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

Budget Preparation and Approval 263
be annexed to the overall budget document. These estimates would facilitate
the preparation of the initial ceilings for the next budget.
In addition to their budget requests, the submission from the line
ministries should include the following materials:
A brief policy statement spelling out the sector policies and expected
outcomes
Where applicable, realistic and relevant performance indicators, including
results from the previous period and expected performance for the future
A statement of how the objectives will be achieved
Proposals for achieving savings and boosting efficiency
Clear measures for implementing the proposals effectively.
Line ministries must coordinate the preparation of the budgets of their
subordinate agencies and give them appropriate directives. The submission
of budget requests from subordinate agencies, in general, should meet the
same criteria as noted for line ministries’ requests.
The review, negotiation, and iteration stage
When it receives the requests of line ministries, the ministry of finance
reviews their conformity with overall government policy and their compliance
with the spending limits. (Ideally, any submission that exceeds the
spending limit by even the smallest amount should be returned to the originating
ministry forthwith with an instruction to resubmit one within the
ceiling.) The ministry of finance then reviews performance issues and takes
into account changes in the macroeconomic environment since the start of
budget preparation. Almost always, these reviews lead the ministry of
finance to suggest modifications in the line ministries’ budget requests.
Negotiation follows.
Negotiation between the ministry of finance and line ministries can take
the form of a budgetary conference. Professional staff members from the
ministry of finance and line ministries should also hold informal meetings
to avoid misunderstandings and minimize conflicts. Major differences of
opinion will normally be referred to the center of government, depending
largely on the relative balance of administrative and political power between
the ministry of finance and the specific line ministry concerned.
Other Relevant Issues
Several other issues must be taken into account in preparing a budget, discussed
below in no particular order of importance.