The budgetary process – Part 2

By Daniel Muchemwa



IN last week’s article on the budgetary process, the focus was on the definition of the budget, budgetary process and budgetary assumptions.
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This article focuses on recent improvements in public sector budgeting, the public and financial management processes.


There are three fundamental changes to the budgeting and public finance management process that have been introduced during the last few years that impact both budget design and implementation.


These are:


*the introduction of an online public finance management system that allows for tighter cash management and improved information flows within each ministry;


*the proposed introduction of the Public Finance Management Bill that will among other things, improve controls and accountability and separate financial management issues from the audit function; and


*the introduction of the concept and subsequent implementation of Results Based Budgeting !Systems.


The question is then what are we getting, expecting and can contribute to these changes?


The introduction of the public finance management system essentially to replace the batch based Central Payments Office system is essentially a transfer of the payment component of the budget management from the Treasury and CPO to individual Accounting Officers.


Each Ministry now runs an independent bank account and produces a separate set of monthly, quarterly and annual financial reports that are broadly governed by the Treasury but are defined more closely by each Accounting Officer on the technical advice of the Director Finance.


Failure by each accounting officer to manage their cash projections as well as their budgets are quickly reflected in their budgets and reports.


This decentralisation of the payment system has addressed the universal problem of centralised systems, i.e. when they fail, they fail everyone.


An added advantage of the PFMS is in improved cash management and reporting.


The cash budget process has become much simpler to manage by the ministries and easier to monitor by the Treasury thus enhancing overall accountability.


The system just does not allow Accounting Officers to spend what they do not have.


Public finances in Zimbabwe are currently managed under the Audit and Exchequer Act, a statute that covers both the management and audit of all public funds.


There is an initiative to introduce independent and separate legislation covering the public financial management system and a bill, the Public Finance Management Bill, has been prepared for Tabling in Parliament.


It is not clear why this has taken a while to be introduced, but there is a general belief that it is a vital piece of legislation in the context of improving accountability and the quality of public finance.


Some of the key issues that the Bill seeks to address are:


* defining more clearly than is the case under the present legislation roles and responsibilities;


* specifying penalties and disciplinary options that can be exercised in the event of transgressions;


* specifying minimum reporting requirement for all public entities; and


* defining clearly what constitute public entities.


The provisions of the Bill have involved serious stakeholder consultations but one can never over consult on issues of public funds and public accountability.


Those interested individuals who have not provided input have an opportunity to do so by either approaching the Ministry or their member of Parliament.


The Public Sector has been worried about the effectiveness of the budgetary process and in particular the poor links between spending and value.


Among the most visible attempts to address this issue has been the introduction of the Result Based Budgeting System (RBBS).


The RBBS is a budgeting system based on Result Based Management (RBM).


Under this approach the budgeting process is driven by the core objectives of the Ministry, performance is subsequently made in the context of what was meant to be achieved and what was ultimately achieved.


Under the RBM system the concepts of monitoring and evaluation become central and accountability goes beyond how much was spent against budget and looks at what was meant to be achieved and of those targets, what was not achieved and the lessons learnt.


These three changes and the success there of will be most visible if there is a discernable culture change.


* Daniel Muchemwa is head, Transformation.Disclaimer: This publication contains information in summary form and is therefore intended for guidance only. It is not intended to be a substitute for detailed research or the exercise of professional judgement.


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