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Budget Management and Financial Accountability: Overview

Budget Management and Financial Accountability: Overview. Parminder Brar, OPCSFM Bill Dorotinsky, PRMPS Budget Management Course March 1-2, 2004. Outline. The challenge of budget management. Budget management cycle. Why is budget management important? Key challenges:

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Budget Management and Financial Accountability: Overview

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  1. Budget Management and Financial Accountability:Overview Parminder Brar, OPCSFM Bill Dorotinsky, PRMPS Budget Management Course March 1-2, 2004

  2. Outline • The challenge of budget management. • Budget management cycle. • Why is budget management important? • Key challenges: • How to monitor progress for systemic improvements and budgetary outcomes? • How to better support budgetary reform in client countries? What is the new approach? • Can budget reform be achieved without a wider reform program? • What impact will decentralization have on budget management? • Organization of the course

  3. The challenge of budget management. • Budgeting is a highly political process • Budget reform is extremely challenging –“Tragedy of the Commons”. • Success has been much more modest than expected. • Institutional incentives are key to budget reform. • The principal-agent problem distorts budgetary outcomes. • Budget is NOT an accounting document • What are the incentives for compliance or non compliance? • What are the lessons we can learn?

  4. Budget management cycle Project Resource Annual budgets: Medium term appraisal allocation Development, Planning plans, e.g. three Recurrent and system year rolling plans Revenue Expenditure Liquidity review management Public expenditure Institutional Politics and Power Sharing review Fund release procedure, e.g... warranting Accountability Expenditure control Project monitoring Audit system Post event Accounting for Monitoring review revenue and & controlling expenditure Reports and financial statements What are the main impediments to reform and what can be done to address them?

  5. Why is budget management important? • Budget Management systems are weak in client countries. • The MDG’s cannot be achieved unless budget systems improve.

  6. Government PFM Reform Strategy, Action Plan and Results Diagnostics Government / DonorPolicy Dialogue Coordinated program of capacity building work Performance indicators New approach to support reform Donor country Assistance Strategy

  7. Organization of the course • What can we do in the short term to improve systems in client countries? • What is the new approach to supporting country reform strategies? • Why has been our experience with reform of Treasury Systems? • What can be done to strengthen internal and external controls? • Will decentralization improve budget management? • How can transparency and accountability be improved? • What are the links between budget management, governance and impact? • Time for questions and discussion • Evaluation

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