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Public Expenditure Management: Budget Execution

Public Expenditure Management: Budget Execution. Bill Dorotinsky, PREM public sector group. PEAM Course March 21, 2005. Expenditure Management Cycle. Financial management system boundaries. Project. Resource. Annual budgets. Medium term. appraisal. allocation. Development,. Planning.

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Public Expenditure Management: Budget Execution

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  1. Public Expenditure Management:Budget Execution Bill Dorotinsky, PREM public sector group PEAM Course March 21, 2005

  2. 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.

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

  4. What is budget execution? • Processes and institutions to implement the budget • Incentives – principle-agent problem • Reflects that budget is NOT only an accounting document • also a political document • Planning/steering device

  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 • 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. General Phases of Execution • Phase 1: Allocation • Phase 2: Ministry Spending Plans • link actions with finances; cash flow needs • Phase 3: Commitments • Phase 4: Verification • Phase 5: Liquidation of Financial Obligation

  7. Phases of Execution Source: Integrated Financial Management.Michael Parry, International Management Consultants Limited.Training Workshop on Government Budgeting in Developing Countries. THE UNITED NATIONS. December 1997.

  8. Core Functions - internal control - program management - spending (commitments) - recording & reporting - payment orders - verification of receipt of goods/services - program/cash plans Financial Management is Everyone’s Responsibility

  9. Expenditure System External Audit Self-correcting system No scandals does not mean clean system Procurement, Personnel, Physical Asset, Contract, Performance Management

  10. Control Approaches

  11. Criteria for Assessing Budget Execution System

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