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

398 Salvatore Schiavo-Campo
of devolution is moving budgeting to new administrative levels that have had
little or no experience in budgeting. Furthermore, because the accounting
system does not provide prompt reporting, the budget performs a critical role
in financial control through the system of monthly request and disbursement,
which is based on the budget allocation and chart of accounts, and the line-item
structure needs to be retained in the medium term.
The design of the accounts, budget, and expenditure planning in
Ethiopia was challenged by some. The accounts design, which retains singleentry
accounting, has been criticized for not adopting double-entry
accounting. The budget design, which retains the line-item format, has
been criticized for focusing on control and not adopting output-outcome
budgeting. The expenditure planning design has been criticized for first
adopting capital planning instead of an integrated capital and recurrent
planning process. These criticisms were misplaced. The project design was
developed through intensive consultation, was based on a correct appreciation
of the state of Ethiopia’s public financial system, and provided a
realistic and systematic approach to improving public financial control and
then management.
Source: Adapted from material drafted by Daniel Tommasi, based on Peterson 2000.
Reform Priorities and Sequencing in the Various
Aspects of PEM
Specific reform priorities and sequencing considerations especially relevant
to conditions prevalent in African countries are suggested below, following
the classification of the major components of PEM elaborated by the Public
Expenditure and Financial Accountability Secretariat (see Allen, Schiavo-
Campo, and Garrity 2004). 11 All of these suggestions are grounded on public
financial management principles as well as the lessons of international
experience, but they are advanced here only as a menu of options and
alternatives—some may apply to certain African countries and not to
others. The design of a sound budget reform program must be based on the
characteristics of the individual country, particularly its administrative and
institutional capacity, as discussed in the section of this chapter on capacity.
Note also that the distinction made in the following sections between “basic
priorities” and “subsequently” is not identical to the distinction between
short term and longer term. The implied sequence is a logical one, not
necessarily a chronological one: certain reforms can be conducted, or at
least initiated, in parallel with more basic reforms even though they cannot