The broader environment of public budgeting, in fact, makes Chile ripe for ex-post performance auditing. Chile possesses ‘adequate rules and procedures and codes of conduct that accept these rules and procedures as legitimate’ (World Bank 2004:3; Iturriaga Ruiz 1995). However, public finance management has remained fairly conventional, privileging adherence to rules and procedures over attainment of results. Furthermore, as Marcel and Tokeman (2002:113) underscore:
‘The lack of institutional checks and balances generate uncertainty over the future behavior of the authorities and prevent the country from fully reaping the benefits of fiscal discipline. In other words, since hierarchical budget institutions were not accompanied by accountability mechanisms over the authorities’ management of public finances, the benefits of such arrangements will remain limited.’
The CGR’s institutional linkages with the other components of the system of financial governance and fiscal control represent a major hindrance to its effectiveness. Relations with the bureaucracy are marred by tension and suspicion. Relations with DIPRES are difficult, partly because of the overlap of responsibilities, and partly because of differences in corporate cultures. Tensions between the executive and the CGR escalated with the multiplication of special investigations and ex-ante controls contesting the legality of government initiatives. Examples include the Plan AUGE, in 2000, in which the CGR contested the legality of the plan’s publicity campaign, or, in 2002, concerning procurement irregularities in the Ministry of Public Works (MOP).
Controversies between the CGR and DIPRES centre on performance auditing and government accounting. The role of the CGR in government accounting is particularly problematic, as it prevents the CGR from auditing government accounts. It generates duplications, as both DIPRES and the CGR maintained, until 2001, their parallel financial information systems. The CGR’s formalistic approach to fiscal control conflicts with DIPRES’ emphasis on performance evaluation. While the CGR is primarily driven by liberal concerns for restraining executive discretion, DIPRES is primarily driven by managerial concerns for improving public management through greater managerial accountability. 49
In the course of the 1990s, the Chilean authorities introduced important reforms in public management and financial governance. As Animat and Vial (2004:20) note,
‘since the restoration of democracy there has been a constant effort to improve the budget process, with special emphasis on budget discipline, execution, and control. Together with the ex-ante spending limits established by the structural fiscal surplus rule, the most significant reforms to the budget process have been at the control stage.’
Progressively, as in Brazil, the modernization of the budgetary system became the driver of state reform, under the stewardship of the central budget office (World Bank 2005; Guzmán 2005). There have been important improvements in terms of fiscal transparency and public access to financial information. The executive must now provide more information on government finances, reporting on budget execution to the legislature on a monthly and quarterly basis. These reports are public since 2000. As Marcel and Tokeman (2002:108),
49 Chilean administrative traditions clearly distinguish fiscal control from performance evaluation. Article 52 of the 1975 law of financial administration (LAFE) underscores that the CGR exercises the ‘financial control of the state and the adequate compliance with legal and regulatory provisions,’ while the ‘control and evaluation of the attainment of objectives and the achievement of pre-set targets are tasks that correspond to the administration of the state and which are exercised by the executive’ (DIPRES 2004:339).