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

Budget Execution 297
termed virements in the budgetary jargon of some countries.) 8 Such
rules should distinguish between (a) transfers that may be made freely by
spending unit managers; (b) transfers that require the approval of the line
ministry’s headquarters; (c) transfers submitted for the approval of the
ministry of finance; and (d) transfers that require legislative authorization,
which should be defined in the organic budget law.
the scope of legislative authorizations to
spend. The scope and the purpose of the authorizations to spend that
are granted by the legislature—that is, the appropriation—should be clearly
defined. In British Commonwealth countries, the executive is authorized to
spend through an appropriation act distinct from the budget. This act
contains budget totals for each ministry or for each major subdivision of the
line ministries’ budget (for example, for each program). The budget provides
background information to the appropriation act. In many other countries,
there is no separate appropriation act. The scope of the legislature’s authorization
is defined implicitly through rules set out in the organic budget law
that determine the degree of freedom of the executive in using budgeted
resources. For example, the legislation will stipulate a level within the budget
structure (a chapter or program) at which transfers are limited to a small
percentage of the outlay. These two different approaches are equivalent as
regards the legislature’s role. However, in a number of countries that have
adopted the latter approach, the scope of legislative authorization is either
not clearly defined or not well understood.
The scope of the legislature’s authorization to spend should be defined to
ensure that the budget is implemented according to the government’s policy
objectives. However, an excessive number of appropriations tends to impede
efficient implementation of the government’s expenditure programs. 9
transfers within the appropriations. Regulations
for transfers within the appropriations vary from one country to another.
In many developing countries, the control of transfers between budget items
is one of the major activities of the ministry of finance budget department
during budget execution. The procedures involved are time consuming and
absorb large amounts of administrative resources.
To implement policies and programs in the most efficient and costeffective
way, line ministries and agencies should have adequate flexibility
to manage their resources within the policy framework of the budget.
Determining the exact composition of the inputs of a program is difficult.
Moreover, concerning investment programs, one investment project can