Republic of Montenegro: Public Expenditure and ... - Vlada Crne Gore

62 Chapter 4: Public Financial Management and Procurement
knowledge transfer to line ministries about how to do program budgeting. Going forward the
government should make a priority to do the following:
• Develop an overall action plan that captures the specific outcomes expected of the
reform, the sequencing and timeframes attached to the activities that will support reform,
and the resources required (whether technical or financial).
• (Provide extensive guidance to line ministries on how to define programs and to assure
their consistency with ministry strategic plans and priorities. (Generally the programs
should reflect 3 to 5 major policy areas, with at least 10 percent of the budget).
• Have ministries detail the main objectives and goals of each programs and link these to
the overall goals and objectives of the ministry.
• Identify sub-programs where appropriate for major programs.
• Assist ministries in selecting a range of indicators, including those that reflect quality of
services delivered not just quantity of people served or the number of procedures
executed.
• Develop capacity within the MOF and other institutions (e.g., auditors) for verifying and
using performance information provided by line ministries. Even though budget
decisions may not be affected by the information initially, the information should be used
to improve the management of the programs.
• Develop skills among budget examiners to discuss policy-based issues with line
ministries and assure that budget examiners views are rooted in the policy priorities of the
Cabinet.
Integrating Medium Term Planning into the Budget Process
4.23 Development of a medium term budget framework would be a useful tool for
Montenegro to strengthen the linkages between policy, planning, and budgeting. As
individual ministries prepare their detailed spending proposals, these should be guided by some
top-down instruction that provides medium term policy priorities by functions or sectors. Even
with national strategy documents, the ability to translate the broad priorities into specific budget
allocations will be weak as long as budgets are only focused on a one year horizon. The current
medium term fiscal framework is a good foundation on which to build; the MOF would need to
add indicative levels of spending grouped by sector or consolidated programs. Initially, the
MOF could start by projecting out only one year beyond the budget year (eventually expanding
to two years). Then for purposes of accountability, the MOF would begin the next year’s budget
preparation at that level, with any differences between the final budget allocations and the
projected level explained.
4.24 As with implementation of program budgeting, it would be important for MOF to
develop a sequenced action plan for implementing a medium term budget framework
(MTBF). Such a plan would include specific reform outcomes, times for achieving them, and
the resources required. A key priority should be to start taking medium term policy priorities
and to begin translating them into budgetary implications. Some actions the government may
consider as part of the process of developing the MTBF over the next few years: