Identifier
Created
Classification
Origin
04BRATISLAVA1059
2004-11-23 14:55:00
UNCLASSIFIED
Embassy Bratislava
Cable title:  

TRANSPARENCY OF BUDGETS/MILITARY SPENDING

Tags:  EFIN ECON EAID LO 
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UNCLAS BRATISLAVA 001059 

SIPDIS


STATE FOR EB/IFD/OMA LGALLAGHER

TREASURY FOR OASIA/MDM JFRANCO

E.O. 12958: N/A
TAGS: EFIN ECON EAID LO
SUBJECT: TRANSPARENCY OF BUDGETS/MILITARY SPENDING

REF: STATE 239929

UNCLAS BRATISLAVA 001059

SIPDIS


STATE FOR EB/IFD/OMA LGALLAGHER

TREASURY FOR OASIA/MDM JFRANCO

E.O. 12958: N/A
TAGS: EFIN ECON EAID LO
SUBJECT: TRANSPARENCY OF BUDGETS/MILITARY SPENDING

REF: STATE 239929


1. THE FOLLOWING ARE ANSWERS, PER REFTEL, TO THE AUDIT AND
REPORTING PROCESS FOR MILITARY EXPENDITURES IN SLOVAKIA
BASED ON RESPONSES FROM THE MINISTRY OF FINANCE (MOF).


2. HOW ARE MILITARY EXPENDITURES AUDITED? ACCORDING TO
SLOVAK LEGISLATION, THE MINISTRY OF DEFENSE (MOD),AS WELL
AS OTHER MINISTRIES, ARE NOT REQUIRED TO SUBMIT AN ANNUAL
AUDIT, IN THE SAME WAY THAT COMMERCIAL FIRMS DO. HOWEVER,
THE MOD REPORTS QUARTERLY ON THE MANAGEMENT OF BUDGET FUNDS
TO THE PARLIAMENTARY COMMITTEE OF DEFENSE AND SECURITY. AT
THE END OF THE BUDGET YEAR, THE MOD COMPILES A FINAL ANNUAL
DEFENSE ACCOUNT BALANCE, WHICH MUST BE APPROVED BY THE
PARLIAMENT AS PART OF THE OVERALL CLOSURE OF ACCOUNTS FOR
THE NATIONAL BUDGET.


3. WHO AUDITS MILITARY EXPENDITURES? IN ADDITION TO THE
REVIEWS CARRIED OUT THE PARLIAMENTARY COMMITTEE, THE MOD IS
DIRECTLY AUDITED BY THE SUPREME AUDIT OFFICE, WHICH AUDITS
THE MANAGEMENT OF STATE RESOURCES FOR ALL DEPARTMENTS OF THE
GOS. ANOTHER BODY, WHICH MAY REVIEW THE MOD'S SPENDING, IS
A SPECIAL CONTROL SECTION OF THE MOF. THIS UNIT CONDUCTS
RANDOM INSPECTIONS AT ALL DEPARTMENTS WITHIN THE GOS,
FOCUSING ON SPECIFICALLY SELECTED OPERATIONS AND/OR
PURCHASES. THE OFFICE OF THE CABINET ALSO HAS SOME,
ALTHOUGH LIMITED, COMPETENCE.


4. TO WHOM ARE THE AUDITS REPORTED? THE AUDIT REPORTS ARE
SUBMITTED TO THE CABINET, THE MINISTER OF DEFENSE, THE
MINISTER OF FINANCE AND THE PARLIAMENT. CIVILIANS DEALING
WITH THE DEFENSE AUDIT INCLUDE MEMBERS OF PARLIAMENT AND THE
CABINET, AS WELL AS OFFICERS OF THE MOD AND THE MOF.


