Managing Public Expenditure - CMI

168
Managing Public Expenditure - A Reference Book for Transition Countries
separate list). They should be compared with actual data for the previous year and the current budget
forecasts.
• Identification of the savings made on ongoing programmes (compared, for example, to the costs
estimated by the ministry of finance when preparing the ceilings); and clear identification of
measures needed to implement effectively the proposals.
• The number of staff positions (occupied and non-occupied) and of personnel expenditures. The
methodology to calculate personnel expenditures must be clearly indicated (in particular, line
ministries should indicate the number of full-time equivalent staff they have used in order to estimate
total personnel expenditures). Overhead costs such as the social welfare and pension fund
contributions paid by employers should be included. The forecasts for increases in salaries and
benefits must be consistent with the ministry of finance guidelines. Estimated payments of
bonuses and special allowances should be identified separately within the personnel costs
subhead. In addition, ministries should include an estimate of the cost of casual staff and
consultants.
• For capital investment projects/programmes above a specified size (as defined by the ministry of
finance), and, for all such projects externally financed: (i) total costs, annual costs over a period of
three to four years, and any balancing expenditure that is required to complete the project after this
period; (ii) an estimate of the operational costs after completion of the project; (iii) a schedule of
commitments (contracts to be engaged) over the project lifetime. The planning of commitments is
required for an agency’s internal management, and to prepare authorisations for forward commitments,
if any. The ministry of finance should specify the rules to be adopted for making estimates of these
forward costs (e.g. constant or current prices, and the assumed inflation rate) and for estimating the
costs after the current fiscal year.
• Data on the nature of entitlement and subsidy programmes, such as the number of beneficiaries and
the method of calculation, should be included in the budget requests of line ministries. The forward
costs of entitlement programmes should be systematically assessed, by the agency responsible to
manage them. This requires compiling all related regulations and laws, and evaluating the impact
of factors such as economic growth and demographic influences.
• Estimates of acquisitions and disposals of state property assets. (Line ministries should be given
incentives to sell such assets for which no future public use is expected).
Line ministries should co-ordinate the preparation of the budgets of their subordinate agencies
and give them appropriate directives. The submission of budget requests from subordinate agencies,
in general, should meet the same criteria as noted above for line ministries’ requests to the ministry
of finance.
Special issues related to screening and selecting investment projects are reviewed in Chapter 6.
3. Examination of the budget submissions and negotiations with line ministries
Once the requests of line ministries are received, the ministry of finance should review their conformity
with overall government policy, legal requirements and compliance with the spending limits; and take
into account any changes in the macroeconomic environment since the beginning of the budget preparation
cycle.