Our role and approach
The function of assessing the financial impact of legislative initiatives by the Parliamentary Budget Office (PBO, hereinafter) is defined by the Rules of Procedure of the Parliament of Georgia and is based on the requirements set out in the Organic Law of Georgia on Normative Acts. Consequently, this function is directly related to the legislative process.
According to the subparagraph "b" of paragraph 1 of Article 17 of the Law of Georgia on Normative Acts, the explanatory note of the draft law shall contain, among other components, the financial impact assessment of the draft law in the medium term (year of enactment of the draft law and 3 years thereafter) and the following shall be specified in it:
b.a) Source of funding for the necessary expenses related to the adoption of the draft law;
b.b) Impact of the draft law on the revenue side of the state and/or municipal budget;
b.c) Impact of the draft law on the expenditure side of the state and/or municipality budget;
b.d) New financial commitments of the state, indicating direct financial liabilities (domestic or foreign liabilities) to be incurred by the state or an entity within its system, as a result of the draft law;
b.e) Expected financial impact of the draft law for those persons to whom the draft law applies, indicating the nature and direction of the impact on individuals and legal entities that are expected to be directly affected by the actions defined by the draft law;
b.f) The amount of tax, fee or other type of payment (cash contribution), as determined by the draft law, to an appropriate budget and the principle for determining the amount.
The PBO shall verify the compliance of the draft law with the requirements of the abovementioned requirements set out in the Organic Law of Georgia on Normative Acts in accordance with the Paragraph 5 of the Article 102 of the Rules of Procedure of the Parliament of Georgia. Based on this, the PBO prepares a conclusion and submits it to the Bureau of the Parliament.
If a submitted draft law does not comply with the requirements of the aforementioned paragraphs of the Law of Georgia on Normative Acts, based on a well-reasoned conclusion of the PBO, the Bureau of the Parliament is authorized to return a draft law to an initiator to eliminate its imperfections.
In addition, according to the Rules of Procedure, the PBO may present additional information concerning issues specified in subparagraph "b" of paragraph 1 of Article 17 of the Law of Georgia on Normative Acts after discussion of a draft law has commenced and before the first hearing.
In order to improve the financial impact assessment mechanism as well as the performance of the PBO's duties defined by the law, the following methodological documents have been developed by the PBO:
- In order to support the preparation of the financial impact assessment of the draft law submitted by the author / initiator of the draft law the PBO has developed a document, which sets out the main requirements and methodological guidelines for the financial impact assessment. The document assists the authors / initiators of the draft law so that the information provided by them reflects a relevant picture of the expected financial impact of the draft law.
- The PBO has also developed a document on the main requirements and methodological guidelines for verifying the financial impact assessment by PBO, with the aim of establishing appropriate standards and guidelines for verifying the financial impact assessment and the preparation of a conclusion by the PBO.
