TITLE XII. On the Economic and Public Finance Regime
Chapter I. General Provisions
Article 332
The State is the owner of the subsoil and of the natural, non-renewable resources without prejudice to the rights acquired and fulfilled in accordance with prior laws.
Article 333
Economic activity and private initiative must not be impeded within the limits of the public good. For their exercise, no one may demand prior permission or licenses without authorization of an Act.
Free economic competition is a right of everyone, entailing responsibilities.
The enterprise, as a basis of development, has a social function that implies obligations. The state shall strengthen the joint organizations and stimulate enterprise development.
The State, mandated by an Act, shall check the impediments to or restrictions of economic freedom and shall avoid or control any abuse that individuals or enterprises may create thanks to their dominant position in the national marketplace.
An Act shall delimit the scope of economic freedom when the social interest, the environment, and the cultural patrimony of the nation demand it.
Article 334
The general management of the economy is the responsibility of the state. By mandate of an Act, the state shall intervene in the exploitation of natural resources, land use, the production, distribution, use, and consumption of goods, and in the public and private services in order to rationalize the economy with the purpose of achieving, at the national and regional level and within the framework of fiscal sustainability, the improvement of the quality of life of the inhabitants, the equitable distribution of opportunities, and the benefits of development and conservation of a healthy environment. The aforementioned framework of fiscal sustainability must function as an instrument for achieving in a progressive manner the objectives of a social State based on the rule of law. In all cases public spending for social purposes shall have priority.
In a special manner, the state shall intervene for the sake of the full employment of the human resources and to ascertain that all individuals, especially those with a low income, may have effective access to all basic goods and services. [It shall] also [intervene] to promote productivity and competitiveness and the harmonious development of the regions.
Fiscal sustainability shall provide guidance to the branches and organs of government, within their competences, in a framework of harmonious collaboration.
When a judgment has been handed down by any of the supreme judicial bodies, the General Prosecutor of the Nation or one of the government ministries may request the initiation of a Financial Impact Assessment, the holding of which shall be obligatory. The explanations of the supporters on the consequences of the judgment on the public finances shall be heard, as well as the concrete plan for its execution, and a decision shall be taken whether to modulate, modify or postpone the effects of the judgment with the objective of preventing serious disturbances to fiscal sustainability. In no case shall the essential core of a fundamental right be affected.
Paragraph
In interpreting the present Article, an authority of an administrative, legislative or judicial character may under no circumstances invoke fiscal sustainability to diminish fundamental rights, reduce their scope of application or eliminate their effective protection.
Article 335
The financial, stock exchange, insurance, and any other activities related to the handling, exploitation, and investment of the resources referred to in letter (d) of numeral 19 of Article 150 are of public interest and may only be exercised following the prior authorization of the State, in accordance with the applicable statute, which shall regulate the government’s form of intervention in these areas and promote the equitable generalization of credit.
Article 336
No monopoly may be established except through the free play of the marketplace and to promote the public or social interest and in accordance with applicable statute.
An Act which establishes a monopoly may not be applied before those individuals, who by virtue of it must relinquish the pursuit of a legal economic activity, are fully indemnified.
The organization, administration, control, and exploitation of financial monopolies shall be subjected to a specific regime, determined by an Act of government initiative.
Revenues obtained in the exercise of the monopolies of games of chance shall be earmarked exclusively to the public health services.
Revenues obtained in the exercise of the liquor monopoly shall be earmarked on a preferential basis to the health and educational services.
Tax evasion with respect to revenues originating from financial monopolies shall be sanctioned as a crime within the limits established by statute.
The government shall sell or liquidate the monopolistic enterprises of the State and transfer to third parties the exploitation of their operation when the requirements of efficiency are not met within the limits established by statute.
In all cases the rights acquired by the workers shall be respected.
Article 337
An Act may establish for the border regions, whether on land or sea, special regulations in economic and social matters tending to promote their development.
Article 338
In peacetime, only Congress, departmental assemblies, and district and municipal councils may levy fiscal or fiscal-like dues. Statutes, ordinances, and resolutions must determine directly active and passive earnings, the events and bases that are taxable, and the rates of the levies.
Statute, ordinances, and resolutions may permit that the authorities determine the rate of taxes and levies that are collected from taxpayers to offset the costs of the services which the authorities provide or participation in the benefits that pertain to them; but the system and the method to define such costs and benefits and the manner of allocating them must be determined by statute, ordinances, or resolutions.
