The Performance Dimensions in Budget > How to achieve predictability and control in budget execution?

Tips for Improved Budget Execution??

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Geoff:
This forum looks like a fantastic idea - I am also really pleased to see that the 'Partners' are a really strong and experinced group with lots of practical experience. I hope we can get some dialogue going on what is for me the single most important aspect of PFM in any low income setting (especially post-conflict), that of improving budget execution.

I suspect the reason no-one has posted on this so far is not because they don't regard it as important, but more that very few people have any real practical and successful experience of improving it in-country over a sustained period. All the strategically prioritised, programme-based, policy-based, MTEF integrated, macro-fiscal framework reconciled budgets in the world will amount to nothing if the appropriations go out of the window when it comes to budget execution. The cross-country PEFA scores (notwithstanding the Secretariat's aversion to using them in this way) consistently indicate that de jure upstream reforms are much easier to introduce and make 'stick' than any real de facto improvement in budget execution, which consistently lags far behind (with rather depressing implications of the for the role of the PFM industry in the developing world).

In extremely low capacity, low income settings, with centralised payments and intense political pressure on the Treasury to deviate from budget execution procedures (and hence extremely limited technical space), what mechanisms have been found to work to improve things? These are likely to be small local procedural innovations that encourage the formalisation of processes and hence empower more 'progressive' officials and limit the channels for informal/political access (and hence probably highly context specific)... but maybe not.

Suggestions most welcome, ideally from those with a few years of practical experience working inside MoFs in such settings!?

Napodano:
Greybeard,

the topic is indeed interesting and relevant for countries just starting PFM reform.

Here some thoughts from my side

* budget execution regulations:MoF regulations on how to implement the budget are useful to set limitations for in-year reallocation of resources (attached find the Albanian MOF instruction on this matter). Politicians may find more difficult to bend written rules. 
* Parliamentary oversight: the oversight role of finance committees should be promoted; increasing their analytical capacity is often a priority overlooked by donors. Check the TN in the IMF blog  http://blog-pfm.imf.org/files/fad-technical-manual-9.pdf 
* Civil society scrutiny: here we are talking of involvement of CSOs in both participatory budget preparation and monitoring public expenditures. In some countries Sector Advisory Groups are vehicles to establish a dialogue between the Government and civil society on public finances.

atseacliff:
You will probably find the recent IMF blog on Fiscal Responsibility Laws of interest.

http://blog-pfm.imf.org/pfmblog/2010/04/from-soccer-to-fiscal-responsibility-laws-brazils-impact-on-the-maldives.html

Although FRL's pre-requisites are likely to rule out the low capacity countries you will find much in the bloggers PPT presentation (attached to the blog) that will resonate.  Generally addressing specific narrow and short term objectives related to the execution of the budget  (e.g. failure to follow the budget calendar, budget arrears)  are likely to be  fruitful areas to focus attention on. Building external oversight and civil society capacity institutions are important but decidedly longer term priorities.

John Short:
One of the reasons the appropriations go out of the window when it comes to budget execution is that planning and budget preparation can be woeful.  Many budget departments in MoFs are really budget  transfer agencies - after-the-event budgeting where the political process takes over and prioritisation is based on power and not policy!. 

Without good budgeting based on planning and policy, and honest estimation of likely resources, good budget execution cannot really take place as it becomes a case of rubbish in rubbish out.  Yes, budget execution is fundamental, but so too is budget formulation.  The focus on control - ensuring that allocated funds are not misappropriated - has often ensured that a balanced approach to PFM reform  is not undertaken.  It would be interesting to get people's experiences of sequencing and if sometimes the cart is put before the horse and the reason why that has taken place.

petagny:
John makes a good point. It's not just poor expenditure planning either: shaky or politically driven revenue forecasts can produce a budget that is not deliverable. Improving revenue forecasting can therefore contribute to creating an environment in which better execution becomes at least a possibility.

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