5. ARE ANY OF THE PEOPLE WHO RECEIVE THE AUDITS CIVILIAN
AUTHORITIES? ALL OF THE AGENCIES LISTED IN PARAGRAPH FOUR,
EXCEPT THE MOD, ARE CIVILIAN AGENCIES. BY SLOVAK LAW, THE
MINISTER OF DEFENSE MUST ALSO BE A CIVILIAN. ACCORDING TO
THE MOD, AS MANY AS 80 PERCENT OF ITS PERSONNEL ARE
CIVILIANS. IN 2004, SLOVAKIA BECAME A MEMBER OF NATO, AND
THE MOD ADOPTED A PLAN OF INCREASING ITS CIVIL MANAGEMENT.


6. TO THE BEST OF POST'S ABILITY, OUTLINE ANY DEFICIENCIES
IN THE AUDIT PROCESS. POST DOES NOT HAVE THE RESOURCES TO
EXAMINE THE ADEQUACY OF GOS AUDITING PROCEDURES.


7. PROVIDE AS MUCH INFORMATION AS POSSIBLE REGARDING THE

NATIONAL BUDGET PROCESS AND IN PARTICULAR THE MILITARY
COMPONENT OF THE BUDGET. THE STATE BUDGET IS THE BASIC
INSTRUMENT OF GOVERNMENT FINANCIAL POLICY IN SLOVAKIA. THE
CABINET DEVELOPS A BASIC BUDGETARY OUTLOOK FOR THE NEW
BUDGET YEAR, AND THEN, ON THE BASIS OF THAT OUTLOOK, THE MOF
CREATES THE DETAILS OF BUDGETARY ALLOCATIONS FOR MINISTRIES
AND OTHER BUDGET-FINANCED BODIES.


8. THE MOD USUALLY BEGINS PREPARING ITS BUDGET NO LATER THAN
JUNE, AFTER THE MOF PUBLISHES INSTRUCTIONS ON DRAFTING THE
BUDGET. LIMITS ON BUDGETARY ALLOCATIONS FOR EACH MINISTRY
ARE OBLIGATORY. THE MOD ISSUES INSTRUCTIONS AND SETS
PRIORITIES FOR THE ASSEMBLY OF THE BUDGET FOR THE UPCOMING
YEAR, WHICH IS WORKED OUT ON THE BASIS OF DETAILED ESTIMATES
OF EXPENDITURES. THIS DETAILED PROPOSAL MUST BE SUBMITTED
TO THE MOF BY THE END OF JULY.


9. THE BUDGET PROPOSAL IS THEN ASSEMBLED BY THE MOF AND
RETURNED TO THE CABINET FOR A SECOND REVIEW. AFTER THE
CABINET GIVES IT FINAL APPROVAL, THE PROPOSAL MUST BE
SUBMITTED TO PARLIAMENT BY OCTOBER 15. UNLIKE OTHER LAWS,
THE STATE BUDGET DRAFT ONLY HAS TWO READINGS. ONCE
SUBMITTED TO PARLIAMENT, THE PROPOSAL IS DISTRIBUTED TO ALL
PARLIAMENTARY COMMITTEES INCLUDING THE COMMITTEE FOR DEFENSE
AND SECURITY. IF NO AMENDMENTS ARE APPROVED, THE FINAL
READING STARTS IMMEDIATELY WITH THE VOTE ON THE BUDGET AS A
WHOLE. HOWEVER, IF ANY AMENDMENTS HAVE BEEN APPROVED, THE
DEBATE IN THE FINAL READING IS LIMITED ONLY TO THE AMENDED
PARTS OF THE BUDGET PROPOSAL.


10. IF THE PARLIAMENT IS NOT ABLE TO APPROVE THE PROPOSED
STATE BUDGET BY THE END OF THE YEAR, THE GOVERNMENT OPERATES
ON A PROVISIONAL BUDGET FOR THE FIRST QUARTER OF THE YEAR;
THIS OCCURRED IN 1999. IF THE BUDGET IS APPROVED, THE
PRESIDENT MUST THEN SIGN IT INTO LAW OR RETURN IT TO THE
PARLIAMENT. IN EFFECT, THE PRESIDENT HAS LITTLE POWER OVER
THE BUDGET.


