Introduction to the budget process

Transcription

1 Mobilisation and Oversight of Resources for Development Introduction to the budget process Key aspects of effective public finance management Introduction to the budget cycle Entry points for parliamentary engagement in the budget process Introduction to the budget process

2 Functional Public Finance Management The framework for control exist Deficits, debts, cash, and obligations are known There is a budget that covers revenues and expenditures Budgets are formulated regularly and calendar is adhered to The budget is credible and real Difference between expenditure outturns and the budget is small Difference between tax obligations and actually collected taxes is small. Money reaches spending units in a predictable and timely manner. Salaries are paid, and paid on time. Obligations to contractors are met in line with established procedures. Introduction to the budget process 2

3 Functional Public Finance Management, cnt The budget is contestable Budgetary transactions are accurately recorded in a manner that allows meaningful analysis and comparison over time. Budgetary data are made available to information-users in a timely fashion in accordance with established procedures Introduction to the budget process 2

4 Legislative performance in PFM One scenario is for the legislature to reinforce fiscal discipline by taking responsibility for the budget s totals. Another (scenario) is for the legislature to undermine discipline by bombarding the budget submitted by the government with legislative amendments that trim revenues or boost expenditures. Prof. Allen Schick Legislatures play a key role in the budget process working transparently, openly and accountably. CABRI, GFG Status Report We (SA) publish with the lag of about a month the actual expenditure in the GG empowering Parliament to enquire into expenditure trends,, Parliament has never taken that up. Minister Trevor Manuel Introduction to the budget process 3

5 General overview Progress made in legislature involvement in budget process, but great variation across Africa and SADC region in nature and effect. Malawi no changes to budget, but can approve or reject SA procedure now in place to amend the budget Limitations on overspending Lesotho, Malawi, Mauritius, Zimbabwe, Botswana, Madagascar, Namibia, SA, and Swaziland Mozambique and Namibia unlimited amendment powers Introduction to the budget process 4

6 Entry points into the budget process Budget Formulation Executive to supply credible, comprehensive and timely information and provide meaningful access Budget Oversight Audit findings are viewed by the legsilature, which requires action to be taken by the executive to correct audit findings. Key documents: Legislative audit commitee reports Budget Approval The legislature reviews and amends the budget and then enacts it into law. Key documents: Budget Law, Reports of legislative budget committees Budget Execution Legislature to demand a voice in budget making and implementation Introduction to the budget process 5

7 New roles for legislature Improved information flows from executive New budget committees Building independent capacity Utilising powers to amend; questioning executive decisions on funding Channeling discontent with fiscal decisions Introduction to the budget process 6

8 With great power, comes greater responsibility Need to balance right to approve, with oversight, with sound management of public finances Weak powers lead to weak legislatures, poor accountability and break-down of rule of law in public finance Unfettered powers may tip balance towards padding budgets Ex post accountability arrangements insufficient No bite, legitimacy and voice of parliament Too little too late Greater role means that legislature must either be involved in government budgeting process, or formulate own budget Trade-offs between involvement in different stages of budget process Introduction to the budget process 7

9 Opportunities for greater Parliamentary scrutiny the MTEF An MTEF is a medium-term (3-year) expenditure plan that balances what is affordable against policy priorities of a government. Less flexibility to make changes in appropriation year 2013 MTEF MTEF Next year s appropriation that has been influenced by legislature Two outer-years offer greater opportunities for engagement and changes 2014 baseline baseline also provides legislature with a further horizon of the spending plans of the executive Introduction to the budget process 8

10 Recap Quality of financial governance in Africa is undermined by weak legislative participation in the budget enactment and oversight phase; Weak oversight allows informal systems to persist and effects fiscal discipline, budget credibility, quality of spending and service delivery; Priority for good financial governance in Africa is to build sound legislative institutions, processes and capacity for budget oversight; The MTEF is an invaluable tool for the legislature to exercise it s oversight function; Timely, reliable, and comprehensive budget information is essential for the legislature. Introduction to the budget process 9

11 Additional Slides Introduction to the budget process 12

12 Status of legislature involvement Assessment of select SADC countries Public Expenditure and Financial Accountability (PEFA). Publicly available data for 2010, 2011 or Time allowed for legislature to respond to budget proposals Tabling of Budget 3 months Legislatures response Botswana Lesotho Mauritius Mozambique Seychelles Swaziland Tanzania B A B A D B B Introduction to the budget process 13

13 Status of legislature involvement, cont. Assessment of select SADC countries Public Expenditure and Financial Accountability (PEFA). Publicly available date for 2010, 2011 or Extent of hearings on audit findings undertaken by legislature Botswana Lesotho Mauritius Mozambique Seychelles Swaziland Tanzania A A A C A A B Introduction to the budget process 14

14 Status of legislature involvement, cont. Assessment of select SADC countries Public Expenditure and Financial Accountability (PEFA). Publicly available date for 2010, 2011 or Issuance of recommended actions by legislature and implemented by Executive Botswana Lesotho Mauritius Mozambique Seychelles Swaziland Tanzania A C D B D B C Introduction to the budget process 15

15 Overall performance Time Extent Issuance A B C D Botswana Lesotho Mauritius Mozambique Swaziland Seychelles Tanzania Introduction to the budget process 16