The Role of Parliament in the budget process. Overview Actors in the budget process Stages in the budget process Budgeting for the medium term.

The Role of Parliament in the budget process

Overview

Actors in the budget process

Stages in the budget process

Budgeting for the medium term

Key Actors in Budget Process

Finance ministry or treasury: Coordinate & drive budget process

Spending departments: Responsible for expenditures within their jurisdiction.

Head of State & Cabinet: Make political decisions about tradeoffs.

Legislature: Scrutinize & authorize revenues and expenditures. Supreme audit institutions: Audit government accounts for

compliance and performance. Others: Media, civil society organizations, donors & international

financial institutions.

B u d g e t t a b l e d i n t h el e g i s l a t u r e

C o n s i d e r a t i o n b yp a r l i a m e n t a r yc o m m i t t e e ( s )

P a r l i a m e n t a c c e p t s ,a m e n d s o r r e j e c t s t h eb u d g e t

F i n a n c e m i n i s t r y o rt r e a s u r y i s s u e sg u i d e l i n e s t o s p e n d i n gd e p a r t m e n t s o r a g e n c i e s

S p e n d i n g d e p a r t m e n t ss u b m i t d r a f t b u d g e t s

N e g o t i a t i o n a n d f i n a ld e c i s i o n s b y e x e c u t i v e

D r a f t i n g L e g i s l a t i v e I m p l e m e n t a t i o n A u d i t

F u n d s a p p o r t i o n e d t os p e n d i n g d e p a r t m e n t s t oi m p l e m e n t a c t i v i t i e s

F i n a n c e m i n i s t r ym o n i t o r s s p e n d i n g

R e q u e s t f o r l e g i s l a t i v ea p p r o v a l o f a d j u s t m e n tb u d g e t i f n e c e s s a r y

S u p r e m e a u d i t i n s t i t u t i o na s s e s s e s d e p a r t m e n t a la c c o u n t s a n dp e r f o r m a n c e

A u d i t r e p o r t s p u b l i s h e da n d r e v i e w e d b yp a r l i a m e n t

B e f o r e b e g i n n i n g o f r e l e v a n t f i s c a l y e a r F i s c a l y e a r s t a r t s a n d e n d s F o l l o w i n g e n d o f f i s c a l y e a r

S t a g e s o f t h e a n n u a l b u d g e t p r o c e s s

Drafting stage

A draft budget that can be submitted to legislature.

Mostly internal to the executive, secretive.

Sets fiscal policy & estimates revenues on projections to establish total resources.

Finance ministry issues guidelines to spending departments.

Budget requests from spending departments.

Negotiations at bureaucratic and political levels.

Legislative stage Budget tabled in the legislature.

Considered by parliamentary committee(s).

Parliament accepts, rejects or amends the budget.

Execution/implementation stage

Funds apportioned to departments to implement activities.

Finance ministry monitors spending. Request for legislative approval of adjustment

budget if necessary. Fiscal risks are inherent in a changing economic

environment – purpose of contingency reserves. In-year adjustment decisions should be transparent

and thoroughly scrutinized.

Audit stage

Supreme audit institution assesses departmental accounts and performance.

Audit reports should be published promptly and submitted to parliament.

We will look at this stage in more detail in a later session.

Budgeting for the Medium Term

Many aspects of budgeting require more than an annual time horizon;

Medium Term Expenditure Framework (MTEF) indicates size of financial resources needed for medium term (3-5 yrs) to carry out existing policy;

Differs from multiyear budgeting;

Usually, only first year of MTEF is approved by legislature

Does the annual central government budget documentation submitted to the legislature contain multi-year expenditure estimates?

Number of countries

Percentage of total

Yes 28 70% No 12 30% Total 40 100% Source: OECD (2003), http://ocde.dyndns.org/

Concluding remarks

Thorough acquaintance with the actors and process of budgeting is essential for parliamentary budget researchers and committee staff;

Simplified and generalized summary of budgeting in the public sector.

Core participants in a typical budget process are the executive, including finance ministries and spending departments; the legislature and its committees; as well as supreme audit institutions.

Most budget processes in the public sector go through drafting, legislative, implementation, and audit stages.

Medium term budgeting frameworks are increasingly used to guide annual budgeting and to provide a broader planning horizon.