The Moorish Wanderer

Debt Ceiling and Fiscal Responsibility

The claim for fiscal responsibility, indeed the claim for economic competence has been rendered farcical with the outgoing government’s reckless spending these last two years, even more so, considering their refusal, up to date, to increase government receipts while indulging in piling up a mounting debt, both domestically and abroad. However, they are not the only ones to be blamed for this: the Finance Ministry has always wielded an enormous amount of power over public finances, and Parliament does not have enough powers to curb spending or influence it, other than representatives attaching amendments to the Budget bill. The entire process is dominated by the ministry, which would be fine, if it wasn’t for its notorious lack of accountability to the Prime Minister or to Parliament.

Simplified process for budget-making

(a French version can be viewed by clicking on this link)

The Budget-making is entirely executive; meaning that members of parliament do not receive the draft bill until the late stages of the game, and have but the amendment prerogative as a leverage on ministry officials. Other than that, while the house gets to debate the content of the bill, representatives have no oversight over the projections ex-ante. The parliamentary debate itself is skewed, since representatives have little time to go through the numbers, they are not presented with other alternatives, and basically are cornered into voting on a fairly complete document -with the chance to make some cosmetic changes at the best-. Now, the argument against giving more power to representatives is valid: many of them lack the proper understanding of administrative proceedings, and are frequently the subject of virulent criticism for their alleged corruption and incompetence. But then again, perhaps this abysmal record is due to the irresponsibility and lack of proper parliamentary oversight they have been put it; I remain intimately convinced the average intake of representatives would dramatically improve in quality if actual power was devolved to their offices, with genuine involvement with lawmaking and proper resources to carry out their duty as the representatives of the Moroccan people.

Since constant criticism does not do any good, I would endorse (since my own tiny voice doesn’t account for much) any political organization ready to endorse legislation introducing a cap on borrowings and allocating human and material resources to make parliamentary business look and act more professional.

Debt-Ceiling mechanism on Budget making: the government can only too often circumvent parliamentary amendments they consider too uncomfortable a constraint, and these days, they have even preferred to borrow abroad rather than increase taxes. The ensuing result is a mounting deficit, inflating debt this government will be long gone when the time comes to pay the piper.

Debt ceiling could make a finance minister's reputation, or break a government.

The cap on public borrowings, in the Moroccan context, is not some move indulging in conservative, orthodox fiscal self-constraint. It actually links budget management responsibility -on behalf of government- to genuine control from the competent parliamentary committee: proposed legislation would require both parliament and government to pre-announce the expected debt ceiling they pledge not to break; extensive theoretical and empirical body of evidence suggests proofs of self-discipline strengthen the credibility of government actions, a reputation that could benefit effectiveness on other policies and announcements. This modus operandi, by the way, has been discarded by all governments in Morocco, on both sides of the political spectrum, because it entails fiscal discipline requirements they are not up to (to that effect, I wonder whether Pr. Najib Akesbi would subscribe to the submitted proposal on capping annual public borrowings)

Again, relative to the Moroccan context, the debt-ceiling is not necessarily attached to a particular political ideology, but rather belongs to the spirit of “good government“, and basically to the set of pieces of legislation likely to balance power between the executive and legislative branches: ministers in Morocco are not really bound by parliamentary scrutiny, and are not subject to known parliamentary censoring procedure, so even answering questions from representatives is not that a compulsory duty; A debt-ceiling program hits the government where it (metaphorically) hurts: the money it spends with little outside scrutiny, and definitely no danger of sanction if it crosses the line of good budget management; let us all remember that while debt is not a fundamentally evil thing, its mismanagement saddles the taxpayer with a trans-generational cost that can be avoided with a little bit of accountability on behalf of those spending the money.

Now, with the real likelihood of de-funding governmental departments, all the horse-trading on amendements put forward by various caucuses during the Budget bill debates are taken to a higher level, and can move away from marginally affecting budget policy, to influence it to the greater good with the newly acquired leverage; Unless government and parliament are bitterly opposed -an unlikely case in Morocco, since the incumbent government is supposed to benefit from a vote of confidence from the house- no party will go all the way down to a brutal showdown. The bottom line is, the taxpayer will be the first beneficiary from capping borrowings, and that applies to all taxpayers, present and future ones.

Professional help for representatives: It has been often pointed out by various members of parliament they lack the proper resources to carry out their jobs; meaning they do not have a decent pool of researchers and political analysts to provide them with the proper information to confront government officials. The 2011 Budget law allocates MAD 270 Million to parliament house, 300 Million when it encompasses the parliamentary liaison ministry (headed by the formerly petulant Driss Lachgar) a relatively insignificant figure, considering the vast resources put together by the finance ministry, vast enough to out-gun any parliamentary pretence to control finance ministry officials and hold them accountable. As a matter of fact, only half of total pay-wage is devoted to administrative staff (supposedly working full-time for representatives) and only 40% of total expenses allocated to parliament house. Some hired help to put together counter-proposals on budgets and legislation would do, and would not cost a lot (especially if these are young graduates interning for a caucus or a representative)

Parliament can achieve a lot, even with the present constitution, as long as it has the proper resources to carry out its duties; by introducing vanguard legislation on how money is levied and distributed, and second by allowing it to work in a professional, rather than amateurish setting. Moul Chkara only thrives where there is a lack of competence and working knowledges of the nuts and bolts of government. There’s the money, let’s put it in good use.

3 Responses

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  1. MoMo said, on October 8, 2011 at 16:35

    I never understood the purpose of a debt ceiling if this ceiling can be always raised by the parliament. A government that has a majority to pass a budget before the parliament will have the power to bypass any deb ceiling by just setting a new one. I agree that he will make some headlines in the press and maybe can cause some outrage as we saw lately in US but still I don’t see how this will prevent government lavish spending.

    • Zouhair Baghough said, on October 8, 2011 at 23:03

      Hi!

      the ceiling thing is about credibility; the situation in the US is a bit different (since you can have Congress and the Presidency controlled by different parties) and couldn’t happen (theoretically at least) in Morocco, since government are supposed to have a vote of confidence from parliament.
      Now, when the government and parliament convene on a debt ceiling, they send a signal of competence and credibility, meaning they will manage at the best of their ability public finances. In view of exceptional circumstances, they can negotiate the necessary changes. But the bottom line is that: a sign of competence and fiscal responsibility.

      Thanks for stopping by!

  2. […] Debt Ceiling and Fiscal Responsibility […]


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