Credible Budgets look SMART: appearance is all

[STONE]

Budget credibility in essence means that when a budget is set people believe that it will be implemented as intended. 

For a Parliament that should mean that no more than the budget will be spent, for a budget is an authority to spend up to a certain amount.  It is credible in the sense that there will be no surprises.  That might be thought of as nothing hidden.

For a spending MDA, credibility of  budget is more to do with the expectation that the budgeted funds will in fact available on time in the coming fiscal year.

One way PEFA measures credibility is to look at past out-turns implying that if budget out-turns have been close to budget in the past they are likely to be so in the future.  But that suggests that if the performance in the past has been poor then the next budget will be 'incredible'.

The issue is richer than that and PEFA seeks to capture whether the budget will be spent for the intended purpose and so looks at the extent of in-year transfers between components of the budgets - ministries, programmes and the like.  Again looking at the past.  It seems that for credibility reputation is all.

This is a problem for PFM improvement.  Persuading MDAs to budget better is harder where last year's budget didn't materialise: what's the point of improving budgeting if you don't get the budget?

How do you assess the credibility of a budget just looking at it (not considering the past)?

There are likely to be lots of aspects to that assessment, but part of it will be an assessment of whether it will be spent for the purposes intended.  That brings up the issue of performance in terms of the service delivery that can be provided by the amounts budgeted.  This requires the budget to show what the service delivery will be and that of course should be SMART - specific measureable achievable relevant and timely.  A credible budget is a SMART budget.

There have probably been several person millennia devoted to setting out what future service delivery will be in SMART terms.  In my experience SMART is rarely seen.   I wonder what is so difficult? 

The SMARTER concept seems to help - adding Evaluated and Rewarded to SMART.  The suggestion being that if actual service delivery is compared to what was intended and that there is a reward for achievement (and a sanction for under-achievement)  there will be an incentive to get things SMART in the first place.  But that's looking ahead and doesn't deal with credibility now.

Why do project and programme managers find it so difficult to set out future service delivery in SMART terms?  Is it because SMART is in the eye of the beholder?

[harnett]

Why do project and programme managers find it so difficult to set out future service delivery in SMART terms?  Is it because SMART is in the eye of the beholder?

I think you know the answer!!!!  "Managers" want as little monitoring and evaluation as possible, especially if they are not true managers, which is the case in many countries where Heads of Departments don't really manage a budget, but implement what their superiors instruct.

Also - what is the point of government revenue/expenditure?  It started off as a means to wage war, and since the Keynesian revolution has been to promote growth and employment (oh, and by the way, try to make that as efficient as possible).  Only with the decline of Keynesian economics in the 1980s have we seen a defence of public spending on the grounds of service delivery and that aspect being highlighted.  The retention of power in many countries sees the satisfying of donors, political allies and your party's voters as a higher priority than generalised service delivery.  But maybe one day we'll get there....