Transcript Slide 1
INTRODUCTION TO PUBLIC FINANCE MANAGEMENT Module 1.2 Introduction to the Budget Cycle Module map 1.1 Introduction 2.1 Macroeconomics of the Budget 1.2 Budget Cycle Planning and budgeting 1.3 The Budget and budget preparation 2.2 MTEF and performance budgeting 1.4 Budget Classification 3.1 Payroll, Procurement & IT 4.2 Treasury Management 2.4 Budget Execution 5.1 External Scrutiny & Oversight 4.1 Revenue Administration 3.2 Internal Control & Audit 4.3 Accounting & Reporting 5.3 Assessing & Recapitulation Module outline The six phases of the budget Cycle 3 Six Phases of the Budget Cycle Budget Execution Review Policy Strategic Planning Budget Preparation External Audit Accounting and reporting 4 Phase 1. Strategic Planning Translation of the medium-term economic and social policies into a medium-term programme of actions, taking into account available resources Macro-economic forecasting National Development Plan Set macro-fiscal policy Development of sector strategies Determining expenditure ceilings Costing / fiscal impact assessments Setting priorities within fiscal constraint policy side fiscal side 5 Phase 2. Budget Preparation • Budget preparation deals with the annual translation of strategic plans into the budget • Responsibilities in budget preparation process are set out in a legal framework: constitution, organic budget law, financial decrees and regulations • Approved budget is a law: deviations (virements, supplementary budgets) need to be approved 6 Phase 2: budget preparation Cabinet II. Send budget circular III. Submit bid IV. Negotiations V. Submit to Parliament for authorisation Parliament 7 Line ministries Ministry of Finance I. Determine budgetary ceiling Phase 3. Budget execution Aim: achieve policy goals Expenditures •Control •Payroll • Procurement of goods/services • Transfers / subsidies Revenue collection • Taxes (direct/indirect) • Excises • Duties • Non-tax revenues • Donor funding Liquidity management • Short term (cash management) • Medium / long term (debt8 management) Phase 3: budget execution Control Authorisation by MoF or Fin. Dept. of LM Commitment to future payment Verification of delivery by spending dept: liability Payment Authorisation by MoF or Fin. Dept. Cash Payment by Treasury or LM 9 Phase 4. Accounting and Reporting Accounting: maintaining basic records of government transactions and, thus, outturn expenditures Aim: monitor and control legal compliance with budget authorisations Chart of Accounts (CoA): coding framework for financial transactions Data: commitments and/or payments 10 Phase 4: Accounting and Reporting Financial reporting • In-year reporting – related to budget execution • End of year report: Annual Financial Statement • Revenues and expenditures • Balance sheet (assets and liabilities) 11 Phase 5. External Audit Supreme Audit Institution (SAI) • National institution responsible for external auditing of government’s l annual financial report Key feature • Independence from executive and legislative authorities by Constitution 12 6. Policy Review • Assessment of actual versus desired government policy outcomes • Ex-post analysis of impact of government policy programs • Adaptations of strategic policy mix based on outcomes of government policy effectiveness and efficiency in service delivery • Should be an integrated phase of budget cycle • No common practice in developing countries • Carried out on an ad hoc basis • Frequently initiated by donor community (PER, PETS) 13 Fiscal Year: Budget Strat. Planning T-1 & Budget Prep. Budget Execution Reporting & Audit Account. & Mon. Policy Review Budget Strat. Planning Budget Execution Reporting & Audit T & Budget Prep. Account. & Mon. Budget Strat. Planning T+1 & Budget Prep. t-2 t-1 t 14 Policy Review Budget Execution Reporting & Audit Account. & Mon. t+1 Policy Review t+2 Budget Cycle Exercise • Groups should each clear a complete Table top, ready for working • Take all cards • Lay out in three columns: Stages Tasks Stakeholders • Do stages first, then tasks, then stakeholders • Be sure to put tasks in correct order • Time: 30 min