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

Strengthening Public Expenditure Management in Africa 389
BOX 12.1 Principles of South African Budget Reform
The South African public expenditure management system has undergone
substantial reform since the mid-1990s. Although the early reforms strengthened
macroeconomic stability and expenditure control, the more recent
emphasis has been on efficient resource allocation and effective service delivery.
The highlights have been rollout of a new intergovernmental system that
requires all three levels of government to formulate and approve their own
budgets, introduction of three-year rolling spending plans for all national and
provincial departments, new formats for budget documentation with a strong
focus on service delivery information, and enactment of new financial legislation.
In addition, changes to the budget process have allowed decision makers
to deliberate on key policy choices and on the matching of available resources
to plans, rather than on item-by-item cost estimates.
Underlying the reforms were the following principles:
Providing comprehensiveness and integration. The main national budget
framework coordinates, integrates, and disciplines policy and budget
processes for the country at the national, provincial, and (increasingly)
local levels.
Allowing political oversight and a focus on policy priorities. Choices between
priorities are inherently political. The South African system recognizes this
fact and structures the integration of political and administrative practices
to ensure that funding choices align with the priorities of government and
that political oversight is reinforced.
Using of information strategically. The reform process systematically sets
out to improve the timeliness, reliability, and usefulness of information on
the allocation and use of funds, internal and external, to improve policy
and funding choices and enable accountability.
Changing behavior by changing incentives. Responsibility was devolved to
spending departments for spending choices and use of funds within
approved ceilings and consistent with policy commitments.
Ensuring budget stability and predictability while facilitating change at the
margin. The budget process includes various mechanisms to manage
uncertainty and maximize predictability of funding and policy over the
medium term, while promoting alignment with policies at the margin,
through the use of rolling baselines and a contingency reserve, among
other measures.
Source: Adapted from material drafted by Daniel Tommasi, based on Fölscher and Cole 2004.
by donors to assist in the achievement of society’s goals. Preventing public
resources from being stolen or otherwise misappropriated is the paramount
fiduciary duty of public financial managers. It is the basic PEM
prerequisite from a technical viewpoint as well. If you cannot protect the
money, you cannot control it; if you cannot control it, you cannot allocate