I. Budget reliability
Scores by Dimension
Overall Indicator Score
1. Aggregate expenditure outturn
D
Notes:
1.1 Aggregate expenditure outturn
D
Notes:
In all 3 years analysed the budget implementation rate was always lower than initially forecast and in 2 of these 3 years, 2016 and 2018, the implementation rate was below 85%, standing at 74.2% and 67.7% respectively.
2. Expenditure composition outturn
C
Notes:
2.1 Expenditure composition outturn by function
D
Notes:
The variance in the expenditure composition, based on the organic / administrative classification, in 2016, 2017 and 2018 was never less than 15%.
2.2 Expenditure composition outturn by economic type
D
Notes:
The variance in expenditure composition by economic classification, in the 2016, 2017 and 2018 budget years was always above 15%.
2.3 Expenditure from contingency reserves
A
Notes:
There is no any contingency line allocated in the 2016, 2017 and 2018 budget years.
Notes:
3.1 Aggregate revenue outturn
D
Notes:
The revenue collection rate was of 85.8% in 2016, 85.3% in 2017 and 68.5% in 2018, below the lower threshold of the 92% to 116% range.
3.2 Revenue composition outturn
D
Notes:
The variance in composition of the revenues was of 32.1%, 22.7%, and 49.3% in 2016, 2017 and 2018, respectively, thus exceeding 15% in all three years.
II. Transparency of public finances
Scores by Dimension
Overall Indicator Score
4. Budget classification
C
Notes:
4.1 Budget classification
C
Notes:
The budgeting and the execution of the budget for 2018 as well as the 2017 CGE is based on economic and functional classifiers that do not fully adhere to international standards as defined in the 2014 GFS handbook and in COFOG and the quarterly implementation reports do not use these classifiers in a complete manner.
Notes:
5.1 Budget documentation
D
Notes:
In the latest General State Budget proposal submitted to the Assembly, the budget documentation presents only 1 of the 4 basic elements of fiscal information (fiscal deficit forecast) and 2 of the 8 additional elements (deficit financing and debt stock) of the PEFA methodology.
6. Central government operations outside financial reports
D
Notes:
6.1 Expenditure outside financial reports
D*
Notes:
Financial information on extrabudgetary expenditure of extrabudgetary and budgetary entities is not complete to assess the magnitude of expenditure incurred by budgetary and extrabudgetary units compared to total GSB revenue, which is not reported in the government’s financial reports.
6.2 Revenue outside financial reports
D*
Notes:
The financial information on extrabudgetary revenues of extrabudgetary and budgetary entities is not complete in order to assess the magnitude of the revenue achieved, compared to the total of the GSB revenues, which are not reported in the government’s financial reports.
6.3 Financial reports of extrabudgetary units
D
Notes:
The few reports delivered are mostly submitted to the government later than nine months after the end of the fiscal year.
7. Transfers to subnational governments
C
Notes:
7.1 System for allocating transfers
C
Notes:
Transparent rules exist for the allocation of transfers from the central government to subnational governments, but most allocations are based on practices using the values of previous years, adjusted considering some revenue forecasts.
7.2 Timeliness of information on transfers
C
Notes:
The process by which the subnational governments receive information on their annual transfers is managed within the central government’s budgetary calendar, which is not generally respected, provides clear and sufficiently detailed information, but only for the current expenditure (excluding expenditure for investments), allowing subnational governments to have 4 weeks to complete their budget plans and present their preliminary draft budgets, while the limits for the investments are indicated after the GSB’s approval by the legislature.
8. Performance information for service delivery
D
Notes:
8.1 Performance plans for service delivery
D
Notes:
There is no information, neither in the budget proposal documents, nor in the budget implementation reports or other public service delivery reports from the line ministries, about expected outputs and outcomes.
8.2 Performance achieved for service delivery
D
Notes:
The budget proposal, the annual or interim financial and operational reports do not contain any output and outcome information about service delivery performance from the line ministries, but only financial information on budget execution.
8.3 Resources received by service delivery units
D
Notes:
There is no information or survey conducted during the last 3 budgetary years on the amount of resources transferred and / or provided to first-line units of primary health and elementary education, or on the performance results from the use of these funds in public service delivery.