The statutes, ordinances, or resolutions that regulate levies based on the result of taxable events occurring during a specific period may not be reapplied except from the date following the entering into effect of the respective law, ordinance, or resolution.
Chapter II. On Development Plans
Article 339
There shall be a National Development Plan consisting of a general part and a plan of investments of the national public entities. In the general part the long-term national purposes and objectives, the parameters and priorities for State action in the medium term, and the strategies and general orientations of economic, environmental and social policy to be adopted by the government shall be laid down. The public investment plan shall contain the multi-year budgets of the principal programs and national public investment projects, and the specification of the financial resources required for their execution, within a framework which ensures fiscal sustainability.
The territorial entities shall elaborate and adopt in a concerted manner between them and the National Government development plans with the purpose of ensuring the efficient use of their resources, the development of strategies in the fight against poverty and the adequate execution of the functions assigned to them by the Constitution and statute. The plans of the territorial entities shall consist of a strategic plan and a plan for short and long term investments.
Article 340
There shall be a National Planning Council made up of the representatives of the territorial entities and of the economic, social, ecological, community, and cultural sectors. The Council shall have a consultative character and shall serve as a forum for the discussion of the National Development Plan.
The members of the National Council shall be designated by the President of the Republic from lists presented to him/her by the authorities and organizations of the entities and sectors referred to in the previous clause which are or have been involved in said activities. Their term shall be of eight years, and every four years the Council shall be renovated in part in the form established by statute.
In the territorial entities there shall also be planning councils, in accordance with the relevant statute.
The National Council and the territorial planning councils constitute the National Planning System.
Article 341
The government shall elaborate the National Development Plan with the active participation of the planning authorities, of the territorial entities and the Judicial Government Council and shall submit the draft plan to the National Planning Council for its views. After receiving the opinion of the Council, it shall proceed to effect those amendments that it considers appropriate and shall present the plan to the consideration of Congress within six months following the initiation of the respective presidential term.
Based on the report that the joint committees of economic affairs draw up, each House shall discuss and evaluate the plan in plenary session. Disagreements about the content of the general part, if there were any, shall not prevent the government from executing the proposed policies in matters falling under its jurisdiction. However, should the government decide to amend the general part of the plan, it shall follow the procedure indicated in the Article that follows.
The National Investment Plan shall be enacted by means of a law which shall have priority over the other laws; consequently, its mandates shall constitute suitable means for its execution and shall supplement existing ones without the need for issuing subsequent laws. Nevertheless, in the annual budgetary laws it shall be possible to increase or decrease the shares and resources approved in the planning law. If Congress does not approve the National Public Investment Plan within three months following its presentation, the Government may put it into effect through a decree having the force of law.
Congress may modify the Public Investment Plan as long as the financial balance is maintained. Any increase of borrowing authorizations requested in the governmental draft plan or the inclusion of investment plans not considered by the latter shall require the approval of the national Government.
Article 342
The appropriate Institutional Act shall regulate everything concerned with the procedures of the drafting, approval, and execution of the development plans and shall use the assigned mechanisms for their harmonization and for the alignment of the official budgets with them. It shall also determine the organization and functions of the National Planning Council and of the territorial councils as well as the procedures in accordance with which citizens’ participation shall be effective in the discussion of the development plans and the appropriate modifications, in accordance with what is established in the Constitution.
Article 343
The national planning entity indicated by the relevant statute shall be responsible for the planning and organization of the systems of evaluation of the management and performance of the public administration, both with regard to investment policies and investment plans under the terms that it defines.
Article 344
The departmental planning organs shall make the evaluation of management and performance concerning the planning, development, and investment programs of the departments and municipalities and shall participate in the preparation of the budgets of the latter in the limits stipulated by the relevant Act.
In each case, the national planning organ may, in selective manner, carry out said evaluation of any territorial entity.
Chapter III. On the Budget
Article 345
In peacetime, it is not permitted to collect levies or taxes that are not included in the revenues of the budget or to make payments from Treasury funds which are not included in the budgetary expenditures.
Nor may any public expenditure be incurred that has not been decreed by Congress, the departmental assemblies, or the district or municipal councils, or any credit transferred which is not projected in the respective budget.
Article 346
The Government shall formulate annually the Revenues Budget and Appropriations Law which shall be presented to Congress within the first 10 days of each legislature. The Revenues Budget and Appropriations Law must be drafted, presented and approved within a framework of fiscal sustainability and be in conformity with the National Development Plan.
In the Appropriations Law, no part whatsoever may be included that does not correspond to a legally recognized credit or an expenditure decreed in accordance with an earlier law or a budget for the Government to duly serve the functioning of the branches of government, the servicing of the debt, or earmarked to implement the National Development Plan.
