5 - DEEPENING PROGRAMME-BASED BUDGETING
Introduction
The Ministry of Finance and Economic Development (MOFED), has made some progress in
the implementation of the Programme-Based Budget (PBB), which is an essential part of
government’s budget reforms. The PBB is slowly starting to be embedded in the public
finance arena of Mauritius. Like any new reform, there are some teething issues at the
beginning; these issues are being gradually addressed. The challenge now is to consolidate
and deepen the PBB.
The NAO has reviewed the progress achieved in the implementation of PBB and also
provided a roadmap on the consolidation of this important public finance reform.
Year 2010
Over the year 2010, progress has been noted on the following counts:
 Stabilisation of the budget presentation format which is now in four parts as follows:
 Part A: Overview of the Ministry/Department;
 Part B: Services to be provided (outputs) and Performance Information;
 Part C: Inputs-Financial Resources
 Part D:Input-Human Resources
 Understanding of concepts like outcomes, services to be provided (outputs) and service
standards (indicators);
 Improvements in programme costing. The decentralization of the payroll of the Financial
Operations, the Procurement and Supply, and the Internal Control Cadres to Line
Ministries/Departments budget is a step forward in reflecting a Ministry’s actual cost of
inputs.
Performance Indicators
Whilst there has been some progress in the formulation of performance indicators, there are
still too many indicators (around 1,500) in the PBB. In addition, it appears that
Ministries/Departments are now clearly distinguishing between service standards which they
can use for internal management purposes and those which are more relevant for the
oversight of the National Assembly. The MOFED needs to ensure greater quality control on
this issue together with the Line Ministries/Departments while maintaining a balance between
quality, volume, efficiency and coverage indicators. As we move towards outcome budgeting
in the years to come, the number of indicators will certainly decrease drastically.
Before a performance indicator is considered for inclusion in the PBB, the first question that
needs to be answered is the following: is it measureable? Presumably, if you cannot measure
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it, you will not be able to assess its progress. The second question is whether the indicator can
be monitored and the third is whether the indicator is not for internal management purposes
more relevant for Performance Management System (PMS) than for the PBB and therefore
the National Assembly. There is a need for greater coordination at this point with Line
Ministries by the MOFED although the Line Ministries know best their performance
indicators. However, Line Ministries/Departments should bear in mind that not all
performance indicators are required for National Assembly purposes. It is strongly
recommended not to overload the PBB with too many indicators.
As part of the budget automation project, MOFED has to rapidly put in place the on-line
monitoring system of performance indicators. This will help both in the monitoring and
reporting of performance information and timely decision-making.
Planning and Budgeting
Now that the PBB is stabilized, MOFED has to revamp the planning function that it used to
perform in the past but with a more realistic approach. Planning and budgeting are two
processes that are intertwined and reinforce each other. There is currently a lack of orderly
planning in the formulation of appropriate policy measures and no coordination at a central
level which is resulting in incoherence and delays at the implementation levels.
In order to reduce the gap between the time a policy decision is taken and actual
implementation, both the planning function and the budgeting function need to be revamped
and synergized. Planning is not simply visioning as there is need to balance ambition with
capacity for implementation.
In order to have effective planning, the Line
Ministries/Departments have first to trigger the thought process at their level including
thinking about availability of financial resources and human resources. In so doing the Line
Ministries should consult all relevant stakeholders in their respective sectors. However, the
task of putting all the pieces together including checking coherence and affordability issues
would ultimately rest with MOFED. The long term planning exercise should be carried out
every ten years.
For effectiveness in this new approach, planning has to join budgeting. And here the 3 year
PBB Strategic Plan will be the link between long term and short term planning with
budgeting. Each Ministry/Department has to elaborate or regularly update its PBB Strategic
Plan and define programmes and projects in line with overall Government priorities or the
Long Term Plan. The PBB strategic plan would lead the overall process for budget planning
and resource allocation.
In so doing the credibility of the frontend of the fiscal exercise in terms of developing the
Medium Term Fiscal Framework (MTFF) and the Medium Term Expenditure Framework
(MTEF) will be improved as the PBB Strategic Plan will feed the Budgeting exercise. Also,
the line Ministries/Departments will have greater predictability over their resource envelopes
as the expenditure ceilings become more credible.