8.4 Performance evaluation for service delivery
D
Notes:
Over the last 3 years, some service efficiency and effectiveness assessments have been conducted, but they covered less than 25% of the line Ministries (only 2).
9. Public access to fiscal information
D
Notes:
9.1 Public access to fiscal information
D
Notes:
Only 1 (one) basic element on budget information and no any of the additional element are made publicly available by the government.
III. Management of assets and liabilities
Scores by Dimension
Overall Indicator Score
10. Fiscal risk reporting
D
Notes:
10.1 Monitoring of public corporations
D
Notes:
The government receives only a few financial reports from the State-Owned Enterprises, randomly, within 5 months from the end of each fiscal year and does not produce any consolidated financial performance report for the public corporations.
10.2 Monitoring of subnational governments
D
Notes:
The budget execution information for all subnational governments is published in the CGE annually, but there are no published any audited or unaudited reports on their financial position and performance.
10.3 Contingent liabilities and other fiscal risks
D
Notes:
The government does not issue state guarantees, but the oversight of the extrabudgetary entities is not efficiently organized (BCSTP guarantees have not been considered), and central government entities and public institutions do not quantify contingent liabilities in their financial reports.
11. Public investment management
D
Notes:
11.1 Economic analysis of investment proposals
D
Notes:
There is no structured system containing guidelines, processes, criteria and procedures for conducting the economic evaluation of investment projects.
11.2 Investment project selection
D
Notes:
There is no formal, transparent and documented mechanism in place for the assessment, selection, prioritization and ranking of more than 25% of the large public investment projects before their integration in any of the latest GSBs.
11.3 Investment project costing
C
Notes:
In 2018, the overall investment expenditure of the major projects was included in the 2019 budget, but there is no evidence of information about their overall cost for the next fiscal year.
11.4 Investment project monitoring
D
Notes:
There is no evidence of a monitoring mechanism of the physical and financial progress of the investment projects, or of the elaboration annual project implementation progress reports, in 2018.
12. Public asset management
D+
Notes:
12.1 Financial asset monitoring
C
Notes:
The BCSTP provides and publishes annual information on the performance of financial assets under its management, but the Treasury has no integrated and up-to-date information on the management and performance of the state's financial assets, with regard to its interest in (public, mostly public or private) enterprises.
12.2 Nonfinancial asset monitoring
D
Notes:
There is no complete and up-to-date inventory of all non-financial asset classes of the State, although there is a partial and centralized reporting on fixed and mobile assets.
12.3 Transparency of asset disposal
D
Notes:
The information on the cost of acquisition and value of disposals of each non-financial asset is not available in the State's financial reports, although there is some information in the 2017 CGE on the quantities of mobile assets and the disposed or written-off vehicles.
Notes:
13.1 Recording and reporting of debt and guarantees
C
Notes:
The GGSDP produces quarterly reports on domestic and foreign government debt, with quarterly updated data and mostly reconciled over the same period, but which, however, does not include information on State guarantees.
13.2 Approval of debt and guarantees
D
Notes:
The legislation foresees the mechanisms and the entities responsible for approving and contracting new loans, issuing new debt and guarantees as well as the related procedures.
13.3 Debt management strategy
C
Notes:
The Government prepared and published a debt management strategy for the period 2012-2020, with the desired fluctuation of the interest rates, the exchange rates and the refinancing.
IV. Policy-based fiscal strategy and budgeting
Scores by Dimension
Overall Indicator Score
14. Macroeconomic and fiscal forecasting
D+
Notes:
14.1 Macroeconomic forecasts
D
Notes:
The macroeconomic projections presented to the NA, as part of the annual General State Budget proposal, include estimates of GDP growth, inflation rate and annual average exchange rates only for the next budget year.
Notes:
The government prepares estimates of revenue, expenditure and budgetary results for the budget year and the following two fiscal years.
14.3 Macrofiscal sensitivity analysis
D
Notes:
The Government does not elaborate alternative fiscal scenarios, with the exception of the debt sustainability analysis, but they do not include macro fiscal forecasts or qualitative assessments for the impact of each alternative macroeconomic assumption.
