The current state of the rule of law in the area of public finance and the necessary legal standards for planning and controlling state expenditures, taking into account the constitutional rank of the budget law – these are some of the issues of the Open Scientific Symposium of the Institute of Public Finance #219Constitution. The event, with the participation of special guest prof. Adam Bodnar, Minister of Justice, was held in Warsaw on June 5.
During the symposium “Constitutional protection of the unity of public finance management“, organized by the Institute of Public Finance, specialists in various fields discussed the rule of law in public finance, as well as the need to restore the fundamental principles of law in this area.
The initiative stems from experts’ concern about the situation of public finance as a system. Actions carried out over the years, moving public finances away from the constitutional standard, have led to a reduction in democratic control over spending and the creation of a kind of “parallel budget” that functions, as it were, alongside the Budget Law. This has also resulted in an unprecedented increase in the debt of spending funds outside the state budget and the Budget Law, to more than 350 billion zlotys (more than one-fifth of the total debt), which poses numerous threats to the economy and state stability.
During the symposium, the Institute of Public Finance also presented the latest calculations of how much it costs taxpayers to have a “parallel budget,” how much extra we have to pay in debt service costs for the funds at Polish Development Bank and the Polish Development Fund compared to if the expenses of these funds were carried out by the state budget.
#219Constitution
So far, the political debate has focused mainly on restoring the fundamental principles of law in the administration of justice, meanwhile, public finance is equally affected by this issue.
“The Constitution of the Republic of Poland devotes an entire chapter to public finance. The Constitution in Chapter X and the implementing acts (including the Public Finance Law) do not limit politicians’ decisions on spending goals, do not indicate what social or investment programs to fund. The Constitution only requires politicians to make financial management open, transparent, under democratic control, i.e., under parliamentary control, and – most importantly – requires that the Budget Law be the basic financial plan of the state.” – points out PhD Slawomir Dudek, president of the Institute of Public Finance, who established at the symposium why budget unity is important.
Article 219 of the Constitution, cited in the name of the symposium, unequivocally states that the parliament adopts the state budget for the fiscal year in the form of a budget law, and is further clarified by Article 109 of the Public Finance Law, which states that the budget law is the basis for the state’s financial management in a given fiscal year.
Creating funds and programs that operate outside parliamentary control and bypass the procedures of the Budget Law, in violation of Article 219 of the Constitution, is, according to experts, a path to the disintegration of the public finance system. This could have serious consequences, including increasing debt, high debt service costs, and a lack of transparency and openness in the management of public funds. All of this can lead to a shattering of citizens’ trust in state institutions and raises concerns about the country’s future financial stability. Moreover, such a situation can lower the economic credibility of the state.
Past policies and countermeasures
Representatives from various disciplines in economic and legal sciences discussed at the symposium:
- past state policy on off-budget spending, spending outside the budget law,
- the current state of the rule of law in the area of public finance,
- the required legal standards for planning and control of state expenditures with particular attention to the constitutional rank of the Budget Law,
- what’s next for the funds at the Polish Development Bank,
- whether the additional interest paid in Polish Development Bank and Polish Development Fund funds is a waste?
- recommended measures to restore the rule of law in public finance.
The organizers hope to develop concrete recommendations to enable the improvement of economic stability and security, and the protection of democratic values and norms in the management of public finances.
At the beginning of the symposium, a special message was broadcasted to its participants by Věra Jourova, Vice President of the European Commission.
The event was opened with a speech by prof. Agnieszka Chłoń-Domińczak, Vice-Rector for Science of the Warsaw School of Economics. prof. Adam Bodnar, Minister of Justice, was the guest of honor. Other speakers include prof. Jerzy Hausner, former Deputy Prime Minister and Minister of Finance, Chairman of the OEES Program Council, GAP Foundation; Marian Banaś, President of the Supreme Audit Office; prof. Teresa Dębowska-Romanowska, University of Lodz, and PhD Grzegorz Kuca, prof. of Jagiellonian University – outstanding experts and academic lecturers in economics, financial, and constitutional law.
The co-organizer of the symposium is the Research Institute For Economic Development of the Warsaw School of Economics (SGH), substantive partners are the Institute for Responsible Finance, the Economic Freedom Fundation, the Association of Polish Economists and the Free Courts Foundation. The media patron of the event is the Polish Press Agency.