The economic committees of the two Houses shall deliberate jointly to give the first reading to the proposed Revenues Budget and Appropriations Law.
Article 347
The appropriations bill shall include the totality of the expenditure which the State plans to implement during the respective fiscal period. If the legally authorized revenues are not sufficient to cover the projected expenditure, the Government shall propose separately, before the same committees that are considering the budget bill, the creation of new revenues or the modification of existing ones to finance the amount of contemplated expenditure.
The budget may be approved without the completion of the bill raising additional revenues which progress may continue in the subsequent legislative term.
Transitional paragraph
During the years 2002, 2003, 2004, 2005, 2006, 2007, and 2008 the total amount of the appropriations authorized by the annual budget law for general expenditures, other than those earmarked for the payment of pensions, health [costs], defense expenditure, personal services, of the General System of Shares and for other transfers determined by the relevant Act, may not be increased from one year to another by a percentage superior to the inflation rate resulting for each of them, plus one point five percent (1.5%).
The limitation of the amount of appropriations shall not apply to those [appropriations] necessary to meet the expenditure decreed by using the powers under a State of Exception.
Article 348
If Congress does not issue the budget, the one presented by the government shall apply within the limits of the preceding article; should the budget not be presented by the same deadline, that of the previous year shall apply, but the government may reduce expenditures and consequently eliminate or reshuffle jobs when the computations of the revenues of the new fiscal year so mandate.
Article 349
During the first three months of each legislature and strictly in accordance with the rules of the Institutional Act, Congress shall discuss and issue the General Revenues Budget and Appropriations Law.
Estimates of the revenues, credit resources, and proceeds of the Treasury balance may not be increased by Congress except following the prior opinion and favorable endorsement of the appropriate minister.
Article 350
The Appropriations Law shall have a component entitled public social expenditure that shall consolidate the parts of such a nature according to a definition made by the respective Institutional Act. Except in case of foreign war or for reasons of national security, public social expenditure shall have priority over any other allocation.
In the territorial distribution of the public social expenditures, account shall be taken of the number of individuals with unsatisfied basic needs, the population, and fiscal administrative efficiency, according to the regulations mandated by an Act.
The investment budget may not be reduced percentagewise compared to the earlier year with respect to the total expenditure of the corresponding Appropriations Law.
Article 351
The Congress may not increase any of the sections of the estimated budgetary expenditures proposed by the Government or include a new section except with the written consent of the appropriate minister.
The Congress may eliminate or reduce parts of the expenditures proposed by the government with the exception of those needed for the servicing of the public debt, the other contractual obligations of the State, integral funding of the ordinary services of the administration, and the investments authorized in the plans and programs referred to in Article 341.
Should the computation of revenues increase or should some of the parts of the respective estimate be eliminated, the amounts made available in this manner, without exceeding their aggregate, may be applied to other investments or authorized outlays in accordance with what is prescribed in the final clause of Article 349 of the Constitution.
Article 352
In addition to what is mentioned in this Constitution, the Institutional Act of the Budget shall regulate matters corresponding to the programming, approval, modification, and execution of the budgets of the nation, of the territorial entities, and those decentralized entities of any administrative level and their coordination with the National Development Plan as well as the capacity of the organs and state entities to enter into contracts.
Article 353
The principles and provisions established in this title shall apply, as far as they are pertinent, to the territorial entities for the elaboration, approval, and execution of their budget.
Article 354
There shall be a General Accountant, an official of the executive branch, who shall be responsible for the general accounting of the nation and shall consolidate the territories or services of the nation with that of its decentralized entities, no matter what the level to which they may belong, except for the execution of the budget, over which the Office of the Controller has jurisdiction.
The functions of streamlining, centralizing, and consolidating the public accounting system, elaborating on the general balance, and determining the accounting principles that must apply in the country, in accordance with the relevant statute, are the responsibility of the General Accountant.
Paragraph
Six months following the close of the fiscal year, the national government shall send to Congress the budgetary balance, audited by the Office of the Controller General of the Republic, for its information and analysis.
Article 355
None of the branches or organs of government may decree subsidies or donations in favor of individuals or legal entities in the private sector.
At the national, departmental, district, and municipal levels, the government may, with the resources of the respective budgets, sign contracts with non-profit private entities and of recognized capability in order to promote programs and activities of public interest, in accordance with the National Plan and the sectional development plans. The National Government shall regulate the matter.
