Pilot Questionnaire Results on Budgeting Practices in African Countries

1. Report on Pilot Questionnaire Results • Budget Frameworks • Budget Comprehensiveness • Off-budget expenditure • Revenue and Expenditure Classification Alta Fölscher and Mickie Schoch

2. CABRI questionnaire on budgeting practices • Why questionnaire? • Database of budget practices in African countries for reference and research • New information: identification of aggregate trends • New presentation format for annual seminar: variation in type of session • Pilot questionnaire • Is it useful? • What can be done differently? • What other themes can be explored?

3. Report • 5 sections • General information on budgeting institutions • Budget framework for central government • Comprehensiveness • Classification • Budget documentation • 10 countries completed, 8 analysed • Still time to complete for post-seminar documentation

4. General information on budgeting institutions • Most countries have • legal framework, but not always comprehensive or followed • Clear and comprehensive timetable for budget, but it is not necessarily followed • Central budget office mostly in the Ministry of Finance and has senior civil servant at helm. • One country central budget office split • Some have political appointees as head • Different countries different relationship between centre and line • Majority line ministry budget offices report directly to finance ministry (devolution of responsibility and accountability?)

5. Do budget frameworks assist in coordination? • Most countries report using relatively sophisticated central government budget frameworks to coordinate macro-economic, fiscal and budget policy • Most countries follow good practice rules concerning sequencing of decisions for budget frameworks and have arrangements to ensure the coordination and quality of information going into the central government frameworks. • However, in most countries less attention is paid to ensuring the comprehensiveness of information considered during the fiscal and budget policy processes. Most countries have less than 20% of donor resources included in fiscal frameworks, and do not include extra-budgetary funds, fiscal operations in the wider public sector or contingent liabilities.

6. Role of central government frameworks • Central government budget frameworks commonly used to coordinate macro-economic, fiscal and budget policy Most countries have explicit fiscal policy process, resulting in medium term fiscal policy… …and have a consistent framework stating targets or ceilings for main aggregates…

7. Most countries subject to external fiscal interventions • Half of the responding countries are subject to fiscal limitations • and most are subject to fiscal interventions by regional or international institutions. • Three quarters reported IMF and/or World Bank involved, half as a condition for loans.

8. Managing uncertainty and change • Most countries have an explicit fiscal prudence factor built into the economic assumptions which reduces the final economic estimates… • Most countries reported including reserve funds in the budget framework to cushion against macro-economic uncertainty and unforeseen expenditure • But contingent liabilities mostly not considered • Some countries update fiscal framework during spending year, but most stick to targets for revenue and borrowing and adjust expenditure upwards or downwards

9. Central government budget framework: who is involved? • Fiscal policy process involve diverse sources of information • On average 4, in some cases 7 institutions involved • But mechanisms exist to coordinate information • Cabinet approves fiscal framework in only two countries • Mostly done at level of finance ministry

10. Central Government Budget Framework: accuracy • Most countries use models to forecast main macro-economic variables • But more than half reported that method to estimate current GDP not always transparent and that future revenues given current tax policy are not modeled • Only two countries allow independent review of main assumptions before publication • Most countries reported only small variations between estimated and actual fiscal aggregates

11. Budget comprehensiveness (i) • Donor funds • Most countries reported that less than 20% of donor funds are considered in the fiscal policy process • Donor funds that do not flow through government accounts not included • Most countries do not consider long-term effect of donor spending • But most publish information on donor conditionalities

12. Budget comprehensiveness (ii) • Extra-budgetary funds and the wider public sector • Half of countries occasionally include projected impact of fiscal operations in wider public sector, but only quarter do so systematically • Most countries do not include information on extra-budgetary funds • Most countries have only limited frameworks for general government • Transfers shown but not broken down • Subnational government own revenue not included

13. Classification (i) • Most use consistent classification, allowing for a single ‘version of truth’ and consolidation • Most countries have undergone substantial classification reforms in past decade • Government accounts are not comprehensive • Only half the countries receipts and payments included general government sector appear in government account • Majority only include domestically-financed transactions • Majority of countries have well-defined rules to distinguish between current and capital expenditures • How capital expenditures are financed differs from country to country

14. Classification (ii) • Half the countries appropriate financing for investment incrementally; recurrent cost implications usually incorporated in budget documents • Significant percentage of public investment is donor financed • In most countries, appropriations are divided in development and recurrent budgets, but are commonly by a single ministry • The development budget against recurrent budget defined differently across countries (largely on account of external resources) • Classification not always used consistently across

15. Budget documentation Scope of budget documentation • Few countries publish comprehensive fiscal frameworks that include fund flows outside of main appropriations • Significant contextual information now included, particularly regarding macro-economic and fiscal outlook and policies and tax policy • Most countries reflect multiple classification dimensions in documentation Most countries report that budget documentation forms effective demand for information in budget process