OECD review of parliamentary budget oversight in Chile

3. Strengthening Congress’s role as a responsible budget institution

Chile is at a pivotal moment in the management of its public finances. Traditional mechanisms for ensuring fiscal discipline are showing signs of strain, just as congressional interest in budget scrutiny is reaching new heights. This shift presents a critical opportunity: by equipping Congress with the right tools and support, Chile can strengthen Congress’s role as a responsible budget institution.

To support this, we propose two key reforms:

1. Replacing the Senate OPC with a stronger, non-partisan Joint Budget Office (JBO) serving both chambers.

2. Strengthening budget oversight procedures to reinforce the institutional capacity of Congress to perform budget scrutiny.

3.1. Establishing a stronger, non-partisan Joint Budget Office

A crucial element in strengthening Congress’s role in budget scrutiny is the provision of appropriate analytical capacity. We recommend Chile consider replacing the current Senate Parliamentary Budget Office (OPS), which faces limitations, with a stronger, non-partisan Joint Budget Office (JBO) designed to serve both the Senate and the Chamber of Deputies.

To effectively support Congress, the proposed JBO would concentrate on three core functions:

1. Providing professional, non-partisan support to Senators and Deputies. Delivering timely, high-quality analysis and advice on budgetary and fiscal matters.

2. Strengthening the costing of legislation. Assessing estimates of the fiscal impact of proposed legislation and significant amendments.

3. Promoting expenditure quality and effectiveness. Analysing public spending efficiency, evaluation of programme performance, and identifying potential areas for fiscal savings or reallocation.

These functions, working in concert, would significantly enhance Congress’s institutional capacity for proactive, informed, and impactful engagement on the budget.

3.1.1. Mandate 1: Providing professional, non-partisan support to Senators and Deputies of Congress

Enhancing the role of Congress as a responsible budget institution requires equipping parliamentarians to debate the budget effectively and strategically. Currently, budget discussions can disproportionately focus on piece-meal or minor items, rather than broader fiscal trade-offs or long-term implications. This limits Congress's ability to debate and shape national fiscal strategy, particularly during times of fiscal tightening or budget reform.

The challenges are both structural and informational. Analytical support varies across political parties and many legislators lack access to non-partisan fiscal analysis, leading to uneven participation in budget deliberations. This imbalance is compounded by the fact that Senators can benefit from the services of the OPS, but similar analytical support is not available to the Chamber of Deputies.

A JBO mandated to provide professional and non-partisan support to all members of Congress would be an important step forward. By offering neutral, clearly communicated briefings on fiscal policy choices and associated trade-offs, the JBO would equip all members of Congress to engage in more strategic debate. It could also help shift focus to high-impact budget items where the added value of congressional discussion is higher.

A key area where the JBO could usefully provide support is also in relation to glosas. While intended to strengthen legislative oversight, Congress lacks the capacity to systematically track their implementation, leading to many being unenforced or unmonitored, thus weakening accountability. The JBO could standardise processes for drafting, and monitoring glosas. This would help streamline their use, enhance effectiveness, and potentially reduce their overall number, prioritising quality and enforceability.

To be effective, the JBO must be a trusted, non-partisan source of fiscal insight, achieved through clear communication on matters related to public finances, emphasising accessibility and clarity. Timely briefings that are tailored to parliamentarians' needs will help foster a more strategic and forward-looking fiscal debate in Congress.

3.1.2. Mandate 2: Strengthening the costing of legislation

Currently, the Budget Office (DIPRES) is responsible for costing legislation. While DIPRES has improved the quality of its costings, they can still lack the granularity needed for robust legislative scrutiny, focusing on macro-level impacts without always addressing the adequacy of funds for implementation or alignment with policy intent. Concerns also exist that some proposals are labelled “cost neutral” despite potential fiscal implications.

While stakeholders in Congress express a wish for greater assurance on these costings, they often lack the requisite technical capacity, and access to resources and necessary information. This information asymmetry makes it difficult for legislators to challenge assumptions or hold the executive accountable for its costings. Consequently, financial scrutiny of new legislation tends to be limited.