Chapter IV. On the Distribution of Resources and Jurisdictions
Article 356
Except for what the Constitution provides, an Act shall determine, at the initiative of the Government, the services for which the Nation and the Departments, Districts, and Municipalities are responsible. In order to take care of the services for which they are responsible and to supply the resources for their adequate provision, the General System of Shares of the Departments, Districts, and Municipalities is hereby established.
The Districts shall have the same competences as the municipalities and departments for the purposes of distribution of the General System of Shares that the Act establishes.
For these purposes, the indigenous territorial entities, shall be beneficiaries, once they are constituted. Likewise, the Act shall designate the indigenous reservations as beneficiaries, provided that they have not constituted themselves as indigenous territorial entities.
The resources of the General System of Shares of the departments, districts and municipalities shall be earmarked for the financing of the services for which they are responsible, according priority to the health service, the services of pre-school, primary, secondary and intermediate education, and public services concerning drinking water and basic sanitation in the home, ensuring the provision of the services and the extension of coverage with an emphasis on the poor.
Taking into account the principles of solidarity, complementarity and subsidiarity, the Act shall establish the cases in which the Nation may contribute to the financing of the expenditure of those services which, in accordance with the determination made by statute fall within the competence of the departments, districts and municipalities.
The Act shall regulate the criteria of distribution of the General System of Shares of the Departments, Districts and Municipalities, in accordance with the competences which it assigns to each of these entities; it shall contain the provisions necessary for the implementation of the General System of Shares, incorporating principles of distribution which take into account the following criteria:
- In the sectors of education, health, drinking water and basic sanitation: the population that has been taken care of and the population that shall be taken care of, the distribution of the urban and rural population, administrative and fiscal efficiency, and equity. In the distribution per territorial unit of each of the constituent entities of the General System of Shares, priority shall be given to factors which favor the poor, in the terms established by statute;
- In other sectors: population, the distribution of the urban and rural population, administrative and fiscal efficiency, and relative poverty.
Competences may not be decentralized without the previous allocation of sufficient fiscal resources for their discharge.
The distribution of the resources of the General System of Shares of the Departments, Districts and Municipalities shall take place by sectors defined by statute.
The amount of the resources that are assigned to the sectors of health and education may not be lower than the amount transferred to each of these sectors on the enactment of the present Legislative Act.
The city of Buenaventura is organized as Special, Industrial, Port, Biodiversity and Biotourism Districts. Its political, fiscal and administrative system shall be determined by the Constitution and special statutes enacted to this end and, insofar as the latter do not contain the required regulations, by the rules which apply to the municipalities.
The National Government shall define a strategy for monitoring, follow-up and comprehensive control with regard to the expenditure of the territorial entities with resources from the General System of Shares in order to ensure the fulfillment of the criteria for coverage and quality [of services]. This strategy must extend the space for citizen participation in respect of social control and accounting procedures.
In order to apply and fulfill the provisions of the preceding section the National Government shall, within a period not exceeding six months following the signing of this Legislative Act, adopt, among other things, the pertinent rules defining the situations in which the adequate provision of services incumbent on the territorial entities is at risk, the measures which may be taken to avoid such situations and the effective determination of the required corrective action.
Transitional Paragraph
The Government must present a bill regulating the organization and functioning of the General System of Shares of the Departments, Districts and Municipalities, on the first month of sessions of the forthcoming legislative period, at the latest.
Article 357
The amount of the General System of Shares of the Departments, Districts and Municipalities shall be increased annually by a percentage equal to the average percentage variation that the current revenues of the Nation have experienced during the four (4) preceding years, including the one corresponding to the estimate for the budget in execution.
For the purpose of calculating the variation of the current revenues of the Nation referred to in the preceding subparagraph, the taxes resulting from State of Exception measures shall be excluded, unless Congress makes them permanent in the following year.
Seventeen percent (17%) of the resources of the General System of Shares for spending purposes shall be distributed among the municipalities with a population inferior to 25.000 inhabitants. These resources shall be spent exclusively on investment, in accordance with the competences assigned by statute. The distribution of these resources shall be based on the same criteria of population size and poverty as defined by the Act on the Shares for General Purposes.
The municipalities classified in the fourth, fifth and sixth categories in accordance with the rules in force may freely spend up to forty-two percent (42%) of the resources they receive from the General System of Shares for General Purposes for investment and other expenses inherent in the functioning of the municipal administration, with the exception of the resources distributed in accordance with the preceding section.
