The Role of Parliament in the budget process

1. The Role of Parliament in the budget process

2. Overview • Actors in the budget process • Stages in the budget process • Budgeting for the medium term

3. Key Actors in Budget Process • Finance ministryor treasury: Coordinate & drive budget process • Spending departments: Responsible for expenditures within their jurisdiction. • Head of State& Cabinet: Make political decisions about tradeoffs. • Legislature: Scrutinize & authorize revenues and expenditures. • Supreme audit institutions: Audit government accounts for compliance and performance. • Others: Media, civil society organizations, donors & international financial institutions.

5. Drafting stage • A draft budget that can be submitted to legislature. • Mostly internal to the executive, secretive. • Sets fiscal policy & estimates revenues on projections to establish total resources. • Finance ministry issues guidelines to spending departments. • Budget requests from spending departments. • Negotiations at bureaucratic and political levels.

6. Legislative stage • Budget tabled in the legislature. • Considered by parliamentary committee(s). • Parliament accepts, rejects or amends the budget.

7. Execution/implementation stage • Funds apportioned to departments to implement activities. • Finance ministry monitors spending. • Request for legislative approval of adjustment budget if necessary. • Fiscal risks are inherent in a changing economic environment – purpose of contingency reserves. • In-year adjustment decisions should be transparent and thoroughly scrutinized.

8. Audit stage • Supreme audit institution assesses departmental accounts and performance. • Audit reports should be published promptly and submitted to parliament. • We will look at this stage in more detail in a later session.

9. Budgeting for the Medium Term • Many aspects of budgeting require more than an annual time horizon; • Medium Term Expenditure Framework (MTEF) indicates size of financial resources needed for medium term (3-5 yrs) to carry out existing policy; • Differs from multiyear budgeting; • Usually, only first year of MTEF is approved by legislature

11. Concluding remarks • Thorough acquaintance with the actors and process of budgeting is essential for parliamentary budget researchers and committee staff; • Simplified and generalized summary of budgeting in the public sector. • Core participants in a typical budget process are the executive, including finance ministries and spending departments; the legislature and its committees; as well as supreme audit institutions. • Most budget processes in the public sector go through drafting, legislative, implementation, and audit stages. • Medium term budgeting frameworks are increasingly used to guide annual budgeting and to provide a broader planning horizon.