Working Group Meeting on Governance of Public Finance.pdf

7/29/2019 Working Group Meeting on Governance of Public Finance.pdf

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WG III Good Governance for Development in Arab Countries Initiative

Governance of Public Finance, Cairo, 1-3 October 2005

Recent major experiences in financial governance reforms

Budget laws in Slovenia

Working Group Meeting on Governance of Public Finance

October 1-3, 2005

Cairo, Egypt

Bojan Pogaar

Ministry of Finance, Slovenia


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Agenda

Introduction

Initial position (pre-reform position)

Reforms

Implementation of reforms some features

Budget laws

Conclusion


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Introduction (1)

1991 disintegration of SFR Yugoslavia

Republic of Slovenia

Population: 2 million

2004 member of European Union


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Introduction (2)

Inflation

GDP per capita

1989 3,116 %

1992 139 %

2004 3 %

1989 6,058

1992 6,275

2004 16,269

A p p r o x i m a t io n o f i n f l a ti o n r a te

0 , 0 0

5 0 0 , 0 0

1 . 0 0 0 , 0 0

1 . 5 0 0 , 0 0

2 . 0 0 0 , 0 0

2 . 5 0 0 , 0 0

3 . 0 0 0 , 0 0

3 . 5 0 0 , 0 0

1 9 8 7 1 9 8 8 1 9 8 9 1 9 9 0 1 9 9 1 1 9 9 2 1 9 9 3 1 9 9 4 1 9 9 5 1 9 9 6 1 9 9 7 1 9 9 8 1 9 9 9 2 0 0 0 2 0 0 1 2 0 0 2 2 0 0 3 2 0 0 4

GDP per capita

0

2000

4000

6000

8000

10000

12000

14000

16000

18000

1 98 7 1 98 8 1 98 9 1 99 0 1 99 1 1 99 2 1 99 3 1 99 4 1 99 5 1 99 6 1 99 7 1 99 8 1 99 9 2 00 0 2 00 1 2 00 2 2 00 3 2 00 4


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Initial position (pre-reform position)

extremely decentralized budgetary systems

(self-management interest associations in just 60 local communities existed more than600 budgets with individual revenue programs)

no medium-term orientation

no link between priorities and budget

bottom-up approach lead to higher and higher

expenditures each year, pressure on revenue side

(difficult to negotiate with line ministries, accros the

board cuts at the end of the year, non-payed bills and

carry overs to next year, )

no transparency (many budget lines with names that

had no meaning, the structure of the budget was

inappropriate, )


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Reforms

centralizing public expenditure management

all the rest major public reforms started in 1999

reforms regarding classifications

reforms regarding budget preparation procedure

some solutions regarding information system

reforms regarding implementation of performance

budgeting


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Reforms - classifications

WHO ? WHAT ? HOW ?

ORGANIZATIONAL/

INSTITUTIONAL

CLASSIFICATION

FUNCTIONAL

AND PROGRAM

CLASSIFICATION

ECONOMIC

CLASSIFICATION

Introduced in 2000 covers all institutions and

agencies of Central

Government and Local

Government (3000)

defines direct and indirect

budget users

Both introduced in 2000 Functional classification: it is used

for reporting (statistical purposes) to

international organizations (fully in line

with the COFOG)

Program classification: programs

are developed according to the

operational priorities and objectives of

the government. Major link between

government policy and budget.

Introduced in 1999 Inputs required to carry out

the tasks determined for

each program activity or

project

Object classification of

revenues

Used for both budgeting and

accounting,

fully in line with GFS

Users: Budget, Accounting, Treasury, Auditing, Decision makers,

Fiscal reporting and statistics


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Reforms budget preparation procedure

First phase:defining of the Overall Budget Ceiling for 24

Expenditures Areas and 96 Main Programs

Second phase:

detailed preparation of line ministries

Subprograms, projects and activities

MACROECONOMIC

INDICATORS

1st Government budget session

CEILINGS

LINE MINISTRIES

Proposals

according to priorities

FINAL NEGOTIATIONS

Budget send to Parliament

2nd Government budget session Budget adopted by the Government

BudgetCir

cula

r

Estimation

of expenditures

Estimation

of revenues

Reconciliation of budget

expenditures

DEFICIT/SURPLUS, + PRIORITIES


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Reforms information system

System MFERAC

ACCOUNTING

EXECUTION

System APPrA

BUDGETPREPARATION

MONITORING

MODULES:

Macro-fiscal scenarios

Borrowing and amortization of debt

Web collection of data budget preparation

Amendments (Parliament)

Outturn - monitoring

Web collection of data final accounts


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Inplementation of reforms some features

centralizing accounting services

developing of unified information

system for accounting and executing

of budget for all budget users

all reforms were started and lead by MoF (mostly byBudget Department)

using help of advisers of international

organizations

comparing systems and solutions of other

countries

solutions were never copied

qualitydatabase


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Budget laws

Constitution

BUDGET

Act on

Implementation of

the Budget

Law on Public

ProcurementAccounting

Act

The Court of

Audit Act

E X E C U T I V E R E G U L A T I O N S

Public Finance

Act

Law on Financing

Local Communities


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Budget laws Public Finance Act

came into effect on January 1, 2000

clarifies responsibilities and duties in:

preparing,

implementing and

controlling the state budget

other permanent provisions and references to

general and specific rules that are to be observedby - central government,

- local authorities,

- special funds, and

- other public institutions


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Budget laws Act on Implementation of the Budget

annual provisions

specific authorizations (for example, limits on state

borrowing and guarantees)

budget structure

recognition of specific revenues (earmarked

revenues)

reallocation of budgetary commitments


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Conclusion

quality database

compare systems and solutions of other countries

listen and learn from advisors of international

organizations

BUT

DO IT YOUR WAY

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