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

488 Alta Fölscher
phases and instruments, as well as to cure significant gaps and deficiencies
that remain in the process.
classification reforms. Although the reforms changed the
structures and processes of the budget preparation process, only recently has
the underlying budget structure and classification system been addressed.
Insofar as core incentives for budget management are tied up with budget
structure and classification—for example, if the budget is structured by
administrative unit, allocations are more likely to be driven by the input cost
of organizations than by the outputs required to meet policy objectives—
this situation would tend to force budgeting back to line-item incremental
budgeting. A programmatic classification that enables better links between
policy priorities, ministerial objectives, and funding programs would help
bring the final stage of detailed budgeting in line with earlier sector and
ministerial allocation processes. Fully reforming the classification system
and linking the new budget classifications to budget controls and the chart
of accounts for implementation and reporting should be a priority on the
reform agenda.
Ministerial-level budget processes have not been reformed at the same
pace as central processes. Although ministries comply with the central
demand for more and different types of information for budgetary decision
making at the center, the production of this information within ministries
is not the result of a thorough process that replicates central MTEF principles
within ministries. This situation compromises ownership of the
information that is passed on to the central level in most cases and the
quality of the information in some cases. In addition to the political will
to run thorough processes at the ministerial level, ministries also require the
necessary capacity.
costing and reprioritization. The costing of spending
proposals is not robust. In the MPERs, baseline spending projections are not
robust. Ministries have little experience in costing, and although the Ministry
of Finance has some capacity and has developed an internal generic
approach to assist in budget preparation, there is a critical need to improve
the quality of forward financial information. The MPERs and sector reports
have not yet linked existing spending clearly enough to objectives. Partly, the
quality of financial and nonfinancial information is at the root of weak
information about the cost of government. But the guidelines within the
budget process do not require a clear enough distinction between (a) existing
spending and the adjustments to existing spending that ministries desire and
(b) new spending that they may be proposing. In practice, key input budget