11. THE INTERNATIONAL MONETARY FUND HAS PRAISED SLOVAKIA
FOR ITS CONTINUED EFFORTS TO IMPROVE FISCAL MANAGEMENT AND
TRANSPARENCY. IN 2004, THE GOS INTRODUCED A THREE-YEAR
FISCAL FRAMEWORK AND MADE SIGNIFICANT PROGRESS IN ADOPTING
THE EUROPEAN UNION'S PREFERRED FISCAL REPORTING METHOD, ESA-
95, BASED ON ACCRUAL BUDGETING. THE GOS IS EXPECTED SOON TO

INTRODUCE THREE-YEAR EXPENDITURE CEILINGS THAT WOULD BE
SUBMITTED TO PARLIAMENT FOR APPROVAL. THIS WOULD ENTAIL
SPECIFYING SUB-CEILINGS ON KEY COMPONENTS OF PUBLIC SPENDING
THAT NEED TO BE REDUCED, AND IDENTIFYING MEASURES TO
MAINTAIN THESE MEDIUM-TERM EFFORTS.


12. ARE PRODUCTIVE DEVELOPMENT OBJECTIVES PRIORITIZED OVER
UNPRODUCTIVE? THE TRANSITION FROM A PLANNED TO A MARKET
ECONOMY IN THE PAST YEARS HAS FORCED STRINGENT LIMITS ON
SLOVAK DEFENSE EXPENDITURES. THE BULK OF MILITARY
EXPENDITURES GO TO FINANCE BASIC OPERATIONAL COSTS AND
MILITARY TRAINING, WHILE MODERNIZATION IS LIMITED. DEFENSE
EXPENDITURES HOVER AROUND 2.0 PERCENT OF GDP, THE LEVEL
RECOMMENDED BY NATO.


13. IS THERE A MECHANISM FOR BUDGET PRIORITIZATION DEBATE?
AFTER THE CABINET SUBMITS THE STATE BUDGET TO THE
PARLIAMENT, VARIOUS COMMITTEES DISCUSS THE BUDGET PROPOSAL
AND PRIORITIES AND RECOMMEND CHANGES TO IT BEFORE IT IS
SUBMITTED TO THE FULL PARLIAMENT FOR APPROVAL.


14. DOES THE COUNTRY'S DEFENSE BUDGET INCLUDE ARMY, POLICE
AND SECURITY FORCES? DEFENSE EXPENDITURES ARE DEFINED AS
THOSE MADE BY THE NATIONAL GOVERNMENT SPECIFICALLY TO MEET
THE NEEDS OF THE ARMED FORCES (NATO SURVEY DPAO 2001 0590).
THEREFORE, THE ARMY, MILITARY POLICE AND MILITARY
INTELLIGENCE ARE IN THE MOD BUDGET. PARAMILITARY FORCES OF
THE MINISTRY OF INTERIOR (MOI) AND THE POLICE ARE INCLUDED
IN THE MOI BUDGET. THE RAILWAY PARAMILITARY FORCES AND
RAILROAD POLICE ARE INCLUDED IN THE MINISTRY OF TRANSPORT,
POST AND TELECOMMUNICATIONS BUDGET. PENITENTIARY AND
JUDICIAL POLICE ARE PAID FROM THE MINISTRY OF JUSTICE
BUDGET.


15. TO POST'S KNOWLEDGE ARE THERE SIGNIFICANT OFF-BUDGET
MILITARY RECEIPTS? TODAY, SLOVAKIA DOES NOT HAVE
SIGNIFICANT OFF-BUDGET MILITARY RECEIPTS. HOWEVER, IN THE
PAST, THERE WERE SUBSTANTIAL OFF-BUDGET RECEIPTS, SUCH AS
UNITED NATIONS PEACEKEEPING OPERATIONS REIMBURSEMENTS AND
REVENUES FROM THE MILITARY AVIATION ACADEMY.
WEISER


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