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

Budgeting in Postconflict Countries 445
and a determination of the pledges from different donors and the probable
timing of their contributions can some sense of available resources be obtained.
The needs identified in the JAM are then articulated into more concrete
projects and programs, and a rudimentary budget eventually emerges, hopefully
consistent with the financial resources available. (The bulk of the financing
is likely to come from donors, because in the immediate postconflict period,
domestic resources and taxation capabilities are extremely limited.)
Thus, in postconflict countries, the forecast of (mostly foreign) revenue
is only an initial point of reference for the construction of a budget, for
which additional aid may well become available if the expenditure proposals
are well justified and the system is ready to implement them. However,
even if only as initial reference, a revenue forecast should still be used to
frame budget preparation so that the country can gradually move toward a
realistic, resource-constrained budgeting system when the immediate
postconflict urgencies have been surmounted, and also so that it can begin
creating good budgeting habits grounded on realism rather than wishful
thinking. The other major requirement is to screen carefully the various
expenditure proposals—whether included in the JAM or generated separately—with
the help of the guidelines and tests suggested below.
Screening Sector Expenditure Program Proposals
Next to expenditure control, the second objective of public expenditure
management—allocative efficiency—calls for distributing financial resources
across different sectors to maximize the aggregate efficiency of resources.
This criterion is good in theory but a practical chimera, especially in postconflict
situations. One cannot decide on a technical basis whether refurbishing
a destroyed primary school in district A is more efficient than rebuilding
a rural road in district B. This conundrum does not imply, however, that
sector allocation decisions necessarily have to be made only on political and
discretionary grounds, and certain guidelines can be formulated. In practice,
as stressed repeatedly, in postconflict countries all budgeting criteria must
be applied with a great deal of flexibility, simplicity, pragmatism, and common
sense. The following basic decision tests, however, are substantively the same,
and their sequence is mandatory—that is, one does not query program costing
before having determined that the program is more or less consistent
with the policy for the sector. In a postconflict setting, of course, these criteria
must be applied very flexibly.
1. Is the overall sector expenditure request within the sectoral expenditure
ceiling? If No, return for downward adjustment without comment; if Yes