THE REFORM OF BUDGETARY PROCEDURES IN FRANCE:
THE NEW ORGANIC BUDGET LAW ( 2001)
Background of the reform
In France, State budget and the content of finances bill are organised by an organic law that is sometimes
refereed as the “financial constitution of France”. The former law was passed in 1959 at a time when
General de Gaulle wished to limit the influence of the Parliament. For over forty years, the organic law has
remained virtually untouched, despite the 36 Private Member’s bills that have been proposed to reform the
organic law. Under this budgetary and accounting system, appropriations were allocated on a yearly basis
and were very specifically targeted - two features which restrict the independence of those managing the
funds, who were unable to put spending decisions in perspective and who were not really able to change
the way appropriations were allocated.
In 2001, this system was finally changed, thanks to a political consensus and a strong will among all
political parties. The new organic law adopted on August 1st 2001 has two main objectives. The first is to
improve outcome-focused budgeting, while the second is to improve parliamentary information and control
regarding fiscal matters.
Improving outcome-focused budgeting

The budget was previously divided in more than 800 items of expenses. The new organic law
reduces this nomenclature to merely 150 programmes, defined by precise public policy targets and
associated with performance indexes. Within each programme, managers will be granted an almost
complete freedom of stewardship, except when dealing with public employment, but it will be
more difficult for them than in past decades to overpass the annual parliamentary authorisation
which sets a cap on each programme’s expenditure. The former precise but most fictitious
authorisation has been replaced by a wider but more effective parliamentary authorisation, focused
on performance: each programme manager shall submit an annual performance draft to the
parliament to prepare the discussion of the finances bill. The following year, programme managers
shall submit an annual performance report to the parliament, so that government policy and
stewardship can be fully assessed and audited.

Spending authorisations stricto sensu will remain annual, but the multi-year dimension will be
taken into account from the point of view of projections and also management.
Improving the information to Parliament

The new organic law provides for an appreciable improvement in the information given to
Parliament for the purpose of drawing up, voting and monitoring the budget. The government
shall, during the last quarter of the ordinary session, present a report on the shape of the economy
and on public finance developments to parliament, comprising notably a list of the functions,
programmes and performance indicators attaching to each of these programmes, envisaged for the
following year’s Finance Bill (art 48 of the law). Annual performance reports will be attached to
the implementation Bill showing by programme the discrepancies in relation to Finance Act
forecasts for the year in question and in relation to achievements observed in the most recent
Implementation Act.

The budget law - the enabling act – will continue to be drawn on a cash accounting basis. Public
accounts will be reformed and developed, providing the Parliament with a much more accurate
view on budgetary statement and public finances. The State accounts will be implemented on a
cash and accrual basis, so that the accounts cover all aspects of central government finances.
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Furthermore, a cost accounting shall be implemented for each programme, so that the costs of
public policies are known, allowing comparisons with other states and with previous accounting
periods.
Increased Parliamentary control over the implementation of the budget

Budgetary control by finances committees will be more effective, in particular with the increased
assistance of the “Cour des Comptes”. The principle of budgetary “sincerity” is formally set out in
the Act, and the Cour des Comptes has to certify the accounts discharged.

MPs rights to amend finances bills will be enlarged, as they will be able to create new programmes
or transfer appropriations from a programme to another, within certain limits, and as long as they
do not tend to increase budget deficit. Furthermore, Parliament shall be associated to the definition
of budgetary nomenclature and performance indexes.
Conclusion
The revision of the organic Order is a legal and technical debate as much as a political one. The new
organic law will be fully enforced in 2006, which allows the public bodies a minimum time to adapt their
procedures. Implementation of the reform will be difficult in that it represents a complete transformation. It
could prove as a major tool for State reform, so that governance becomes more efficient, responsible and
transparent.
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