The Logic of the Budget Process
JAVED ANWAR
The Logic of the Budget Process
 A Budget is a Spending Plan
Importance of the National Budget
 The budget is not just a technical instrument compiling income
and expenditure. It is the most important policy statement made
by the Executive in the course of the year. It reflects the
fundamental values underlying national policy. It outlines the
government's views of the socio-economic state of the nation.
 The budget is governments’ most important economic policy tool.
Public budgets translate;



government’s policies
political commitments
revenue collection
expenditure of funds to meet the country’s competing needs
Importance of the Budget Contd
 It is a declaration of the government's fiscal,
financial and economic objectives and reflects its
social and economic priorities. The budget further
provides a valuable measure of the government's
future intentions and past performance.
 A budget is a government’s plan for the use of
public resources to meet the citizens’ needs.
Key Budget Documents and Openness
ENGENDERING TRANSPARENCY IN BUDGETS
Pre- budget
statement
Publication of
economic
assumptions
and fiscal risk
Multi-year
framework
Improved budget
documentation
Publication of
assumptions and
parameters
Comprehensive
coverage / scope
Mid-year report
Actual spending
information
Sectoral
performance
information
Useful
classifications
Timely and
accessible
audit reports
Reporting on
achievements
of spending
Information on
priorities &
objectives
Strategic direction of policy
Drafting
Source: Idasa
Legislative
Stage
Oversight and accountability
Budget
Execution
Audit
Stage
Recent Trends in Open Budgeting
Recent Trends in Open Budgeting
 Based on the Open Budget Survey for 2012 done by IBP, and released
on 23 January, 2013 budget transparency remains weak globally;,
 77 countries of the 100 surveyed fail to meet the basic standards of
budget transparency, yet the same countries host 50% of the world’s
population;,
 It also notes that governments publish less than 50% of required
budget data, and only 23% of the countries surveyed provide citizens
with comprehensive budget information, whilst 21 do not even publish
the Executive’s budget proposal;,
 Slow improvement in budget openness – 20% increase in budget
transparency scores in 40 countries: 2006 – 2012.
Recent Trends in Open Budgeting
 According to OBI 2012, Bolivia, China, Equatorial Guinea,
Myanmar, Qatar, Egypt, Sri – Lanka, and Zambia are the
worst performers.
 Notable
improvements have been noted
Afghanistan, Sao – Tome, Philippines.
for:
Honduras,
 Limited opportunities for public/ civic engagement in the budget
process;,
 Weak oversight institutional capacity, - Supreme Audit Institutions
(SAI), Legislature – powers and independence.
Table 1: Open Budget Index (OBI) Scores for
2012
COUNTRY
PUBLIC
ENGAGEM
ENT
LEGISLATI SAI
OVERAL
VE
STRENGT SCORE
STRENGTH H
Angola
6
18
25
28
Botswana 19
58
100
50
Malawi
57
42
52
36
25
47
30
67
55
58
88
75
90
14
33
50
4
Zimbabwe 17
23
25
20
19
Mozambiq 8
ue
Namibia
3
South
Africa
Zambia
PARLIAMENT ‘S ROLE
TOWARDS TRANSPARENCY
IN THE BUDGET PROCESS
What is Parliament?
 An elected representative body having supreme
legislative powers within a state
 As the elected body that represents society in all its
diversity, parliaments have a unique responsibility
for reconciling the conflicting interests and
expectations of different groups and communities
through the democratic means of dialogue and
compromise
IPU Definition
 “A Parliament is a generic term depicting a
representative body of individuals to whom
the people have entrusted the responsibility
of representing them by laying down the
legal framework within which society shall
be governed and seeing to it that these legal
conditions are implemented in a responsible
manner by the Executive”.
Role of Parliament
 Three core functions of Law-Making, Oversight and
Representation. Parliament exercises oversight mainly
through the budget process
 In carrying out these tasks, Parliament works together
with associations of civic society, and has the distinctive
responsibility of safeguarding the individual democratic
rights of citizens
 It can only do all this, if it observes democratic norms, by
showing itself open, accessible and accountable to the
electorate in its mode of operation.
Role of Parliament
 If Parliament can play its role in the budget process it can
assert its 3 roles discussed earlier;,
 Parliaments must enact laws that ensure civic participation
in the budget process – Public finance reforms;,
 Aspirations of the electorate must be seen in the budget
eventually approved by Parliament;,
 Monitoring of public expenditure by the legislature -
Oversight
Why a participatory budget process
 Participation in budget process powerful tool for
representation and accountability
 Demonstrates importance of strategic engagement
with the State for promoting a people-centric
democratic discourse
 Powerful
tool to complement other important
accountability tools such as elections, mass
mobilisation and protests
Budget Process