Notes:
15.1 Fiscal impact of policy proposals
D
Notes:
Over the 3 years under review (2016 to 2018) there is no evidence that the Government has prepared estimates of the fiscal impact of proposed changes to revenue and / or expenditure policies for the upcoming fiscal year.
15.2 Fiscal strategy adoption
D
Notes:
In 2018, no fiscal strategy (with qualitative objectives) was prepared for the FY 2019, while the sectoral strategies do not cover the entire Central Government.
15.3 Reporting on fiscal outcomes
NA
Notes:
For 2017 and 2018, there is no Government fiscal strategy and, thus, the Government (i) has not produced any internal report on fiscal outcomes and (ii) has not submitted, together with the Annual Budget, a report describing the progress made towards the achievement of its fiscal strategy and goals set.
16. Medium-term perspective in expenditure budgeting
D
Notes:
16.1 Medium-term expenditure estimates
D
Notes:
The annual budgets provide expenditure estimates for budget year N + 1 according to an administrative or economic classification, but does not provide expenditure estimates for the following two years.
16.2 Medium-term expenditure ceilings
D
Notes:
Although the ministries and governmental institutions receive information on the expected limits for the preparation of their medium-term expenditure, there is still wide variation between the indicative limits and the prepared and approved budgets.
16.3 Alignment of strategic plans and medium-term budgets
D
Notes:
There is no alignment between the sectoral strategic plans and MTEFs.
16.4 Consistency of budgets with previous year’s estimates
D
Notes:
In the last two GSB proposals (2018 and 2019) no MTEFs were presented, while there were significant differences between the values estimated under the last two sectoral MTEFs, with no explanation for the variations.
17. Budget preparation process
D
Notes:
Notes:
There is a theoretical budgetary calendar, with a 4-week timeframe allocated for the preparation and submittal of the preliminary draft budget by the budgetary units.
17.2 Guidance on budget preparation
D
Notes:
Comprehensive and clear budgetary circular letters, reflecting the maximum limits, with guidelines for the preparation of the budget, are issued to the budgetary units and distributed as approved by the Council of Ministers.
17.3 Budget submission to the legislature
D
Notes:
During the past 3 years, only the 2018 annual budget proposal has been presented by the government to the National Assembly at least one month before the start of the fiscal year.
18. Legislative scrutiny of budgets
D+
Notes:
18.1 Scope of budget scrutiny
B
Notes:
The legislative review covers fiscal policies and aggregates for the coming year, as well as details of expenditures and revenues, with no mid-term projections.
18.2 Legislative procedures for budget scrutiny
A
Notes:
The legislative procedures for the scrutiny and approval of the GSB’s proposals (i) are established before the holding of the budget hearings, (ii) are monitored and (iii) include provisions for public consultations, and (iv) there are the 2nd and other specialized sectoral committees for the analysis, that (v) the processes rely on technical support and negotiation procedures established.
18.3 Timing of budget approval
D
Notes:
The National Assembly approved the general state budget within one month of the beginning of the year, in only one of the last three fiscal years.
18.4 Rules for budget adjustment by the executive
B
Notes:
There are (i) clear rules for making ongoing budget adjustments by the executive power, (ii) they are respected in most instances, and (iii) the rules allow extensive administrative reallocations.
V. Predictability and control in budget execution
Scores by Dimension
Overall Indicator Score
19. Revenue administration
D
Notes:
19.1 Rights and obligations for revenue measures
D
Notes:
The information provided on their websites by the Directorate of Taxes and the Directorate-General of Customs, the entities responsible for collecting most revenue, although containing the main legislation applicable to the rights and obligations of taxpayers.
19.2 Revenue risk management
D
Notes:
The existing framework for assessing and prioritizing risks arising from non-compliance with tax regulations is neither comprehensive nor systematic and does not cover the four areas, for the Directorate of Taxes and is not implemented in the Sydonia world, for revenue managed by the Directorate-General of Customs.
19.3 Revenue audit and investigation
D
Notes:
There is no compliance improvement plan, and only 41.2% of the audits and inspections were completed.
19.4 Revenue arrears monitoring
D
Notes:
Data from the Directorate of Taxes' arrears show that 86% of arrears are over 12 months old and represent 25% of 2018 tax revenues and data from the Directorate-General of Customs do not allow us to know the age of the arrears.
