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

Budget Execution 307
projects within line ministries and a midyear review involving line ministries
and central agencies (midyear reviews are discussed later).
Arrears issues
Unpaid liabilities arising from budget execution are the difference between
the expenditures at the verification stage and the payments. They include (a)
genuine arrears, which are liabilities unpaid at the payment due date, and
(b) the float, which consists of invoices not immediately due for payment.
Monitoring unpaid liabilities is essential for cash planning and avoiding
any risk of overruns in budget execution. If implemented, comprehensive
budget monitoring will cover most unpaid liabilities, but perhaps not all.
The exceptions could concern expenditures irregularly committed and
unavoidable expenditures, such as electricity consumption.
As shown in box 9.5, unpaid liabilities may be found at different levels
of the budget execution cycle. Therefore, special surveys may be needed to
make a comprehensive assessment of the stock of unpaid liabilities and to
identify the required measures to stop arrears generation.
Midyear review
A comprehensive midyear review of the implementation of the budget
is needed to ensure that programs are implemented effectively and to identify
any policy problems. This review of budget execution should cover financial,
physical, and other performance indicators. Cost increases caused by
inflation, unexpected difficulties, insufficient initial study of projects, and
budget overruns must be identified so that appropriate countermeasures
can be prepared.
Many countries have a formal midyear review by the cabinet of
developments in the execution of the budget. This review encompasses
the following:
An update on any changes to projected macroeconomic variables and
revenue forecasts or projections
An analysis of budget execution by programs against budget, including
reasons for any significant over- or underexpenditures
Consideration of all requests from ministries for program or agency
supplementation.
A midyear budget review is emphatically not, however, an opportunity
to revisit or review all budget allocations. It should be seen more as