When a territorial entity achieves universal coverage and meets the quality standards established by the competent authorities in the sectors of education, health, and/or public services concerning drinking water and basic sanitation in the home, according to certification by the competent national entity, it may spend the surplus resources on investment in other sectors within its competence. The National Government shall regulate the matter.
Transitional Paragraph 1
The amount of the General System of Shares, GSS, of the Departments, Districts and Municipalities shall increase by taking as its base the amount dished out during its previous period of application. During the years 2008 and 2009 the GSS shall increase at a rate equal to the inflation rate, with an additional increase in real terms of 4%. During the year 2010, the increase shall equal the inflation rate, with an additional increase in real terms of 3.5%. Between the year 2011 and the year 2016 the increase shall equal the inflation rate, with an additional increase in real terms of 3%.
Transitional Paragraph 2
If the rate of real growth of the economy (Gross Domestic Product, GDP) certified by DANE for the respective year is superior to 4%, the increase of the GSS shall equal the inflation rate, with an additional increase in real terms as indicated in the Transitional Paragraph 1 of the present Article, plus the difference in percentage points which results from a comparison of the real growth of the economy certified by DANE and the 4%. These additional resources shall be spent on comprehensive care for small children. The increase of the GSS resulting from higher economic growth which is the object of the present section shall not constitute the basis for the funding of the GSS in subsequent years.
Transitional Paragraph 3
The General System of Shares, GSS, shall receive an increase in funding in addition to the increases referred to in the preceding transitional paragraphs with regard to the education sector. This additional increase shall take place in the following stages: in the years 2008 and 2009, it shall equal one point three percent (1.3%), in the year 2010 one point six percent (1.6%), and during the years 2011 to 2016 one point eight percent (1.8%). In each of these years, the additional increase shall not constitute the basis for the funding of the System in the subsequent period of application. The resources shall be spent on coverage and quality.
Transitional Paragraph 4
The National Government shall define a number of criteria and transitional arrangements in the application of the results of the last census with the objective of avoiding negative effects resulting from the variations in the census data on the distribution in the General System of Shares. The System shall direct the necessary resources in such a way as to avoid under all circumstances a reduction in the level of funding which the territorial entities currently receive for reason of diminishing population size.
Article 358
For the consequences contemplated in the two above articles, current revenues are to be understood as those constituted by tax and nontax revenues with the exception of capital revenues.
Article 359
No national revenues shall be specifically earmarked. Excepted are the following:
- The shares provided in the Constitution for the benefit of Departments, Districts, and Municipalities.
- Those earmarked for social investment.
- Those which, based on the earlier laws, the nation assigns to social forecasting entities and the former intendencies and police districts.
Article 360
The exploitation of a non-renewable natural resource shall give rise to an economic offset in the form of concession fees (regalía) for the benefit of the State, without prejudice to any other right or compensation which might be agreed upon. An Act shall determine the conditions for the exploitation of non-renewable natural resources.
Upon the initiative of the Government, a separate Act shall determine the distribution, objectives, purposes, administration, collection, control, efficient use and destination of the revenues resulting from the exploitation of non-renewable natural resources, laying down the conditions for participation of their beneficiaries. The totality of revenues, assignments, organs, procedures and regulations shall constitute the General System of Concession Fees (Sistema General de Regalías).
Article 361
The revenues from the General System of Concession Fees shall be used for the financing of projects for the social, economic and ecological development of the territorial entities; for savings to meet their pension obligations; for material investments in education and investments in science, technology and innovation; for generating public savings; for the control of the exploration and exploitation of deposits and the study and geological mapping of the subsoil; and for increasing the general competitiveness of the economy in the attempt to improve the social conditions of the population.
The departments, municipalities and districts in whose territory the exploitation of non-renewable natural resources takes place, as well as the municipalities and districts with sea and river ports through which these resources, or products derived from them, are transported, shall have the right to receive a share of the concession fees and compensations, as well as the right to directly use these resources.
For the purpose of fulfilling the objectives and ends of the General System of Concession Fees, a Science, Technology and Innovation Fund, a Development Fund, a Regional Compensation Fund and a Savings and Stabilization Fund shall be created.
The revenues from the General System of Concession Fees shall be distributed as follows: a percentage equivalent to 10% [of the total revenue] [shall go] to the Science, Technology and Innovation Fund; 10% [shall go] to the regional pension savings [funds], and up to 30% to the Savings and Stabilization Fund. The remaining resources shall be distributed in a percentage of 20% to the direct transfers referred to in section 2 of this Article, and in a percentage of 80% to the Regional Compensation and Regional Development Funds. Of the total resources assigned to the two latter Funds, a percentage equivalent to 60% shall be assigned to the Regional Compensation Fund and a percentage of 40% to the Regional Development Fund.
