Chile has a history of strong fiscal performance underpinned by robust institutions and sound public policies. The Ministry of Finance and the Budget Office (Dirección de Presupuestos, DIPRES) have historically been the leading and dominant players in budgeting. An Autonomous Fiscal Council (Consejo Fiscal Autónomo, CFA) further strengthens the fiscal framework. Effective institutional arrangements for Congressional budget oversight, however, are lacking.
Constitutionally, the power of Congress to directly amend the budget is limited. Nonetheless, dynamics are rapidly evolving in Chile and Congress is increasingly asserting itself in budgeting. Congress has found mechanisms to bring the government to the negotiating table and increasingly uses 'glosas' (budget annotations setting out reporting requirements or specifying how funds must be spent) to exercise influence.
As Congress takes a more active role in budgeting, it is important that its institutional arrangements evolve accordingly. Some elements of the existing system could be improved. For example, the reliance on glosas has reached unmanageable levels, undermining rather than enhancing oversight.
The Senate Parliamentary Budget Office (Oficina de Información, Análisis y Asesoría Presupuestaria Senado de Chile, OPS) is a commendable initiative aimed at bolstering technical support for budget discussions. However, its capacity to realise its full potential and consistently deliver the depth of analysis required by an increasingly assertive Congress appears to be constrained by its institutional positioning, which affects its visibility, and the adequacy of its resources. These factors limit the overall impact of the OPS on budgetary deliberations. The situation underscores a broader need for more robust and independent analytical support across the entirety of the National Congress, encompassing the Chamber of Deputies.
Furthermore, existing committee structures, wherein budget committees are responsible for a wide array of unrelated portfolios, can pose challenges to conducting sufficiently specialised and in-depth budgetary scrutiny.
To empower Congress and strengthen its role as a responsible budget institution, we recommend two major reforms, both of which can be achieved within existing constitutional parameters. The first is for Chile to consider replacing the Senate OPS with a stronger, non-partisan Joint Budget Office (JBO) serving both chambers.
The JBO would be established as a more prominent entity with its own governance arrangements and budget that are separate from either chamber. Its mandate would encompass three core functions:
1. Providing professional, non-partisan support to senators and deputies of Congress. It would act as a trusted centre of expertise for legislators. It would synthesise complex budget information into accessible formats to foster strategic debate on key fiscal priorities and budget matters most consequential for fiscal sustainability.
2. Strengthening the costing of legislation: All legislative costings are today provided by the Ministry of Finances and DIPRES. The JBO would assess such costings and be in a position to independently endorse them or, if necessary, provide an alternative view.
3. Promoting expenditure quality and efficiency: Whereas the CFA has played an important role in strengthening macro-fiscal oversight, the JBO would help improve scrutiny of the quality of expenditure. It would do so by leveraging the wealth of evaluation and performance information available in Chile and currently under-used.
Staffed with fiscal experts and communicators, the JBO would have guaranteed access to all relevant budget information and enjoy resources commensurate with its mandate.
Furthermore, the review recommends that Chile consider changes to congressional budgetary procedures to further reinforce its institutional capacity to perform budget scrutiny. These encompass the following three core procedural 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.
These institutional and procedural reforms are designed to enhance parliamentary budget oversight. They will serve to help Congress in having a responsible and effective role in the budget process.