20. Accounting for revenue
C+
Notes:
20.1 Information on revenue collections
B
Notes:
The Directorate of Treasury receives, daily, a report from the Directorate of Taxes, consolidating the revenue collection from this and from the Directorate-General of Customs, and these figures represent the majority (approximately 80%) of the tax and non-tax revenues collected in STP in the year 2018.
20.2 Transfer of revenue collections
B
Notes:
The Directorate of Taxes and the Directorate-General of Customs, which collect most of the central government's tax and non-tax revenue, transfer the collected revenue to the Treasury Single Account within a maximum of 24h and 48h respectively, dimension 20.2 is rated “B.”
20.3 Revenue accounts reconciliation
C
Notes:
The entities which collect most of the revenues, the Directorate of Taxes and the Directorate-General of Customs, reconcile transfers to the Treasury daily by integrating this information with SAFE-e.
21. Predictability of in-year resource allocation
C
Notes:
21.1 Consolidation of cash balances
C
Notes:
Most cash balances are consolidated daily, but most balances (over 75%) are subsequently consolidated on a monthly basis.
21.2 Cash forecasting and monitoring
C
Notes:
DT prepares annual treasury forecasts, updated quarterly and monthly, but without receipt and consolidation of treasury forecasts prepared by the CGs, resulting in interim cash flows that are not based on current income and expense information.
21.3 Information on commitment ceilings
C
Notes:
Reliable monthly information is sent to the UGs about the release of resources and the maximum commitments for next month.
21.4 Significance of in-year budget adjustments
C
Notes:
In 2018 the amendments and budgetary adjustments performed by the executive are relatively transparent but frequent and significant.
22. Expenditure arrears
D+
Notes:
22.1 Stock of expenditure arrears
D
Notes:
Arrears (short-term only) exceed 40% of the total expenditure in at least two of the last three fiscal years completed.
22.2 Expenditure arrears monitoring
C
Notes:
Monitoring domestic debt related to late payments is a relatively new exercise, and the control procedures for managing and verifying arrears are reduced in most institutions, but the Government presents data on debt stock and the composition of arrears annually at CGE (with a quarterly report in Q4-2018).
Notes:
23.1 Integration of payroll and personnel records
D
Notes:
The personnel hiring and promotion are verified by the DAFs and by the DO comparing against the approved monthly budget, but the payroll reconciliation with the personnel records is not done regularly.
23.2 Management of payroll changes
D
Notes:
In addition to the general provisions of the SAFE Law, there are no defined operational procedures for changes to personnel records, with clear indication of deadlines and documents to be used.
23.3 Internal control of payroll
D
Notes:
There are no established procedures for changes to the personnel record, nor adequate audit records to maintain a history of changes.
Notes:
No payroll audits are performed.
Notes:
24.1 Procurement monitoring
C
Notes:
The bidding and procurement processes of 3 (three) Ministries, which represented 65% of the budgeted expenditure for 2018, contained accurate and complete data for most methods of procurement of assets, services and works.
24.2 Procurement methods
D
Notes:
There is no information on the values of competitive and non-competitive contracts, but the only information obtained was from bids from 3 (three) Ministries, which represented 30% of the budgeted expenditure for 2018, and it is impossible to analyse the processes of the other Ministries in the sample.
24.3 Public access to procurement information
D
Notes:
Only 1 (tendering opportunity) of the 6 key elements of Public Procurement and Contracting information is available to the public through advertisements on national television, radio and websites of the Ministry of Finance and sectoral ministries.
24.4 Procurement complaints management
D
Notes:
The STP bid and procurement complaint review system includes an appeal body, which meets the 1st and 4 (four) of the 6 (six) best practice criteria.
25. Internal controls on nonsalary expenditure
D+
Notes:
25.1 Segregation of duties
B
Notes:
The segregation of duties is prescribed throughout the expenditure implementation process, especially at the SAFE-e level and where the user access and rights levels are pre-defined for the implementation of specific operations, with some areas requiring certain adjustments.
25.2 Effectiveness of expenditure commitment controls
D
Notes:
The expenditure authorization control rules are still fragile, low in coverage, and generally inefficient.
