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

Budget Execution 295
provided that accountability is adequate; however, in many anglophone
African countries, accountability at the level of the spending-ministries
has been deficient. Nevertheless, anglophone countries have external
audit arrangements that play a comparatively more important role in the
budget process than is the case in francophone countries. In theory,
supreme audit agencies in anglophone countries provide parliament and
the public with information on budget execution and the integrity of
annual accounts.
Budget Appropriation Management Rules and Budget Revisions
This section deals with budget appropriation management rules that cover
the period of the budget, transfers between budget items, and sequestration
and within-year budget revisions.
Period covered
annual rule. A classic principle of budget management is the annuality
principle, which means that the budget is adopted for one budget year at
a time and that appropriations for the current budget year must, in principle,
be used in the course of the year. Therefore, at the end of the year, unused
appropriations are canceled. This principle is aimed both at ensuring fiscal
discipline, by preventing implementation of several budgets at the same time,
and at encouraging good expenditure planning.
However, the annual rule can create a rush for spending at the close of
the fiscal year. This spending bulge at the end of the fiscal year can be the result
of prudent purchasing procedures. Nevertheless, the potentially adverse
effects of a strict annual rule are many. The annual rule may encourage line
ministries to make unplanned and economically inefficient expenditures at
the end of the year. To avoid such perverse effects, several countries of the
Organisation for Economic Co-operation and Development (OECD) have
recently authorized the carryover of a certain percentage of these unspent
appropriations to the next fiscal year.
Systematically authorizing carryover for recurrent expenditures in
developing countries would pose problems regarding expenditure control,
however. If appropriate accounting procedures are not in place, altering
the annual rule can lead to executing two budgets at the same time—
and confusion. An eventual alteration of the annual rule for recurrent
expenditures should be considered only in those countries where the budget
preparation process is fully satisfactory. In any case, carryover for operating
expenditures should be limited to a small percentage of appropriations and
be submitted to the approval of the ministry of finance.