Upload
roy-shields
View
238
Download
1
Tags:
Embed Size (px)
Citation preview
Module 1.2 Introduction to the Budget Cycle
INTRODUCTION TO PUBLIC FINANCE MANAGEMENT
Module map
Module outline
The six phases of the budget Cycle
3
4
Six Phases of the Budget Cycle
Review Policy Budget Execution
Accounting and reporting
Strategic Planning External Audit
Budget Preparation
5
Translation of the medium-term economic and social policies into a medium-term programme of actions, taking into account available resources
Phase 1. Strategic Planning
Macro-economic forecasting
Development of sector strategies
Setting priorities within fiscal constraint
Costing / fiscal impact assessments
Set macro-fiscal policy
Determining expenditure ceilings
National Development Plan
fiscal side policy side
6
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
7
Phase 2: budget preparation
I. Determine budgetary ceiling
Min
istry o
f F
in
an
ce
L
in
e m
in
istri
es
V. Submit to Parliament for authorisation
II. Send budget circular
III. Submit bid
IV. Negotiations
Parliament
Cabinet
8
Phase 3. Budget execution
Revenue collection
• Taxes (direct/indirect)
• Excises
• Duties
• Non-tax revenues
• Donor funding
Expenditures
•Control
•Payroll
• Procurement of goods/services
• Transfers / subsidies
Liquidity management
• Short term (cash management)
• Medium / long term (debt management)
Aim: achieve policy goals
9
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
10
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
11
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)
12
l
Phase 5. External Audit
Supreme Audit Institution (SAI) • National institution responsible for
external auditing of government’s annual financial report
Key feature• Independence from executive and
legislative authorities by Constitution
13
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)
14
t t+1 t+2
Fiscal
Year:
t-2 t-1
Budget
T-1
Reporting & Audit
Policy Review
Budget Execution
Account. & Mon.
Strat. Planning
& Budget Prep.
Budget
T+1
Reporting & Audit
Policy Review
Budget Execution
Account. & Mon.
Strat. Planning
& Budget Prep.
Budget
T
Reporting & Audit
Policy Review
Budget Execution
Account. & Mon.
Strat. Planning
& Budget Prep.
Budget Cycle Exercise
• Groups should each clear a complete Table top,
ready for working
• Take all cards
• Lay out in three columns:
• Do stages first, then tasks, then stakeholders
• Be sure to put tasks in correct order
• Time: 30 min
Stages Tasks Stakeholders