Download - Budget Credibility Uganda Final

7/31/2019 Budget Credibility Uganda Final

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Building Budget Credibility

Collaborative AfricaBudget Reform Seminar.

1st to 3rd December 2004

FARM INN, Pretoria,

South Africa


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Outline

Background

Ownership of Priorities

Predictability of Resources

Budget Should Deliver with Minimumdeviations

Lessons Learnt


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Background

PEAP defines government macroeconomic andpoverty policy objectives: EconomicManagement, Enhancing production,Competitiveness, and Incomes, Security, Conflictresolution and Disaster Management, GoodGovernance, Human development

A credible budget should be consistent withagreed PEAP priorities and deliver projectedtargets .


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Building budget credibility

Institutionalisation of a harmonisedframework to sustain a credible budgetthrough:

Identification and consensus and priorities(Ownership)

Link Budget with agreed priorities(Assurance)

Predictability of resources (Trust)

Deliverance of budget with minimum deviation.A framework that promotes synergy

between policies, legislation and processes


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Ownership of Priorities

Participatory approach: strategic role by stakeholders thru SWAP, working groups

National consultations take 18 months at

national , sectoral and local government levels Action oriented research, studies on sector

specific,institutional and cross cutting issues(operational efficiency, equity)

Outcomes of studies inform the decision makingprocess

Revision of PEAP ever three years


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Trust level 1: Linking NationalBudget to Agreed Priorities

Poverty focused & equity concern inpolicies and programmes

Outcome & Output Orientation

MTEF

Budget Consultations at national, localgovernment and sector levels

Parliamentary involvement (Budget Act2001)

Donor sub groups and PER


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Sector Wide Approach (SWAP)

Identification and agreement of Priorities ,targets and monitorable indicators by all stakeholders

Promotes intra-sectoral linkages and synergy

within the sector Strategic allocation of resources

Facilitates monitoring and minimizes transactioncost on behalf of the donors

Minimize on duplications and wastage


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MTEF

The MTEF resource envelope is consistent withmacroeconomic objectives

The MTEF is three year rolling expenditure framework,it prioritizing the expenditures within constrained

resources. It enhances fiscal discipline and provides strategic

allocation of resources. The MTEF operationalises the PEAP and SWAP at both

center and local government levels.

MTEF provides sectors with predictable and stableprojection of budget resources.


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The Consultative Budget ProcessParliament

Cabinet

Line Ministries/

Spending Agencies/

SWGs/Donors

MFPED

National Budget Workshop

-Indicative Sector Ceilings

-Budget & SWG Guidelines

Preparation of Sector

BFP and Revised

MTEF Allocations

within the Ceiling

Cabinet Approval

of BFP/MTEF

Inter-ministerial

Consultations

Compilation of National BFP

And Updated MTEF

Submission of Indicative

Plan/MTEF

Finalisation of Budget

Allocations/MTEF

Final Budget

Approval

Budget

Speech

Preparation of Detailed

Budget Estimates

Oct - Dec Jan - Mar Apr - June

PER

April 1 June 15May 15

S t l Sh i th MTEF 1994/5


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Sectoral Shares in the MTEF: 1994/5-2005/6

0%

5%

10%

15%

20%

25%

30%

1994/95 1995/96 1996/97 1997/98 1998/99 1999/00 2000/01 2001/02 2002/03 2003/04 2004/05 2005/06

ShareofBud

get(%)

Education

Health

Security

PA

Interest

JLOAgric.

Water


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PAF Expenditures 1997/98-2005/6

0

100

200

300

400

500

600

700

800

900

1997/98

(Pre-PAF)

1998/99 1999/00 2000/01 2001/02 2002/03 2003/04 2004/05 2005/06

Shs

Bn

Other (Land Reform, AdultLiteracy, Restocking, LGDP)Accountability

Rural Roads

Agricultural Extension andExportsSafe Water and Sanitation

PHC

Universal Primary Education


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Trust Level 2: Predictability ofResources

Fiscal Policy Objectives

Forecasting Resource envelope

Improving resource predictability Execution of the Budget with minimum

deviations


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Fiscal policy objectives

Economic growth (7%). To fund the public goods andservices needed to run a modern state and meet theobjectives identified in the PEAP

Low inflation (no more than 5%). To maintain a fiscalstance which is consistent with macroeconomic

objectives. To avoid unsustainable public debt Competitive exchange rate

Foreign exchange reserves at least 5 months of imports

Growth in private sector credit. To raise domesticrevenues in a manner which does not distort incentivesfor the private sector or discourage work and investment


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Resource envelope

MTEF = Total Inflows (Tax and non taxrevenues + donor inflows) Totaloutflows ( external debt servicing) -

(domestic arrears payments) .

MTEF distributes the resources intosectoral and institutional allocations

Improving resource predictability


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Composition of Resource Envelope

0

500

1000

1500

2000

2500

3000

1992/93 1995/96 1998/99 2001/02

Total Revenue Domestic Revenue Grants


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Domestic Revenues: % of GDP1992/3-2003/04 (stagnating growth)

0%

2%

4%

6%

8%

10%

12%

14%

1992

/93

1993

/94

1994

/95

1995

/96

1996

/97

1997

/98

1998

/99

1999

/00

2000

/01

2001

/02

2002

/03

2003

/04

Domestic Revenues


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Enhance Non Tax revenues as % of DomesticRevenue and %GDP

0.00%

0.50%

1.00%

1.50%

2.00%

2.50%

3.00%

3.50%

2000/1 2001/2 2002/3 2003/4 2004/5

Domestic revenue GDP


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Donor Commitment verses outturn(Budget Support in US$ millions)

0

100

200

300

400

500

600

700

1998/99 1999/00 2000/01 2001/02 2002/03 2003/04

Projections Outturns


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Fiscal Deficit as % GDP

-15%

-10%

-5%

0%

5%

10%

15%

20%

25%

1997

/98

1998

/99

1999

/00

2000

/01

2001

/02

2002

/03

2003

/04

2004

/05

2005

/06

2006

/07

2007

/08

Govt Expenditure Govt Revenue Fiscal Deficit


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Budget should Deliver(Financial front)

Fiscal discipline by maintaining the agreedbudget domestic deficit thru:

Manage expenditures within realized resources (cashbudgeting).

Cut expenditures to match underperformance of domesticrevenues.

Reduce foreign reserves to match under disbursements ofdonor funds

Supplementary expenditures are approved by

parliament Ring fencing of priority expenditures

Enhance financial management, monitoring andaccountability


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Budget should Deliver(physical performance front)

Periodic monitoring of the PEAP (Povertyassessment; House hold integrated

surveys, demographic survey, integritysurvey,National Service Delivery Survey)

Annual Budget Performance Report

District and sector reports on PEAP targets National Integrated Monitoring and

Evaluation System


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Lessons learnt Homegrown responding to Emerging Issues

Substantial investment in awareness raising andcapacity and institutional building or restructring

Budget a Potential but Not sustainable Meansto All Political Aspirations: role of Govt

Intervention and Balancing spending betweensocial and productive sectors.

Targeted and Cost effective consultations versusbottom up approach.

Measures to counter political interference(necessity for ring fencing the poverty priorityprogrammes)

Clarity on Principles of collaboration


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THANK YOU