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Budget Execution: Overview

Budget Execution: Overview. Bill Dorotinsky, PRMPS Budget Execution Course November 3, 2003. Outline. What is budget execution? Expenditure Management Cycle What are the objectives? Why is budget execution important? Organization of the course. What is budget execution?.

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Budget Execution: Overview

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  1. Budget Execution:Overview Bill Dorotinsky, PRMPS Budget Execution Course November 3, 2003

  2. Outline • What is budget execution? • Expenditure Management Cycle • What are the objectives? • Why is budget execution important? • Organization of the course

  3. What is budget execution? Definition: Processes and institutions to • implement the budget • manage resources, assets (and policies) • report on resource use • audit reports and resource use Fundamentally concerned with • Compliance – processes, rules, policies • Incentives – principle-agent problem • Outcomes – financial, programmatic Reflects that budget is NOT only an accounting document • also a political document • potentially, a planning/steering device

  4. Expenditure Management Cycle Financial management system boundaries Project Resource Annual budgets Medium term appraisal allocation Development, Planning plans, e.g. three recurrent and system year rolling plans revenue Expenditure Liquidity management review Public expenditure Institutions review Fund release procedure, e.g... warranting Accountability Expenditure Project monitoring control Audit system Post event Accounting for Monitoring review revenue and & controlling expenditure Reports and financial statements Source: Adapted from Integrated Financial Management.Michael Parry, International Management Consultants Limited.Training Workshop on Government Budgeting in Developing Countries. THE UNITED NATIONS. December 1997.

  5. Objectives of budget execution • Manage Spending and Revenues to budget • support choices of elected officials • allow budget to be planning and steering tool • promote macrofiscal discipline • Reduce opportunities for corruption • Enable program implementation (service delivery) • Assure resources flow to programs • allow budget to be aid to operational efficiency through spending unit advance planning, efficient administration • enable program managers to achieve objective

  6. Credibility of the Honduran Budget – In-year Deviations by Agency (percent of the executed over the approved budget) Why is budget execution important?

  7. Why else important? • Every country spends money; • done well or poorly, it is an existing set of institutions in countries upon which to build reform • Important role in anti-corruption • Critical for direct budget support

  8. Five PEM Principles • Comprehensiveness – include all revenue and expenditure, and all government agencies • Accuracy – record actual transactions and flows • Annuality – cover a defined period of time (e.g. one year) • Authoritativeness – only spend as authorized by law • Transparency – information on spending should be publicly available, on a timely basis, in an understandable or common format

  9. Organization of the course • Topic versus chronology • Institutions and terms • Incentives and dynamics • Time for questions and discussion • Case study • Course Evaluation – please fill-out as we go along

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