Of the revenues from the General System of Concession Fees, a percentage of 2% shall be assigned to the control of the exploration and exploitation of deposits and the study and geological mapping of the subsoil. This percentage shall be deducted in a proportional manner from the total revenue of the General System of Concession Fees distributed in the preceding section. The functions established here shall be carried out by the Ministry of Mining and Energy or the entity to which the latter delegates them.
The sum of the resources corresponding to the direct transfers referred to in section 2 of this Article, and the resources of the Regional Development Fund and the Regional Compensation Fund shall increase annually by a rate corresponding to half of the growth rate of the total revenue of the General System of Concession Fees. The Act which shall regulate the system shall define a mechanism for mitigating the decrease of the aforementioned resources resulting from a drastic reduction of the revenues of the General System of Concession Fees.
The difference between the total revenue from the General System of Concession Fees and the resources assigned to the regional pensions savings, the Science, Technology and Innovation Fund, the Regional Development Fund, the Regional Compensation Fund and those referred to in section 2 of this Article shall be assigned to the Savings and Stabilization Fund.
The Science, Technology and Innovation Fund and the Regional Development Fund shall have the purpose of financing regional projects which have been agreed between the territorial entities and the National Government.
The resources of the Regional Compensation Fund shall be assigned to the financing of development projects of regional or local impact in the poorest territorial entities, in accordance with the criteria for Basic Unsatisfied Needs (Necesidades Básicas Insatisfechas—NBI), population and unemployment, and with priority for coastal and border zones and the regions on the periphery. The lifetime of the Regional Compensation Fund shall be thirty (30) years, starting with the entry into force of the Act referred to in section 2 of the preceding Article. After this period has ended, the resources shall be assigned to the Regional Development Fund.
The resources of the Savings and Stabilization Fund, as well as its earnings, shall be managed by the Bank of the Republic in the terms established by the National Government. In periods of negative savings, the distribution of these resources among the other components of the System shall be governed by the criteria defined by the Act to which section 2 of the preceding Article refers.
In case the resources assigned annually to the Savings and Stabilization Fund exceed thirty percent (30%) of the annual revenue from the General System of Concession Fees, the surplus shall be distributed among the other components of the System, in conformity with the terms and conditions defined by the Act to which section 2 of the preceding Article refers.
Paragraph 1
The resources of the General System of Concession Fees shall not form part of the General Budget of the Nation, nor of the General System of Shares. The General System of Concession Fees shall have its own budgetary system which shall be governed by the provisions contained in the Act to which section 2 of the preceding Article refers. In any case the Congress of the Republic shall adopt the budget of the General System of Concession Fees every two years.
Paragraph 2
The use of the resources corresponding to the direct transfers referred to by section 2 of this Article, as well as of the resources of the Science, Technology and Innovation Fund, the Regional Development Fund, and the Regional Compensation Fund, shall take place in accordance with the National Development Plan and the development plans of the territorial entities.
The priority projects which are funded with these resources shall be defined by collegiate administrative and decision-making organs, in conformity with the provisions of the Act which regulates the General System of Concession Fees. In the case of the departments referred to in section 2 of this Article, the collegiate administrative and decision-making organs shall be composed of two (2) ministers or their representatives, the respective governor or his/her representative, and a representative number of mayors. The Act which regulates the General System of Concession Fees may establish committees of a consultative character for the collegiate administrative and decision-making bodies, with participation of the civil society. With regard to the municipalities and districts referred to in section 2 of this Article, the collegiate administrative and decision-making organs shall be composed by a representative of the National Government, the governor or his/her representative, and the mayor.
The programs and/or projects in technological science and innovation of the departments, municipalities and districts which are be funded with the resources of the Science, Technology and Innovation Fund shall be defined by a collegiate administrative and decision-making organ on which the National Government, represented by three (3) ministers or their representatives, one representative of the National Planning Body and a representative of the national body charged with the management of public policies in science, technology and innovation, which in addition shall discharge the functions of the technical secretariat, a governor for each of the regional planning authorities to which the following section of this article refers, four (4) representatives of the public universities and two (2) representatives of the private universities shall have seats. Moreover, the resources of the Science, Technology and Innovation Fund shall be distributed in the same proportional manner as the resources of the Regional Compensation Fund and the Regional Development Fund are distributed to the departments. In no case may resources of this Fund finance current expenditure.