The JBO would offer a credible institutional alternative by having the capacity to assess executive costings of draft bills and amendments, enabling Congress to better assess the fiscal implications of its agenda. Crucially, the JBO would not only serve as a counterweight to executive estimates but also help validate key policy assumptions (e.g., uptake rates, unit costs, implementation timelines), and provide an alternative view where necessary. This would help build greater public and institutional trust in legislative costings.

The JBO’s role in providing a "second opinion" on government costings would enhance legislative accountability and ensure that Congress is fully aware of the fiscal implications of the legislation it is considering, and can debate the impacts of new legislation on fiscal sustainability. Examples of how independent input into legislative costings has helped strengthen budget oversight in other OECD countries are provided in Box 4.

Box 4. International examples of how independent input into legislative costings helps strengthen budget oversight

Independent input into legislative costings can act as a safeguard for fiscal responsibility and enhance democratic accountability. Across the OECD, about half of the independent fiscal institutions (IFIs) are involved in legislative costing, though their roles and scope vary significantly. Institutions such as Korea’s National Assembly Budget Office (NABO) and Argentina’s Congressional Budget Office (Oficina de Presupuesto del Congreso, OPC) represent two distinct yet effective models of how legislative costing supports informed decision-making.

In Korea, NABO stands out for its robust and centralised costing function. Following amendments to the National Assembly Act in 2014, NABO was granted exclusive authority to produce cost estimates for bills introduced by Members of the National Assembly. This shift addressed previous issues of technical inadequacy and potential misuse in legislators' own cost statements. Today, NABO prepares between 400 to 500 cost estimates annually. The bills that are costed are determined by their likelihood to impact public finances. These measures ensure that parliamentary debate is informed by reliable fiscal data and that legislative proposals are scrutinised for their budgetary implications.

In contrast, though not legally mandated to produce annual reports or evaluations, Argentina's OPC responds to and fulfils approximately 150 costing requests per year. The OPC’s responsiveness and growing institutional credibility enable it to contribute meaningfully to Argentina's budget transparency and legislative accountability, particularly in an environment where fiscal institutions are still maturing.

NABO and the OPC illustrate two effective models of integrating independent input into legislative costing: one with formal authority and high output, and another with responsive, ad-hoc support. The examples underscore how this work can improve understanding around the fiscal impact of legislative proposals and strengthen budget oversight.

3.1.3. Mandate 3: Promoting expenditure quality and effectiveness

Taking the difficult budget decisions necessary to meet current and future spending challenges in Chile will be facilitated by a clearer understanding of the results achieved through different budget programmes. Members often lack the time, expertise, or institutional support to interpret complex analyses or assess performance indicators, meaning evidence that could guide resource reallocation is often not acted upon. By supporting the use of performance information and evaluations in budget scrutiny, the JBO can empower Congress to have a richer debate around budget choices, promoting expenditure quality and effectiveness.

The JBO could offer a strategic institutional response to these constraints through analysis of performance and evaluation results, and support for Congress in using this information to shape budgetary decisions. Key functions would be:

• Interpreting and synthesising evaluation findings: Helping ensure public funds are effectively spent by highlighting to Congress inefficiencies, flagging risks, and supporting debate on evidence-based reallocations.

• Strengthening the link between evaluation and budget allocation: Leveraging opportunities to bridge information gaps and better connect performance evaluations with budget scrutiny by the budget sub-committees.

Chile has a strong repository of performance and evaluation information that is underutilised by both the executive and Congress. These changes would aim to help address this, strengthening Congress’s role in driving smarter, more accountable budget choices. In doing this, the JBO can draw inspiration from similar work undertaken by the Austrian Parliamentary Budget Office (PBO) (see Box 5).

Box 5. The Austrian PBO and its work to improve use of performance information in budget oversight

Austria’s 2013 amendments to the Federal Organic Budget Act mandates performance budgeting, requiring ministries to set outcome objectives and performance indicators. The Austrian Parliamentary Budget Office (PBO) plays a key role in helping parliament engage with this framework by making performance information more accessible and usable. The PBO supports this work in three main ways:

• Providing clear explanations of key concepts such as outputs and outcomes, helping legislators understand the structure and purpose of performance data.