25.3 Compliance with payment rules and procedures
D
Notes:
There are several non-quantifiable payments that do not comply with regular payment procedures and there is no evidence on the justification and regularization of the relative payments.
Notes:
26.1 Coverage of internal audit
A
Notes:
The internal audit is operational in central level institutions (budgetary and extra-budgetary) representing all budgeted expenditure and revenue.
26.2 Nature of audits and standards applied
B
Notes:
The audits internal are performed with basis to standards and procedures based on international standards and focus on the suitability and the effectiveness of controls internal.
26.3 Implementation of internal audits and reporting
D
Notes:
In 2018, there was an internal audit plan by IGF, with 27% of the planned audits conducted.
26.4 Response to internal audits
D*
Notes:
There are no data to assess the response rate of the entities audited by IGF.
VI. Accounting and reporting
Scores by Dimension
Overall Indicator Score
27. Financial data integrity
D+
Notes:
27.1 Bank account reconciliation
D
Notes:
The accounts existent in the Central Bank are reconciled daily by the Treasury, but only for the expenditure side. The revenue entries are confirmed only by the Directorate of Taxes.
Notes:
The suspense accounts are reconciled until 2 months after the end of the economic year.
Notes:
Advances on public procurement contracts are reconciled irregularly and not systematically and within two (2) months after the end of the economic year.
27.4 Financial data integrity processes
B
Notes:
Access to SAFE-e records is restricted and segregated per profiles. There are mechanisms that allow knowing who initiated a transaction, who accessed a record, when it was accessed, and whether the record was updated.
28. In-year budget reports
D+
Notes:
28.1 Coverage and comparability of reports
C
Notes:
The quarterly reports have a coverage and classification that allow a direct comparison with the approved budget at Central Government level, with a partial degree of detail, but do not contain information on the expenses incurred by the entities with financial and administrative autonomy from transfers from the central government.
28.2 Timing of in-year budget reports
D
Notes:
In 2018, although the first three (3) quarterly reports were produced within less than eight (8) weeks, the fourth quarterly report was provided 15 weeks after the end of the quarter.
28.3 Accuracy of in-year budget reports
C
Notes:
The quarterly reports have an analysis of budget implementation, which includes information on the allocation, settlement and payment of expenditure phases.
29. Annual financial reports
D+
Notes:
29.1 Completeness of annual financial reports
C
Notes:
At the date of the assessment, the CGE of the last completed fiscal year 2018 is not available.
29.2 Submission of reports for external audit
D
Notes:
The 2017 and 2016 CGEs were delivered to the TdC respectively 17 and 19 months after the end of the budget year to which they relate.
29.3 Accounting standards
C
Notes:
CGE, while not using IPSAS, uses accounting standards based on the existing legal framework in STP.
VII. External scrutiny and audit
Scores by Dimension
Overall Indicator Score
Notes:
30.1 Audit coverage and standards
D
Notes:
The audits carried out using ISSAI standards cover institutions that represent less than 50% of GSB expenditures and revenues in 2018, 2017 and 2016.
30.2 Submission of audit reports to the legislature
D
Notes:
The TdC Reports and Opinions for the 2014 and 2015 CGEs were delivered to AN within more than 9 (nine) months from the reception, and the 2016 CGE Report and Opinion have not yet been delivered to AN, 9 (nine) months after the reception.
30.3 External audit follow-up
C
Notes:
The audited entities submit formal responses to audit recommendations, but these are not implemented in a timely manner.
30.4 Supreme Audit Institution independence
D
Notes:
Although the TdC is independent by law as regards to the appointment and continuity of the Judges, with unrestricted access to the information needed for the activity, the TdC has no independence in setting its budget limit, and its execution depends on the availability of the state treasury.
31. Legislative scrutiny of audit reports
D
Notes:
31.1 Timing of audit report scrutiny
D
Notes:
The last audited CGEs 2014 and 2015 did not rise to scrutiny by the National Assembly within 12 months of receipt by the TdC.
31.2 Hearings on audit findings
D
Notes:
There have never been any hearings on the results of the audits.
31.3 Recommendations on audit by the legislature
D
Notes:
The recommendations on audit results were never issued to the government.
31.4 Transparency of legislative scrutiny of audit reports
D
Notes: