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

420 Salvatore Schiavo-Campo
using a virtual fund approach to present these earmarked expenditures in the
budget and monitor them closely, the budget itself has been fragmented into
several special accounts: “The multiplicity of parallel budgets creates an
opaque budget management system, which seriously jeopardizes the quality
of budget management” (Tandberg, Hélis, and Hovland 2004). In Chad, a
number of experienced public accountants work in the Treasury Department,
but the multiplicity of special procedures has contributed to scatter inefficiently
their efforts.
Corruption, too, was not taken sufficiently into account in budget reform.
Rationalizing the highly centralized and duplicative control procedures proved
difficult because of the “tolls” levied by financial controllers from the Ministry
of Finance at each stage of the expenditure cycle. Indeed, despite the ex ante
financial controls along the lines of French practice, control is extremely weak.
To address this crucial issue would go far beyond the technical aspects. Here are
some examples. Many payment orders issued by the Ministry of Finance’s Payment
Order Department face excessive delays before being registered by the
Treasury Department. The Ministry of Finance’s financial controllers participate
in the verification of the deliveries, but nobody checks whether the “delivered”
goods actually reach the end users. For the general budget, the payment system
is centralized, but the payments are prioritized by the Treasury’s paymaster in
a nontransparent manner. And management in even the priority sectors has
been hampered by the fact that badly paid military officers have been authorized
to be intermediaries between line ministries and suppliers.
Source: Adapted from material drafted by Daniel Tommasi, based on World Bank data and
information from government officials.
One final observation: when introducing “more advanced”systems, one
should make absolutely certain to protect the existing systems and continue
them until such time as the new systems are fully established, owned, and
debugged. Although progress should be encouraged and opportunities for
more efficient practices seized, the risk of losing the good while reaching for
the best is a reality of budget reform as of the human experience in general.
Box 12.7 illustrates the damaging effect on Malawi’s PEM of abandoning its
reasonably informative investment programming system and replacing it
with a comprehensive MTEF.
Fostering Performance Orientation in Budgeting
From the simplistic assumptions of about a decade ago, understanding of the
complexity and pitfalls of the measurement of performance in the public
sector has grown. This chapter is not the place for a review of the extensive