• Developing overview “maps” and interactive visual tools available to the public that display performance targets across a range of policy areas, including climate protection and gender equality.

• Scrutinising outcome objectives and indicators for ambition, relevance, and consistency, and assessing their alignment with broader national and international goals, such as the Paris Agreement.

These efforts have been widely credited with strengthening the ability of Austria’s Parliament and its Budget Committee to navigate and effectively engage with the performance information provided alongside the budget.

3.1.4. Institutional set-up for the Joint Budget Office (JBO)

A new institutional architecture would support the Joint Budget Office (JBO). In contrast to the current Senate OPS, the JBO would be established as a standalone body serving both chambers to promote institutional equity and broader congressional ownership. The institution would sit separate from either chamber, with its own budget line, in line with OECD Recommendation for Independent Fiscal Institutions (IFIs). Its mandate and independence should be defined in law, safeguarding operational autonomy and protecting it from political or executive interference.

The JBO would have a responsibility to be non-partisan to maintain cross-party trust. This necessitates robust safeguards in governance and staffing: leadership appointments based on merit, professional qualifications, and technical competence. The JBO leadership must have the authority to hire and dismiss staff, ensuring a high-quality technical team shielded from political interference.

To be effective, the JBO would need resources commensurate with its mandate. It would also need to be staffed by a strong team of experts with deep knowledge of public finance and economics, including experienced economists and public finance specialists, as well as a communications expert. They need to be able to convey complex budget information succinctly and tactfully.

The ability of the JBO and its staff to engage strategically with the budget committees — equipping legislators with targeted questions, performance information, evaluation summaries, and early warnings of implementation risks — will be critical for enhancing budget scrutiny.

The JBO should actively support parliamentary committees, with institutional arrangements formalising its ability to provide evidence, similar to OECD institutions such as the Canadian PBO (see Box 6). To manage workload and maintain impartiality, the scope of analytical requests should be clearly defined in legislation, and there should be clarity on how requests from different stakeholders (e.g., the Joint Budget Committee and its sub-committees as well as individual members) are prioritised.

Box 6. The Canadian Parliamentary Budget Office (PBO) and its support for the work of parliamentary committees

An example of an independent parliamentary budget office that plays an active and structured role in supporting parliamentary committees throughout the budget cycle and fiscal year is found in Canada. The Canadian Parliamentary Budget Office (PBO) does so by:

• Publishing reports to accompany every budget appropriation bill, offering both a high-level overview and a deeper analysis of selected spending items;

• Regularly appearing before the House of Commons and Senate finance committees to testify on budget appropriation bills and the broader economic outlook;

• Providing individual briefings to Members of Parliament and Senators upon request;

• Tracking the disbursement of funds for measures announced in Canada’s budget documents.

Through these activities, the Canadian PBO strengthens the hand of parliamentary committees in undertaking budget scrutiny and enhances transparency in federal budget process.

Source: (PBO, 2024[6])

Crucially, the JBO’s effectiveness would also hinge on guaranteed legal access to timely, comprehensive, and detailed fiscal information from the government.

Finally, the JBO's mandate must complement existing fiscal institutions like the CFA (which has a macro-fiscal mandate). While the JBO could strengthen the CFA by relieving it of tasks that fall outside its core responsibilities, it should avoid overlapping functions — particularly in the area of costings. Clear delineation of roles will depend on a well-defined legal remit, adequate resources, and strong co-ordination protocols. Given their complementary mandates, co-ordination between the JBO and the CFA could be formalised to foster information-sharing and ensure alignment on macroeconomic assumptions and fiscal frameworks. International examples offer useful models of how to promote alignment while preserving institutional autonomy (see Box 7).

Box 7. Co-ordination between the Austrian Parliamentary Budget Office and the Austrian Fiscal Council

In Austria, fiscal oversight and parliamentary support in budgetary matters are provided by two distinct but co-ordinated bodies: the Fiscal Advisory Council (Fiskalrat) and the Parliamentary Budget Office (PBO).

