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

Budget Preparation and Approval 239
Preparation of MTEF/budget proposals. Line ministries’ proposals must be
submitted to the Ministry of Finance by August 2, structured to identify
clearly the proposed policy changes and to include the following items: a
—A baseline medium-term allocation. The resource envelope used to
determine this baseline consists of the two MTEF forecast years prepared
the previous year.
—Identified savings and reprioritization, within the baseline allocation.
—Program options that propose changes to the medium-term baseline
allocation (for example, new programs, change in the level of output,
change in implementation schedule of a program). These options
should be related to the strategic priorities of the line ministry. For nonrecurrent
expenditures, estimates should cover five years (two years
beyond the MTEF period).
—Various relevant documents (for example, personnel, analysis of risks
and contingent liabilities).
Review of proposals. During August and September, the provincial and
national Medium Term Expenditure Committee, composed of senior officials
from the Ministry of Finance and other ministries, evaluates the
MTEF-budget submissions of line ministries and makes recommendations
to the Ministry of Finance.
Submission to Cabinet. The Ministry of Finance submits to the cabinet the
draft Medium Term Budget Policy Statement and adjustments estimates,
which, after cabinet approval, are tabled in the Parliament of South Africa
at end-October, to inform the policy debate, not as a binding document.
The draft includes chapters on growth; economic policy and outlook; fiscal
policy and budget framework, including a medium-term fiscal framework;
taxation; sectoral priorities for the medium term; and provincial
and local government finance.
Finalization. In early November, after cabinet approval, the MTEF allocations
to ministries and for conditional grants to subnational government
are communicated through allocation letters by the Ministry of Finance.
On that basis, the line ministries prepare their draft MTEF-budget during
November and December, which includes under the same format the estimates
for the coming budget year and indicative projections for years two
and three of the MTEF. The complete MTEF-budget is tabled in Parliament
in February.
Source: Adapted from Fölscher and Cole 2004.
a. Line ministries are also required to prepare annual financial statements and an annual report, which
must be submitted to the Ministry of Finance three and four months, respectively, after the end of the
fiscal year. In addition, in 2005 line ministries were required to prepare a five-year strategic plan, which
was tabled in Parliament after the budget.