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

Budget Execution 287
In Malawi, the CCS introduced was very similar to the one used in Uganda.
Despite some initial progress in recording and reporting expenditure commitments
and audit of arrears, the accumulation of new arrears was not
affected. The system has not progressed further because of noncompliance by
the spending agencies and lack of enforcement and penalties by the ministry
of finance. Political neglect and lack of institutional capacity have also undermined
reform efforts.
Sources: IMF 2006a, 2006b.
Notwithstanding those efforts, financial control of commitments is not
sufficient to keep expenditures under control. As shown by figure 9.1, commitments
may be made through different channels, which in a number of cases are
upstream from the annual budget execution cycle. For example, controls on
the consumption of utilities—such as electricity and telecommunications,
which represent a significant part of the government’s current expenditure—
need to reinforce internal management systems, not necessarily the budgetary
procedures. Control of overruns on the investment programs requires monitoring
of multiyear commitments, which is not systematically done. Contingent
liabilities and other fiscal risks may lead to budget overruns if they are not
assessed and taken into account during budget preparation.
In a number of anglophone countries, for certain programs (for
example, unemployment benefits), moneys are appropriated by specific
acts of parliament called special and standing appropriations, not by the
annual appropriation act. These appropriations do not lapse at the end of
the fiscal year. Standing appropriation refers to open-ended appropriation,
the amount spent depending on the demand for payments by claimants
satisfying program eligibility criteria specified in the legislation. Similarly,
in the francophone budget systems, besides limited appropriations,
which give expenditure ceilings, the budget includes open-ended estimated
appropriations, but this last category of appropriation is used only for debt
service and a very few special expenditure items, such as legal costs.
Controlling legal commitments authorized by standing appropriations or
estimated appropriations requires decisions upstream from the annual
budget execution cycle.
More generally, keeping expenditure under control requires, in addition
to controlling the uses of annual appropriations, the following:
Sound budget formulation and policy decision to ensure the conformity
of permanent commitments with budget forecasts
Control of multiyear commitments