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

276 Salvatore Schiavo-Campo
The situation is different for investment projects, because their pluriannual
nature and uncertainties require giving the executive branch more
flexibility in the timing of expenditure. In addition to projects, for a program
(that is, a collection of complementary activities aimed at the same objective
but with different individual allocations) the line ministry must have the
authority to shift resources between activities—again with ministry of finance
approval if the reallocation goes beyond a certain percentage of authorized
expenditure. Instead, reallocations between large projects or between major
programs would normally call for some form of consultation with the legislature,
and reallocations between ministries should require a formal
budget amendment.
In actual practice, much depends on the quality of overall governance.
Aside from the appropriate procedures for approving and amending the
budget and the rules for reallocations during the year, in a healthy governance
system consultations between the executive and the various legislative
committees are substantive, continuous, and not limited to one-off events
such as the budget debate or the presentation of a supplementary budget.
When this situation prevails, and external participation by civil society is
provided for as well, a broad understanding of the reasons for budgetary
decisions is generated, conflict and dissension are minimized, and a much
higher probability exists that a good budget is executed well.
Notes
This chapter is based in part on material in Salvatore Schiavo-Campo and Daniel
Tommasi’s (1999) Managing Government Expenditure, Asian Development Bank,
Manila, by permission. The views expressed in the publication are those of the authors and
do not necessarily represent those of the Asian Development Bank or its Board of Directors
or the governments the directors represent. For information related to development in
Asia and the Pacific, see http://www.adb.org.
1. Such a perspective has been referred to at various times as indicative of multiyear
programming, medium-term public expenditure programs, multiyear estimates, and
a medium-term expenditure framework. The medium-term expenditure framework
designation is currently used most frequently and is used in this chapter as well.
2. The reader familiar with statistical inference will recognize here the well-known
tradeoff, for a given sample size, between the precision of a statistical estimate and
its probability of containing the true value, with narrow-band estimates being more
precise but less likely to include the true value for the population and wide-band
estimates more likely to be correct but more vague as well.
3. Aside from the legacy of the planning practices of the past, other factors contributed
to dual budgeting, such as pressure or recommendations from donors or international
finance institutions. The desire of donors to “enclave” their projects, to minimize
risks of mismanagement and maximize provision of counterpart funding, has