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

Budget Preparation and Approval 251
and an integrated budgeting process (discussed in chapter 2) and the legitimate
requirement of aid creditors that the debt relief granted to poor African
countries go to reducing poverty instead of financing low-priority expenditure
or, of course, sheer waste. In other regions, too, an occasional suggestion
has been made to identify high-priority development activities and make
sure their funding is protected through the budget process. Given that in
developing countries high-priority expenditures are those that are growth
enhancing, poverty reducing, or both, the consensus among a group of
experts in public expenditure management coalesces around the following
four criteria (as summarized by Mountfield 2001): 4
1. Ineffective expenditure management is neither pro-poor nor pro-growth.
Only by strengthening public expenditure management can countries
improve the pro-poor and pro-growth quality of expenditure in a lasting
way. Particularly through a multiyear perspective, a pro-poor strategy
can be articulated into a restructuring of expenditure over a number of
years. Establishing and monitoring medium-term targets for broad categories
of expenditure have valuable roles to play in indicating the
longer-term direction.
2. Because strengthening expenditure management is a medium- and longterm
institutional challenge, in special cases a need may exist for transitional
targeting and monitoring of expenditure priorities within the budget.
3. Nevertheless, micromanagement must be avoided. The ministry of finance
(and the donors) must resist the temptation of negotiating individual
expenditures on specific budgetary line items. Doing so would further
reduce the already very limited flexibility afforded to operational budget
managers in African developing countries and prevent them from
moving gradually in the direction of greater results orientation and thus
greater effectiveness of expenditure in the interest of poverty reduction
and growth.
4. Moreover, because money is fungible, such transitional targeting must be
done on the basis of broad expenditure categories and avoid creating a
“budget within a budget,” which would do the following:
Undermine the budget as an instrument of government policy.
Lead to neglecting cuts in “bad”expenditure even though identifying the
most wasteful programs is often as important as increasing spending on
the good ones.
Make economic comparisons impossible, obscure the true distribution
of resources, and create coordination problems for spending departments
and local service providers.