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

292 Daniel Tommasi
authorizing and paying functions, not between the line ministry and the
treasury department of the ministry of finance.
In addition, ministry of finance or third-party controls are performed
at different stages of the expenditure cycle:
Commitments are controlled ex ante by the financial controller, who in
many countries is a ministry of finance officer, posted within line ministries.
In some countries (for example, Tunisia), the financial controller reports
to the prime minister, not to the ministry of finance.
Verification is generally made by line ministries, but in some countries,
the financial controller is also involved in the verification.
Payment orders are prepared by line ministries, but, as previously noted, in
most Sub-Saharan francophone countries they are issued by the ministry
of finance.
Payment orders are controlled in a number of countries by the financial
controller.
Payment orders are systematically controlled by the treasury department.
Payments of domestically funded expenditures are made by the treasury
department of the ministry of finance.
Controls overlap. Thus, the request for payment prepared by line ministries
can be controlled two or three times by ministry of finance departments
(financial controller, budget department responsible for issuing the
payment orders, and the treasury department). These numerous third-party
ex ante controls lead to excessive interference of central agencies in the
day-to-day management of line ministries. They may also cause delays in
budget implementation and hinder efficient management. Despite this centralization
of financial management powers within the ministry of finance,
rejections of the issued payment orders are numerous. The treasury officials
can reject for “irregularity” payment orders issued by the ministry of
finance’s budget department and sometimes also controlled by the ministry of
finance’s financial controller. In countries with poor systems of governance,
multiplying controls has perverse effects and increases corruption, as unofficial
tolls or levies are imposed at the different checkpoints. For example,
centralization of payment decisions within the treasury in a period of cash
shortages increases favoritism, with payments being prioritized in favor of
well-connected suppliers instead of high-priority sectors.
Tight and cumbersome control rules have the perverse effect of generating
special procedures for circumventing them. Various forms of special payment
orders are used, which are generally not properly documented. In some