The projects of regional impact of the departments, municipalities and districts which are funded with the resources from the Regional Development and Compensation Funds shall be defined through regional planning processes by collegiate administrative and decision-making organs on which four (4) ministers or their representatives, one representative of the National Planning Body, the respective governors or their representatives and a representative number of mayors shall have seats.
The Act which regulates the General System of Concession Fees may establish committees of a consultative character for the collegiate administrative and decision-making bodies, with participation of the civil society.
In any case the territorial entities shall enjoy majority representation in relation to the National Government in the collegiate organs.
Paragraph 3
A System of Monitoring, Follow-Up, Control and Evaluation shall be created for the General System of Concession Fees, which shall have as its object the supervision of the efficient and effective use of the resources of the General System of Concession Fees, thereby strengthening transparency, citizen participation and good government.
The Act referred to in section 2 of the preceding Article shall define its functioning and the procedure for the imposition of preventive and corrective measures and sanctions for the improper use of the resources of the General System of Concession Fees. These measures which may be applied to the departments, municipalities and/or districts and other executing agencies may include the suspension of transfers, the cancelation of projects and/or the restitution of resources.
The Act referred to in section 2 of the preceding Article shall also define the annual percentage of the resources of the General System of Concession Fees which is assigned to the functioning of the System of Monitoring, Follow-Up, Control and Evaluation of the Concession Fees. This percentage shall be deducted in a proportional form from the total revenues of the General System of Concession Fees distributed in the fourth section of this Article.
Transitional Paragraph 1
The National Concession Fees Fund shall be abolished from the date determined by the Act referred to in section 2 of the preceding Article. The National Government shall appoint the liquidator and shall determine the procedure and time limit for the liquidation. The resources of the National Endowment Fund which have not been used on the date of entry into force of this Legislative Act shall be assigned as a matter of priority to the reconstruction of the road infrastructure of the country and to the ecological recovery of the regions affected by the winter emergency of 2010-2011.
Transitional Paragraph 2
With regard to the resources which shall be assigned to the direct transfers referred to in section 2 of this Article and to the Regional Compensation and Regional Development Funds, their distribution shall be as follows during the first three years: during the first year a percentage of 50% shall accrue to the direct transfers referred to in section 2 of this Article and 50% to the funds referred to in this paragraph; in the same way, a percentage of 35% and of 65%, respectively, shall be assigned to these ends in the second year; and during the third year, a percentage of 25% and 75%, respectively.
If during the period between 2012 and 2014 the direct transfers referred to in section 2 of this Article are inferior to 50% of the annual average, in constant pesos of 2010, of the direct transfers which have been made, minus deductions imposed by statute, between 2007 and 2010; and during the period between 2015 and 2020 are inferior to 40% of the direct transfers which have been made, minus deductions imposed by statute, between 2007 and 2010, the department, municipality or district may use the resources assigned to the respective department in the Regional Development Fund up to the previously mentioned percentage or until the resources of the department in the said Fund are exhausted, whichever occurs first.
Transitional Paragraph 3
In the first year of the operation of the General System of Concession Fees twenty-five percent (25%) of its resources shall be assigned to the Sings and Stabilization Fund.
During the period 2012-2014, one-fifth of the annual resources of the Savings and Stabilization Fund shall be assigned to the direct transfers referred to in section 2 of this Article.
Transitional Paragraph 4
The National Government shall have a period of three (3) months following the promulgation of this legislative act for initiating before the Congress of the Republic the bill referred to in section 2 of the preceding Article, which adjusts the regime of concession fees to the new constitutional framework.
Once the bill referred to in the previous section has been presented, the Congress of the Republic shall have a period not exceeding nine (9) months for its approval. If the Act has not been adopted by Congress at the end of this period, the President of the Republic shall be authorized to regulate the matter by decrees having the force of law during one (1) month.
Transitional Paragraph 5
The General System of Concession Fees shall apply from January 10, 2012. If on this date the Act referred to in section 2 of the preceding Article has not entered into force, the National Government shall guarantee the operation of the System by transition decrees with the force of law, which it shall adopt on December 31, 2011 at the latest.
Transitional Paragraph 6
In order to ensure the effective distribution of the resources in the fiscal year 2012, the National Government shall adopt the budget of the General System of Concession Fees for the aforementioned fiscal year by way of a decree with the force of law.
Article 362
The assets and revenues originating from taxes or other sources relating to the exploitation of monopolies of the territorial entities are their exclusive property and enjoy the same guaranties as the property and income of individuals.