Emphasis is on meaningful participation by
Parliament in the entire process

Entire process defined as follows:-
1.
Formulation/Crafting of the Budget
Debate and Approval in the House
Monitoring Implementation/Execution
Budget
Audit
2.
3.
4.
of
the
The Budget arena
CIVIL SOCIETY
PARLIAMENT
.
Legislative
accountabilit
y
External
oversight and
audit
Budget
formulation
Budget
process
Budget
execution
Legislative
oversight
GOVERNME
NT
Budget
review and
adoption
Legislati
ve
scrutiny
The Budget Cycle
Parliamentary Rules and Practices
 Budget brought to Parliament in the form of Appropriation
Bill and Finance Bill
 These money Bills go through the same stages just like any
other bills – 1st Reading, 2nd Reading, Committee Stage and
3rd Reading
 Depending on the Political Governance system –
Parliamentary, Presidential etc – Standing Rules and Orders;,
 Budget amendment powers, time for budget debate;,
Tools and Approaches
1.
2.
3.
4.
5.
6.
Fuller understanding of parliamentary rules and
procedures governing the budget process
Full knowledge of the policy and legal framework
governing the budget process and public finance
management
Engagement of parliamentary committees and
influential MPs
Building strong coalitions
Capacity Building
Online parliamentary engagement
Legal and Policy Framework
 The
key statutes are the Constitution, Public Finance
Management Act, Finance Acts, and the Audit Office Act
 Budget process calendar, and actors mapped in some of these
legal statutes;
 Independence of Oversight Bodies – Legislature, Supreme
Audit Institutions,
 Legal space availed to non state actors – communitybased
organizations
(CSOs),
Civil
society
organizations (CSOs), etc;,
 Responsibility opening budgets to the public rests with each
government – country contexts – e.g PFM reforms;
Experiences - Pan African context
 In Uganda, South Africa and Kenya budget policy
statements presented to Parliament at least three
months before tabling of the national budget
 In South Africa, Parliament has amendment powers
on both budget statement and estimates of
expenditure
 In Kenya Act gives budget committee 24 days to
review and analyse the budget and report to
Parliament
 In South Africa it is 16 days
Engagement of parliamentary committees
 The key committees are Budget Committee and
Public Accounts Committee
 Other portfolio committees are also important as
they are legally required to scrutinise quarterly
and monthly reports from ministries that they
shadow
 Hearings are a good opportunity for civic and
public input into the crafting of the budget
Portfolio committees
 Important to fully understand the portfolio




committee system
Most of their meetings are open to CSOs and the
public
Their terms of reference legally empowers them to
summon anyone to appear before them and give
evidence, including the use of public funds
They can inquire into any policy matters including
the budget that falls within their jurisdiction
Who has what influence, links and power in the
committee?
Building Coalitions
 Strong coalitions are essential to strengthen CSO
advocacy on the budget process
 Develop relationships, partners and alliances
throughout the parliamentary engagement process
 Related to that is engagement of the media. Which
media and on what do we want to engage the media
on?
 Research, analysis and proper packaging of
information, materials and messages
Capacity Building
 The key to successful engagement of Parliament on
the budget process lies in addressing serious capacity
gaps within civil society, the Executive and
Parliament itself – Parliamentary Budget Office
(PBO) initiatives –Zimbabwe, Malawi, South
Africa, Zambia, Uganda, Nigeria, Kenya etc
 Organisational, technical and financial challenges
 Above
all, political will and an environment
conducive to productive engagement is a prerequisite
Online Parliamentary Engagement
 Parliament is in the process of establishing a
Parliamentary Budget Office
 This is a technical, independent and professional
unit mandated with assisting MPs process large
volumes of budgetary information
 Will have its own website and interface more with
CSOs and the public
 Use of various social media platforms to engage on
the budget with influential MPs