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Budget Execution: Tracking Progress and Controlling Funds - Case Studies

Budget Execution: Tracking Progress and Controlling Funds - Case Studies. Parminder Brar, FM Anchor Budget Management and Financial Accountability Course March 1-2, 2004. Outline.

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Budget Execution: Tracking Progress and Controlling Funds - Case Studies

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  1. Budget Execution: Tracking Progress and Controlling Funds - Case Studies Parminder Brar, FM Anchor Budget Management and Financial Accountability Course March 1-2, 2004

  2. Outline • Case Study 1: India : Why India? Bank lending of around $1.5 bn. Is 1.29% of GoI’s budget, and around 0.6% of general government spending. Supporting budget management reform is critical for achieving MDG’s. Budget Management System based upon Treasury Single Account and reimbursement to commercial banks. • Case Study 2: Nigeria : Why Nigeria? Cash management crucial for budget management. Role of CBN in budget management. Budget management based upon cash advances and multiplicity of bank accounts and banks for each agency. • Conclusion

  3. Case 1: India – Expenditure Trends • Annual expenditure trends are remarkably similar. * Rs. 1 crore = Rs.10 million.

  4. Case 1: India – Expenditure Trends • Annual expenditure trends are remarkably similar.

  5. Case 1: India – Overall Expenditure • Around 75% of GOI expenditure is recurrent (Non Plan) and the rest is capital (Plan) *. * There could be some overlap in capital and recurrent expenditure between Plan and Non Plan.

  6. Case 1: India – Non Plan Trend • Annual trends of recurrent expenditure are remarkably similar.

  7. Case 1: India – Non Plan Expenditure

  8. Case 1: India - Plan expenditure • Around 40% of capital expenditure is spent in the last quarter.

  9. Case 1: India – Plan expenditure

  10. Case 1: India - Ministry trends • The Indian Rope Trick:

  11. Case 1: India - Ministry trends • The Peaks:

  12. Case 1: India - Ministry trends • The Rolling Hills:

  13. Case 1: India - Ministry trends • The Stress Reliever:

  14. Case 1: India - Receipts • Tax receipts account for 60% of GOI receipts

  15. Case 1: India - Receipts • Receipt trends are remarkably similar.

  16. Case 1: India - Receipts • Tax receipts have been overestimated for the last 7 years.

  17. Case 1: India - Receipts • Budget Management challenges are partly due to overestimating receipts every year.

  18. Case 1: India - Receipts • GoI’s receipts flow into a Treasury Single Account in the Reserve Bank of India.

  19. Case 1: India - Disbursements • Disbursements are on the basis of reimbursement of funds to commercial banks. One Ministry deals with one bank.

  20. Case 2: Nigeria - Receipts • Cash management is based on funds available in the CRF.

  21. Case 2: Nigeria - Expenditures • Disbursement system operates on the basis of cash advances to numerous banks.

  22. Case 2: Nigeria – CRF Receipts • 77% of receipts are on account of Treasury Bonds. * Provisional unaudited data

  23. Case 2: Nigeria – CRF Expenditures • 79% of disbursements are on account of Treasury Bonds. * Provisional unaudited data

  24. Case 2: Nigeria – Net TB Support • In FY 03 - in ten out of twelve months NTB operations reduced monthly cash balances. * Provisional unaudited data

  25. Case 2: Nigeria – Non NTB Disbursements • In FY 03 – Cash constraints severely impacted capital and recurrent expenditures. * Provisional unaudited data

  26. Conclusion • Poor budgeting can aggravate stress of budget management (India). • Unpredictability of fund flows can severely impact project performance (Nigeria). • Multitude of bank accounts result in sub optimal cash management (Nigeria). • Are there robust systems for linking financial progress with physical progress? • Does flow of funds result in better outcomes?

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