Departmental and municipal taxes enjoy constitutional protection and, consequently, an Act may not transfer them to the nation, except temporarily in the case of a foreign war.
Article 363
The tax system is based on the principles of equity, efficiency, and progressivity.
The tax laws shall not be applied retroactively.
Article 364
The domestic and foreign indebtedness of the nation and the territorial entities may not exceed their capacity for repayment. An Act shall regulate this matter.
Chapter V. On the Social Purpose of the State and of the Public Services
Article 365
The public services are inherent in the social purpose of the State. It is the duty of the State to insure the efficient provision thereof to all the inhabitants of the national territory.
The public services shall be subjected to the juridical regime determined by an Act, may be provided by the State directly or indirectly, by organized communities, or by individuals. In any case, the state shall maintain the regulation, control, and application of said services. If, for reasons of sovereignty or social interest, the State, by means of an Act approved by the majority of the members of both Houses upon the initiative of the Government, should decide to earmark for itself specific strategic or public service activities, it must indemnify, beforehand and fully, those individuals who by virtue of the said law are deprived of the exercise of a lawful activity.
Article 366
The general well-being and improvement of the population’s quality of life are social purposes of the State. A basic objective of their activity shall be to address the unfulfilled public health, educational, environmental, and drinking water needs of those affected.
For such an outcome, in the plans and budgets of the nation and of the territorial entities, public social expenditures shall have priority over any other allocation.
Article 367
An Act shall determine the relative jurisdictions and responsibilities for the provision of domestic public services, their coverage, quality, and financing, and the schedule of rates taken into account in addition to the cost criteria, those of solidarity, and of redistribution of revenues.
Home public services shall be provided directly by each municipality when the technical and economic characteristics of the service and the general benefits permit them and make them advisable, and the departments shall execute functions of support and coordination.
An Act shall determine the competent entities that shall determine rates.
Article 368
The nation, departments, districts, municipalities, and decentralized entities may grant subsidies in their respective budgets so that individuals with lower incomes may pay the rates of home public services that cover their basic necessities.
Article 369
An Act shall determine the duties and rights of users, the regime of their protection, and their forms of participation in the management and funding of the State enterprises that provide the service. Similarly, an Act shall define the participation of the municipalities or their representatives in the entities and enterprises that provide the home public services.
Article 370
It is the responsibility of the President of the Republic to stipulate, subject to the relevant statute, the general policies of administration and efficiency control of the home public services and to exercise through the Office of the Superintendent of Home Public Services the control, inspection, and oversight of the entities that provide them.
Chapter VI. On the Central Bank
Article 371
The Bank of the Republic shall exercise the functions of a central bank. It shall be organized as a legal public entity with administrative, patrimonial, and technical autonomy, subject to its own legal regime.
The following shall be the basic functions of the Bank of the Republic: to regulate the money supply, international exchanges, and credit; to issue legal tender; to administer the international reserves; to be the lender of last resort and banker of the credit institutions; and to serve as the government’s fiscal agent. All these functions shall be exercised in coordination with the general economic policy.
The Bank shall give a report to Congress on the execution of the policies for which it is responsible and on other matters requested from it.
Article 372
The executive board of the Bank of the Republic shall be the monetary, exchange, and credit authority, in accordance with the functions assigned to it by statute. It shall be responsible for managing and executing the functions of the Bank and shall be made up of seven members, among them the Minister of Finance, who shall chair it. The Director of the Bank shall be elected by the executive board and shall be one of its members. The five other members, who can hold no other employment, shall be appointed by the President of the Republic for renewable terms of four years, replacing two of the members every four years. The members of the executive board shall represent the interest of the nation exclusively.
The Congress shall adopt an Act which shall regulate the Bank of the Republic for the exercise of its functions and the regulations under which the government shall issue the statutes of the Bank. These shall determine, among other things, the form of its organization, its legal regime, the functioning of its executive board and its board of directors, the term of the director, the rules for the constitution of its reserves, among them, those of exchange and monetary stabilization, and the future application of its earnings.
The President of the Republic shall perform the inspection, oversight, and control of the Bank within the terms stipulated by statute.
Article 373
The State, through the intermediary of the Bank of the Republic, shall oversee the maintenance of the purchasing power of the currency. The Bank may not establish credit quotas or give guaranties for the benefit of individuals except when the intermediation of foreign credit is involved for its distribution through the credit institutions or of temporary support of said liquidity. Financing operations for the benefit of the state shall mandate the unanimous approval of the executive board unless open market operations are involved. In no case may the legislature mandate credit quotas for the benefit of the State or individuals.
