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

130 Alta Fölscher
classification and a performance orientation, often combined in parallel
program performance budgeting systems.
An important additional task of the budget process is to expose the
choices faced by government, thus empowering political officeholders to
choose among the options. Confidence in and consensus about the choices
that are made require that the choices be comprehensively identified and
analyzed. The discussion in this chapter makes clear how daunting this task
is, given limited time and capacity. In recent years, countries have developed
several budgeting methods and practices that assist with this task. These
methods can be broadly categorized into process-based mechanisms and
mechanisms that determine what information is brought to the budget
decision-making table.
Process-based mechanisms
Some countries take advantage of the different incentives faced by players in
the budget process to create an adversarial bidding (or hearing) process
within government. As with courts of law in many jurisdictions, the process
aims to establish the truth by requiring the parties to argue their case. The
finance ministry seeks to point out the scope in ministerial budgets for
improvements in efficiency and effectiveness, while the spending agencies
seek to demonstrate that they are underfunded, given the level of services
that are demanded. Finance ministries often depend on reputational effects
to make this system work: spending agencies may choose to cooperate when
they will benefit over time from building a reputation for approaching
budgeting in a constructive way. For example, spending agencies may find
that if they cooperate in years when more savings are required, they will
benefit in years when more money is available. Finance ministries also often
depend on shame-and-blame effects: if a spending ministry and its political
head are made to look bad in an early bidding meeting, other ministries may
want to avoid such treatment by preparing themselves better. An adversarial
budget process will work only if the finance ministry (as well as its minister)
is powerful, is well organized, and has good skills.
A thorough bidding process facilitates appraisal of all spending
programs over time because ministries are required not only to defend their
new spending proposals but also to explain why they could not generate
more savings from within their own budgets to fund the spending proposals.
Adversarial budgeting can also have negative consequences, as it is not
necessarily the case that the truth will out. Much depends on the skills of
the officials and political officers involved and the relative political strength
of ministries. It is also difficult to take a long-term view under such a