Loi Organique n° 73-699 du 2 août 1973 relative aux Lois de Finances (LOLF 1973)

The Loi Organique n° 73-699 du 2 août 1973 relative aux Lois de Finances, often referred to as the LOLF 1973, represented a pivotal step in reforming the management of public finances in France. Though superseded by the LOLF of 2001, its legacy remains significant as it laid the groundwork for modern budgetary practices and introduced essential principles that continue to influence French public finance.

Prior to 1973, the budgetary process in France was characterized by a focus on means rather than results. The emphasis was on controlling spending inputs, with little regard for the effectiveness or efficiency of public policies. The LOLF 1973 aimed to shift this paradigm by introducing key innovations:

Consolidation of Budgetary Documents: The LOLF streamlined and consolidated budgetary documents, making the budget more transparent and easier to understand. This was achieved by reducing the number of special accounts and incorporating them into the general budget. This increased overall accountability and made it easier to track government spending.

Budgetary Unity and Universality: The law reinforced the principles of budgetary unity and universality. Budgetary unity means that all revenues and expenditures of the state must be included in a single budget document. Universality means that all revenues must be used to finance all expenditures without specific earmarking (with limited exceptions). These principles ensure that the budget is comprehensive and transparent.

Increased Parliamentary Control: While the executive branch retains significant power in drafting and implementing the budget, the LOLF 1973 aimed to enhance the role of Parliament. It granted Parliament greater authority to scrutinize the budget and propose amendments, although the government retained the power to override certain parliamentary decisions. It also provided for a more detailed budget presentation, enabling parliamentarians to make more informed decisions.

Introduction of Program Budgeting Principles: Although not as fully developed as in the LOLF 2001, the LOLF 1973 introduced elements of program budgeting. This involved organizing the budget around government programs and activities rather than simply listing line items of expenditure. This shift facilitated a focus on the objectives and outcomes of public spending.

Emphasis on Performance Measurement: The law called for the development of indicators to measure the performance of government programs. While the implementation of performance measurement was limited under the LOLF 1973, it paved the way for the more sophisticated performance-based budgeting system introduced by the LOLF 2001.

Despite its groundbreaking nature, the LOLF 1973 was ultimately deemed insufficient to address the evolving challenges of modern public finance. Its limitations included a continued emphasis on input control, a lack of comprehensive performance indicators, and insufficient parliamentary oversight. These shortcomings led to the development and implementation of the LOLF of 2001, which represented a more radical and comprehensive reform of French budgetary practices. Nevertheless, the LOLF 1973 remains a crucial historical document that laid the groundwork for the subsequent advances in French public finance management.