formalistic approach to fiscal control reflected the legalistic character of Chilean administrative law.
The CGR earned the respect of many Chileans by opposing the military dictatorship’s encroachment of the law during the military regime (1973-1990). Initially, Pinochet undermined the CGR in subtle ways, ending the mandatory allocation of a fixed percentage of the budget in 1975 or changing the staff salary regime in 1981, which led to the departure of over 500 officials. Pinochet did not dismantle the CGR, as he needed it to ensure that the bureaucracy complied with the junta’s decisions. However, when former comptroller-general Héctor Humeres confronted the military regime, he neutralized it by capturing it.
In 1977, Humeres questioned the constitutionality of the plebiscite the junta was planning for early 1978 and threatened to veto it through ex-ante control. Pinochet expedited the retirement of Humeres, who was due to retire in 1977, and nominated one of his lieutenants, Sergio Fernández, in his stead. Fernández swiftly approved the legality of the plebiscite just two days before it was to be held. He resigned in April 1978 to become the interior minister, a pivotal position in Pinochet’s government. Fernández’ handpicked his successor, Osvaldo Iturriaga, who remained in office until 1997, well into the democratic transition. These events are often cited as grounds to justify the criticism of the CGR as being an ‘authoritarian enclave.’
The credibility of the CGR is enhanced by the effectiveness of the state in which it is embedded. The CGR inserts itself in an effective state with an efficient public administration, reliable regulations and adherence to the rule of law. A prominent member of the tribunal of accounts from 1891 until 1918, Valentín Letelier, contributed to shape administrative jurisprudence and anchor the principles of legality and probity in the Chilean public administration. The CGR greatly benefits from disciplined public finances achieved through the progressive centralization of the budget process over the past century initiated under the first presidency of Arturo Alessandri in the early 1920s (Animat et al. 2006). Today, Chile has a budgetary system in which the executive branch is clearly pre-eminent, steered by the central budget office (DIPRES) of the ministry of finance (Santiso 2006c, 2006d, 2005a, 2005b). 48
The existence of a strong social consensus on the need to preserve probity and legality in public administration further anchors the credibility of the CGR in the Chilean political and social landscape. Furthermore, there is also a strong cross-partisan consensus favoring a central steering role for the executive and supporting fiscal discipline. As Marcel and Tokeman (2002:112) note, ‘the memory of past fiscal instability made Chilean politicians quite supportive of fiscal restraint.’ There is a remarkable degree of acceptance of the current policy framework, the de-politicization of economic policy and the centralization of the budget process (Animat and Vial 2004). According to Montecinos (2003:1), ‘for over a century, budgetary politics in Chile contained protracted efforts to depoliticize economic management and insulate policy decisions from congressional interference.’
As a result, the Chilean budgetary process is governed by stable and predictable rules. The return of democracy did not question the prevailing consensus favoring executive pre-eminence in public budgeting and, as a consequence, limited legislative oversight of public finances. The nature of the political system also explains the stability of the budgetary system. Based on uninominal electoral districts, electoral rules lead to a bipartisan system and prompt parties to form coalitions. They require grounding structural reforms in bi-partisan consensus.
48 The centralization of budget authority is the result of a long process that started as early as the civil war of 1891, which erupted partly as a result of a conflict between the executive and the legislature over the budget. It culminated with the adoption of the 1975 financial administration law and the 1980 constitution, which gave Chile one of the most centralized budgetary systems in the region. The legislature was closed during most of the military dictatorship between 1978 and 1990.