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

296 Daniel Tommasi
Because capital investment expenditures are difficult to manage within
an annual budget framework, procedures for carrying over unused appropriations
may be desirable for capital expenditures; however, caution is
required. The budget should include sound estimates of investment project
costs. Carryover of capital expenditures should involve only ongoing projects
that are not sufficiently funded in the budget for the year in question (year t),
because the appropriations of the year t – 1 budget—for which carryover is
requested—were expected to be used. The request should be submitted to
the approval of the ministry of finance. For externally financed expenditures,
carryover should be authorized, but it is the common practice, even when it
is not stipulated in the financial regulations.
complementary period. In many countries, books are closed
immediately at the end of the fiscal year. Expenditures not paid must be paid
from the following year’s budget. This rule is simple and could encourage
good cash planning. It has, however, some perverse effects: some checks are
issued but kept in the drawer, and expenditures may be registered in nontransparent
suspense accounts from which they will be paid later.
Some countries have adopted a modified cash-basis accounting system.
During a complementary period of one or two months after the end of the
fiscal year t, a pending payment order can still be paid from the appropriations
of the year t budget.
In African francophone budget systems, the budget expenditure is the
payment order, not the cash payment. Therefore, unpaid payment orders
at the end of the year can be paid the following years. 7 In addition, there
is often a complementary period to account for payment orders of the
previous year.
Each of the previous procedures has both advantages and perverse
effects. It is necessary to be aware of the perverse effects and analyze them to
define corrective measures.
delays in enacting the budget. When the legislature has
not yet approved the budget before the fiscal year starts, the legal framework
generally includes provisions that allow the executive to start spending on
the basis of the previous year’s budget appropriations, often restricted to onetwelfth
of the previous year’s appropriations per month.
Transfers between budget items
Rules for transfers between budget items (chapters, line items, and so forth)
are generally stipulated in the financial regulations. (These transfers are