The Fiscal Advisory Council operates as an independent entity primarily focused on monitoring Austria's adherence to national and EU fiscal rules, assessing macroeconomic and budgetary forecasts, and issuing recommendations on fiscal policy. Its mandate emphasises ensuring fiscal discipline across government entities.

Complementing this, the PBO serves the parliament (National Council) by providing independent, non-partisan analysis and expertise on the budget, the fiscal implications of legislative proposals, and broader economic and fiscal policy matters, thereby enhancing the legislature's capacity for informed decision-making and oversight.

To foster co-ordination, coherence and information exchange between these institutions, a representative of the PBO is entitled to participate in all meetings of the Fiscal Advisory Council, albeit in an advisory capacity with no voting rights, ensuring a reciprocal flow of information and supporting a more integrated national fiscal framework.

3.2. Procedural reforms to strengthen parliamentary budget oversight

Congress could also institute procedural reforms that would serve to strengthen its scrutiny of the budget. We propose Chile consider the following three core changes:

1. Implementing a top-down budget approval process, requiring agreement on overall budget totals before detailed committee scrutiny.

2. Reforming the structure of the budget sub-committees for a more balanced workload and better alignment with policy areas, potentially leveraging sectoral committee expertise.

3. Clarifying committee roles and improving communication between committees and chambers.

3.2.1. Implementing a top-down budget approval process, requiring approval of overall budget totals before detailed committee scrutiny

Chile's budget deliberations often involve extensive sectoral scrutiny, with relatively less attention being given to overall fiscal aggregates. Implementing a top-down budget approval process in the Chilean Congress - whereby overall budget totals are voted upon before detailed committee scrutiny takes place - could enhance debate around the overall fiscal stance of the government and foster greater awareness of spending limits in the budget process. By establishing upfront agreement on aggregate spending limits, Congress could ensure that subsequent committee discussions remain anchored within fiscally sustainable boundaries.

A top-down budget approval process can help instil a sense of fiscal discipline into parliamentary budget oversight processes. In practice, this could be accomplished by the Chamber of Deputies and the Senate jointly discussing and formally approving overall budget parameters through a binding resolution as a first stage to budget scrutiny following the introduction of the budget bill. The committee stage of budget scrutiny then focuses on individual budget appropriations. Several OECD countries employ this type of top-down budget approval processes in their national parliaments (see Box 8 for examples).

Box 8. Examples of top-down budget approval processes in OECD parliaments

Sweden

Following reforms in 1997, Sweden’s Riksdag (parliament) first votes on the aggregate level of spending and the allocation across expenditure areas before any individual appropriations are decided. In practice, this gives two stages to the budget approval process in parliament:

• Stage 1: Approval of budget totals. The Riksdag approves a binding expenditure ceiling for central government and sets the spending limits for each of the broad expenditure areas, providing a fixed overall budget envelope.

• Stage 2: Approval of detailed budget lines. The Riksdag vote on specific budget lines within each spending area. These decisions must remain within the budget envelopes fixed during Stage 1, so an increase in one area requires a decrease elsewhere in the same expenditure area, to avoid breaching the total.

The approach has helped strengthen fiscal discipline in Sweden through forcing parliamentary committees to consider trade-offs associated with increasing spending in a particular area.

France

The French Organic Budget Law (LOLF 2001) requires that the overall fiscal totals be approved by France’s Parliament before detailed spending is considered. The annual Budget Act (Loi de Finances) is divided into: Part One: General Conditions of Financial Equilibrium, and Part Two: Appropriations by Mission (department/programme budgets). According to parliamentary rules, Part Two cannot be discussed until Part One is adopted. In other words, agreement on the budget’s overall totals and fiscal balance is a prerequisite for moving on. This gives two stages to the budget approval process at the legislature:

• Stage 1: Sets ceiling for total expenditures and authorises overall budget deficit or surplus for the year. Parliament debates and votes on the broad fiscal aggregates.

