately influence the committee\'s behavior and decision-making. Negative incentives may include threats, harassment or other abuses of power by the government.$

Comments: The Committee is structured by politics and their decisions are political.

40d: In practice, when necessary, this committee initiates independent investigations into financial irregularities.

Score:

100

Comments: The Commission on the Tributary, Finance, Banking and Budget makes the investigation. And if this Commission finds an irregularity, the Comission of Fiscalización assumes the respective duty.

Peer Review Comments: The Congress Fiscalization Commission, as well as the General State Comptroller, have historically acted under the influence of political and economic interests. A better information source would be the Fiscal Policy Observatory (Observatorio de la Política Fiscal), which is a CSO.