Public Sector Governance and Accountability Series: Budgeting and ...

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Budget Methods and
Practices
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Budgeting in the public sector is a complex exercise. It involves
the combination of information from multiple sources, bringing
together different perspectives and dealing with diverse interest
groups, all influencing complex decisions. Fragmentation is
inevitable between the center and the line, between planners and
financial managers, between budgeting and implementation, and
between different types of spending. Over time, methods to deal
with difficult choices, complexity, and fragmentation have developed
within budgeting systems. This chapter provides a perspective
on the problems of budgeting that different methods and practices
are designed to address and then discusses a number of approaches
that have developed over the past 30 years to address these problems.
The chapter is written from the perspective of a developing
country, but it does provide information about the experience of
industrial countries with these approaches.
The Nature of the Problem
Budgeting in the public sector is fundamentally different from
budgeting in the private sector. At the heart of the difference are
the absence of a bottom line and the presence of a shared and limited
source of funding. The dynamics that surround public budgeting
play out in a financing context in which the aim is not to make
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