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

Budget Methods and Practices 115
needs and highlighting the unavoidability of expenses are well-known
strategies to guard against uncertainty.
In countries where the finance ministry is powerful, has good capacity,
and is well organized, ceilings are more rigid. In countries where this is not
the case, ceilings are not taken seriously at all. In both cases, however, the
ceilings are perceived as merely the starting point for the annual budget
struggle. In an incremental system, the informal rules of the game concern
agencies’ strategies to maximize their share in the budget pie, countered by
the ministry of finance’s strategies to bring requests down to manageable
numbers and size.
A classical strategy of agencies is to pad their requests on the assumption
that the ministry of finance is likely to effect cuts as a matter of course.
Estimates are rarely prepared well, with the result that the ministry of
finance, lacking sufficient information and, often, sufficient capacity to cut
in a refined manner, resorts to percentage decreases across spending agency
budgets. Budgets then are effectively made at the center, with little spending
agency input.
Wildavsky and Caiden (1980: 141) note that in an incremental system
with ritualistic cycles of padding and cutting, spending agencies that do not
leave room for cuts disconcert their examiners. The larger the request and
the number of proposals, the more the ministry of finance can cut while still
giving a department additions to its previous total. A department that submits
a high number of projects is at an advantage, because it is likely to
receive more.
Agencies with superior information also routinely underbudget for
high-priority expenditure or for expenditure driven by legislative requirements.
During the spending year, ministries of finance have little choice but
to provide provisional funding to cover shortfalls. Another version of asking
for less than what is required occurs when spending agencies in an annual
budget system provide low first-year estimates of project costs. Once the
project is approved, future-year expenses are much higher, with the government
committed to finish what it has started.
The difference between industrial and developing countries, however,
does not lie in the existence of practices such as these, but rather in how
frequently they occur and how extreme they are (Wildavsky and Caiden 1980:
142). The stable environment of industrial countries means that it is less
necessary for spending agencies to inflate their requests over the previous
year’s totals to ensure that they hold on to funds. Finance ministries in industrial
countries usually also have more accurate information on what is being
spent and what is required to fulfill policy commitments, thereby putting