Cap. 534 Art. 3Fiscal responsibility.

The Government shall define and carry out its fiscal and budgetary policies according to the following principles:

(a) the principle of transparency whereby in setting out the budgetary targets and objectives and in carrying out its fiscal and budgetary policies, the Government has the obligation to make public all the information necessary to allow the assessment of the implementation of such fiscal and budgetary policies, the respective outcomes and the stance of central and local finances. In furtherance of this principle, Government shall, at the time of the presentation of its annual budget, disclose in statement form:

(i) any significant changes in the accounting standards, policies and practices affecting or likely to affect the computation of the prescribed fiscal indicators;

(ii) as far as is practicable and, consistent with the protection of the public interest, the contingent liabilities created by way of guarantees, the actual liabilities arising out of borrowings by Public Sector Undertakings and Special Purpose Vehicles and other equivalent instruments where liability for repayment is on the Government; all claims and commitments made by Government having potential budgetary implications, including revenue demands raised but not realised;

(b) the principle of stability whereby Government shall carry out its fiscal and budgetary policy in a manner that will ensure medium-term predictability, consistent with the objective of maintaining macro-economic stability;

(c) the principle of fiscal responsibility whereby Government shall carry out its fiscal and budgetary policy and manage budgetary resources, obligations and fiscal risks in a manner that ensures the sustainability of the fiscal position in the medium and long term such that the Government is able to manage financial risks and unforeseen events in future periods without having to introduce economically or socially destabilizing expenditure or revenue adjustments; and long term economic development while ensuring that the current generation funds the costs of its services;

(e) the principle of efficiency whereby the Government’s fiscal and budgetary policies shall be aimed at achieving an efficient use of scarce public resources requiring that economic efficiency is considered in defining fiscal policies and that public investment decisions, including those related to EU funded initiatives or other donors, are based inter alia on an economic appraisal as well as the assessment of the capacity to absorb the relevant funding levels;

(f) the effective management of personnel spending whereby public sector employment and pay policies in respect of Ministries, Departments, public sector authorities, entities and agencies and Local Councils, except where expressly excluded by the Minister for Finance, shall be consistent with the fiscal and budgetary targets set out in the Medium Term Fiscal Strategy;

(g) the principle of effective financial and asset management whereby Government shall implement its fiscal and budgetary policies according to the best practices for sound and effective financial and asset management. In furtherance of this principle, there shall be instituted a system of performance management and reporting, asset registers and the policies and procedures regulating the acquisition, use and disposal thereof, policies regulating funding decisions and risk management policies and practices.