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The Colombian Budget Process

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  • Ulpiano Ayala Oramas

    ()

  • Roberto Perotti

    ()

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    Abstract

    The rules that govern the budget process are important determinants of fiscal outcomes, with potentially important macroeconomic implications. This paper starts with a review of the theoretical underpinnings of the effects of budget processes and the main empirical evidence. After a brief institutional description of the Colombian budget process, an assessment and proposals for reform are made. The main issues analyzed here are the degree of centralization of the budget process, transparency, rules, and intertemporal links. Serious flaws have been detected: decentralization during the preparation of the budget, proliferation of budget documents, heterodox accounting standards and reporting for deficits and investment, insufficient coverage, biased forecasts and macro assumptions, unduly restrictive rules that promote creative accounting, or seemingly innocuous rules, and weak management of intertemporal links. It is recognized that better rules and institutions can be circumvented, but they can be important in realizing three conditions: allow the public a good understanding of fiscal policy and position, increase the incentives for fiscal discipline, and create an environment where a fiscally sound government can do its job more effectively, and a fiscally undisciplined government will be subject to a more informed scrutiny. These conditions can greatly enhance the scope for a more effective fiscal policy in Colombia.

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    File URL: http://www.fedesarrollo.org.co/wp-content/uploads/2011/08/WP-No.-14-The-Colombian-budget-process.pdf
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    Bibliographic Info

    Paper provided by FEDESARROLLO in its series WORKING PAPERS SERIES. DOCUMENTOS DE TRABAJO with number 003574.

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    Length: 27
    Date of creation: 01 Aug 2000
    Date of revision:
    Handle: RePEc:col:000123:003574

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    Related research

    Keywords: Presupuesto; Presupuesto Nacional; Política Fiscal; Finanzas Públicas; Descentralización; Colombia;

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    References

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    Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
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    1. Robert P. Inman, 1996. "Do Balanced Budget Rules Work? U.S. Experience and Possible Lessons for the EMU," NBER Working Papers 5838, National Bureau of Economic Research, Inc.
    2. James M. Poterba, 1996. "Do Budget Rules Work?," NBER Working Papers 5550, National Bureau of Economic Research, Inc.
    3. Alberto Alesina & Tamim Bayoumi, 1996. "The Costs and Benefits of Fiscal Rules: Evidence from U.S. States," NBER Working Papers 5614, National Bureau of Economic Research, Inc.
    4. Alberto Alesina & Roberto Perotti, 1996. "Budget Deficits and Budget Institutions," IMF Working Papers 96/52, International Monetary Fund.
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    Cited by:
    1. Mauricio Olivera & Monica Pachon & Guillermo Perry, 2010. "The Political Economy of Fiscal Reform: The Case of Colombia, 1986-2006," Research Department Publications 4674, Inter-American Development Bank, Research Department.
    2. Alejandro Hoyos & Hugo R. Ñopo, 2010. "Evolution of Gender Gaps in Latin America at the Turn of the Twentieth Century: An Addendum to "New Century, Old Disparities"," IDB Publications 6792, Inter-American Development Bank.
    3. Isidro Hernández Rodríguez, 2001. "El proceso presupuestal colombiano: comentarios a la propuesta de la Misión Alesina," Revista de Economía Institucional, Universidad Externado de Colombia - Facultad de Economía, vol. 3(5), pages 228-245, July-Dece.
    4. World Bank, 2005. "Colombia : Public Expenditure Review," World Bank Other Operational Studies 8559, The World Bank.
    5. Juan Carlos Echeverry & Jorge Alexander Bonilla & Andrés Moya, 2006. "Rigideces Institucionales y Flexibilidad Presupuestaria: Origen, Motivación y Efectos sobre el Presupuesto," IDB Publications 9091, Inter-American Development Bank.

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