• Stage 2: Approval of detailed appropriations. The Finance Committee and sectoral committees review detailed appropriations for each policy area and ministry, with the amounts voted mission by mission. Any amendments must not breach the fiscal aggregates agreed during Stage 1. Thus any increase in spending proposed must be accompanied by offsetting revenue raising or spending decreases.

This sequential process ensures a top-down approach to parliamentary oversight of the budget and disciplines the budget scrutiny undertaken by French budget committees

3.2.2. Reforming the structure of the budget sub-committees for a more balanced workload and better alignment with policy areas, potentially leveraging sectoral expertise

Despite the time Congress devotes to reviewing Chile’s national budget, it is broadly recognised that the current structure of the sub-committees of the Joint Budget Committee could be more efficient. The sub-committees can be responsible for examining wide-ranging and often unrelated portfolios, which limits their ability to engage in meaningful, in-depth analysis (see Figure 3).

Figure 3. Budget sub-committees in Chile and their portfolios

A Congress-led initiative to reform the number and structure of the sub-committees would allow for a more balanced and coherent distribution of subject areas and expenditure responsibilities that would help ensure that committee members are dealing with related portfolios and can better engage with the issues at hand. More evenly allocating fiscal weight between the sub-committees would also help ensure that there is proportional examination of budget proposals by value.

The work of the sub-committees could also be strengthened through leveraging sectoral expertise. For example, the sub-committees could appoint “rapporteurs” who would have responsibility for being a principal source of information in relation to each subject area covered, helping enrich budget discussions with greater subject knowledge. Rapporteurs might glean their subject knowledge through following the work of subject committees and liaising with relevant government departments. The rapporteur system could draw inspiration from models in other OECD parliaments (see Box 9 for the example of Germany).

Box 9. The rapporteur system of budget scrutiny in Germany

At the German Bundesdag (parliament) the Budget Committee has a rapporteur system that ensures that even without the input of sectoral committees, the Budget Committee has access to and develops significant expertise on departmental budgets. The rapporteurs are responsible for engaging directly with line ministries on relevant content of the draft budget.

At the beginning of each electoral term the Budget Committee appoints a lead rapporteur and three assistant rapporteurs (one from each party) to cover each departmental budget. The rapporteurs remain responsible for this portfolio for the full electoral term (or more, especially in the case of rapporteurs form smaller parties), allowing them to develop significant expertise.

The responsibility of the rapporteurs is considerable because in addition to their work within the Budget Committee, they are the principal source of information for their parliamentary groups and their advice generally forms the basis of their parliamentary group’s evaluation of the departmental budget in question.

3.2.3. Clarifying committee roles and improving communication between committees and chambers

In OECD parliamentary systems, effective budget oversight hinges on the clear delineation of roles among the two chambers of parliament, budget committees, and subject (sectoral) committees. Clarifying these responsibilities enhances fiscal discipline, ensures comprehensive yet efficient scrutiny, and promotes accountability. Without this, there is the risk of duplication, inconsistent oversight, and limited cumulative value in the process.

In Chile, greater delineation of responsibilities would help ensure that the Joint Budget Committee, its sub-committees, the Chamber of Deputies and the Senate have a connected budget review process. Clarifying the roles of the different Congressional stakeholders offers the opportunity to improve the coherence of budget scrutiny in the Chilean Congress, with each of the different stakeholders building on one-another’s work. Alleviating duplicative work would also help strengthen the efficiency and effectiveness of budget scrutiny in an already-tight timetable.

Delineated responsibilities might include:

• The Chamber of Deputies and Senate focusing on debating and voting on budget totals.

• The budget committees focusing on debating and voting on individual budget lines.

  • The sub-committees would have responsibility for reviewing and voting on all the budget lines within their portfolios.

  • The Joint Budget Committee would provide an overall opinion on the budget – drawing on the work of its sub-committees – to help inform the plenary debates and votes on budget totals within the Chamber of Deputies and Senate.

This would create a more streamlined, accountable process, ensuring that congressional scrutiny is both cumulative and consequential.