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

400 Salvatore Schiavo-Campo
Subsequently, attention can be given to the strength and effectiveness of
the executive mechanisms for policy making and the legislative role in
budgeting by the following measures:
Assess the political mechanisms for policy coordination and strategic
decisions, and make appropriate recommendations that are based on
experience elsewhere—with cabinet offices; government secretariats; and
similar option-sifting, traffic-regulating bodies—and are consistent with
the constitutional and political context of the country.
Give adequate information and means to the legislature to review policies
and the budget.
Present the budget to the legislature on time, to allow for proper scrutiny
and completion of the budgetary debates before the start of the fiscal year.
Review revenue forecasts, expenditures, and fiscal targets together.
Evaluate the appropriateness of limits on the powers of the legislature to
amend the budget (for example, a pay-as-you-go provision, by which any
amendment that increases expenditures or decreases revenues must be
accompanied by a counterbalancing measure to maintain the initial
deficit target).
When appropriate, consider fiscal responsibility provisions (see chapter 3),
whether through formal legislation or other means.
Expenditure Programming and Budget Preparation
The reform directions and priorities in the various stages of budget preparation
are suggested below, beginning, however, with certain recommendations
concerning the improvement of revenue forecasting. Parts of this
and subsequent sections recapitulate material presented in the earlier chapters
in this book.
Revenue forecasting
Although tax administration is by definition outside the scope of PEM, good
expenditure management always begins with realistic forecasts of revenue.
Indeed, without a reliable idea of the resource constraint, all planning is an
empty paper exercise—and budgeting is no exception. Accordingly, the basic
priorities are as follows:
Examine on an annual basis the historical differences between actual
revenue and budgeted revenue.
Recommend a “mechanical” adjustment for the next budget year corresponding
to the average differences in a few prior years.