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DEEPENING PROGRAMME-BASED BUDGETING
Figure 5-1 shows the link between long term planning with short term planning and
budgeting:
Figure 5-1 Link Between Long Term Planning and Budgeting
Long Term Planning(LTP)
Sector
Strategies
PSIP/NIIP
3-Year PBB Strategic Plan
PBB Document
PSIP: Public Sector Investment Programme
NIIP: National Infrastructure Investment Programme
The Long Term Planning (LTP) exercise should have a 20 to 25 years horizon in perspective
but it should be undertaken as an assignment every ten years. The LTP cannot be undertaken
by MOFED alone but it will be built up from a bottom up approach with the Line Ministries
engaging with stakeholders and feeding the process with inputs. The relevancy, coherence
and affordability with funding options are undertaken at the Line Ministry as the first step.
However, the second step which is as important and necessary is the coordination to be
undertaken by MOFED by ensuring national consistency including analysing cross-cutting
issues, trade-offs and putting all the pieces together. Over and above, the LTP would also be
guided by the overall vision of Government. Once the coherent and affordable Long Term
Plan is established, the top-down process would operate in the sense that the
Ministries/Departments would work in coordination towards the actual implementation of the
national vision.
In a nutshell, planning should be undertaken against the backdrop of implementation because
a dream is free but the journey isn’t. If you want to achieve a dream, you have to be willing
to do more than just imagine the outcome. The thought process must be guided by finding
out the price that has to be paid to reach a goal. The parameters that will constitute that price
will be time taken to reach that goal, skills required, opportunities that would need to be
foregone, and costs to be incurred. Therefore, a simple rule known as the taxi principle
applies: Always find out the cost before you get in a Cab.
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DEEPENING PROGRAMME-BASED BUDGETING
Annual Report
As the PBB process gets consolidated, the Line Ministries/Departments will have to prepare
annual reports on their financial and non-financial performance for the year. The annual
reports will be an actual tracking of performance of the targets as set in the Line
Ministries/Departments 3-Year PBB Strategic Plans. These reports will have to be submitted
to the National Assembly and the NAO will audit these reports on a sample basis.
Public Finance Management Legislation
I am informed that MOFED is doing the preparatory work on a new Public Finance
Management Legislation. This will give an opportunity to modernise the actual public
finance legislation which is fragmented. In the same vein, a new legislation will also be
prepared for auditing.
Automation of Budgeting
I understand that MOFED is envisaging the automation of the budget process which will
involve budget preparation, analysis, publication and monitoring. The major advantage of an
automated budget system is that it prepares the data and reports much more accurately and
faster. It also permits sophisticated analysis such as ‘what if ?’analysis and higher quality
budgeting. As this project will bring significant efficiency gains in the preparation, analysis,
publication and monitoring of the PBB, efforts must be made to implement the project
timelyas it is an extension of the existing system on which the Treasury Accounting System
(TAS) rests.
Delivery of Services
The NAO is also aware that the procurement system is being fine-tuned. We support this
initiative as this will assist in the implementation of projects as bottlenecks are found and
practical solutions adopted. In the same vein, procurement through Public Private
Partnerships must be actively developed and implemented and this will reduce pressure on
public resources. If Government wants PPPs to take off, its strategy must be reviewed
including building capacity and additional multi-skilled staff, be it from external sources, at
the central level.
In order for the Line Ministries to be able to deliver, the bottlenecks in the system for
recruitment have also to be tackled. Each year budgetary provision is provided for positions
but actual recruitment lags behind, affecting adversely on service delivery.
At this stage the systems surrounding both the procurement and human resources have to be
re-looked at and modernized in order to improve delivery of services at the level of the Line
Ministries/Departments.
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DEEPENING PROGRAMME-BASED BUDGETING
Conclusion
I wish to commend the progress made both by MOFED and the Line Ministries/Departments
during 2010 in the furtherance of this major public finance reform. The way forward is
certainly towards greater consolidation and deepening of the PBB as well as synergizing it
with other reforms like the Performance Management System. It is indeed a long journey
which will have to be travelled with concerted and relentless efforts by all stakeholders and
by building on cumulative progress year on year.
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DEEPENING PROGRAMME-BASED BUDGETING