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Business issues in Budget management, monitoring in Fiscal Policy initiatives

Business issues in Budget management, monitoring in Fiscal Policy initiatives


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  • 1. Fiscal Policy, MacroEconomics Legislatures and Budgeting Prepared for Ministry of Finance, Department of Economic Policy, REPUBLIC of NAMIBIA
  • 2. “The Key to the Solution is the formulation of the Problem” Tom Dietrich – IEEE Computer Society Lectures on Artificial Intelligence Portland Oregon 1984
  • 3. Fiscal Policy Working Group Goals goals to provide capacity, perspectives and objectives • Provide view and content on effect of fiscal policy initiatives across the range of macroeconomic sectors… • Reveal, verify and validate how economic policy different strategies interact to achieve desired goals and objectives. • Measure and assess how different strategies interact ..... • Provide a verifiable, transparent, collaborative, robust & customisable framework • Provide capacity to verify policy implementation and validate results to achieve planned goals and objectives • Provide an effective way of incorporating the public sector into aggregate econometric models • Contribute to programmes such as public finance management, budget cycle, revenue projections, expenditure monitoring & control, and statistical accountability • Provide a Republic of Namibia Ministry of Finance a Macroeconomic and Economic Policy Analysis Database Framework – all rights reserved - D. Garigan
  • 4. Republic of Namibia
  • 5. Factors Influencing Legislative Roles • Constitutional foundation – From Presidential separation of powers to Parliamentary systems • Cohesiveness of party systems • Institutional features of legislatures – Bicameral – Full time governing bodies vs. part time – Capacity to review executive budgets • Comprehensiveness of budget
  • 6. 20th Century as Executive Century • Legislative Roles Eclipsed – Little role in fiscal policy targets – Limited authority to change executive budgets – Limited time and capacity to review budgets • Range of Influence Across Legislatures – Budget making legislatures – Budget influencing legislatures – Budget marginalized legislature
  • 7. Economic Policy Analysis Database Framework    
  • 8. Issues of Influence in Budgeting • Government response to social and financial and international pressure • Influence of key legislative actors • Linking of Legislative Action with results • Executive control of implementation • Synchronisation of legislative & executive – Economic policy reforms, executive action with legislative reaction
  • 9. Legislative Budget Changes • Formulating economic impact of budgets • Strengthening monitoring process • Enhancing legislative capacity for detail • Present appropriations and budget execution in a common context • Common set of concepts, semantics for economic outputs, results and quantitative measures; review of formulated policy
  • 10. Barrier to the Economic Policy Framework ProblemsProblems Complex of agents, actors, roles,  Standards for sector data, arbitrary definitions  Quantitive “results” with unknown validity  Top-down Budgeting  Single agency proposal  No external monitoring  Executive Branch Performance Management  Administrative summary report resultsAdministrative summary report results DispersedDispersed Fiscal InformationFiscal Information Information notes.. not data. Cannot integrate No Digital Budgeting and Accounting System Lack of common semantics across agents. No Standard Measures of activities or results Administrative overheads for collecting data agent accountabilityagent accountability, centralized control,centralized control, actors & roles; no dataactors & roles; no data
  • 11. Fiscal Policy Monitoring Feasibility Demonstration Project First Steps in multi stage budget approval/execution monitoring • Identify functional classifications of economic policy data. • Identify sources/gaps in required data • Assess existing capacity and quality of data • Focus on short term achievable objectives • Construct/select preliminary development plan and sequence of events – • Accounting category standards based on IMF Cost of Functions Of Government (COFOG) pilot. (Customs, IRS, 2 Local & Regional Govt) (80/20 rule scenarios) • Test flight with prototype Database Framework context and Accounting Chart of Accounts redefinition, integrated into budget preparation and approval process
  • 12. Economic Policy Database Framework Functional Layers The mulitier database specification, includes 3 basic layers: 1. External agent Interface Layer 2. Data Warehouse IFMS Interface and Economic Policy Work Space 3. Macroeconomic Entity Layer • NOTE #1 External Agents– the lower tier provides an interface specification for receiving and managing data streams from external data sources (regions, ministries and organizations - e.g. Bank of Namibia, National Planning Commission, Customs and Excise, etc) for receiving subscription based transfers of non fiscal sector reports and data. Much of the subscription data could be directly translated to the Macroeconomic layer 3 • NOTE #2 The Government Financial Management Information System (GFMIS) layer enables the “economic” approach to the Financial Mangement accountancy in the General Ledger as a basis for capturing data to support Macroeconomic modeling. • NOTE #3 Workshop Layer - the repository of Macroeconomic Entities (ME) sets are constructed from summaries the processing of #1. External Interface “preformed data” (e.g. Bank of Namibia monthly summary transactions). Other constructions would involve merging the IFMS transactions with the Development Project Registration Tables
  • 13. Economic Policy Collaboration Sequence Diagram verify project detail modify/approve taskplan, activitycode and outputindicator Update cofog + project funds confirm stakeholders, project task > cofog + budget line funds Review activities projectplan output indicators and target values Grant Applicant prospective project XA Region O/M/A NPC MoF Parliament Factor activities a sse ss potential stakeholders review proposed project output indicators and target values submitproject proposal prospective project provides project managmentand codes for OMAs financialmanagment reviewbudget amounts and codes; adjust and/or approve submit verified project package Archive approved budgetpackage verify invoice + monitoringdetail submit project as authorised budget request budget measure introduced, approved/modified/ rejected fundingresultfunding result funding result funding result invoice+project monitoringreport carry out project tasks purchases and planned events approved request for payment authorise payment update amounts Request for Development Project Grant Funding d.garigan 12June2009 EPAD Seq-1 cofog expense function codes cofog list setup activty expense codes cofog list EPAD Seq Diagram collaborating roles and actions
  • 14. Functional Slice of Context XA OMA Review Project Proposal Archive Documents ParliamentRegion NPC Review Project set- up prepare project accounting Package MOT/ IT Message MoF Development Project Proposal/Approval & Funding Evaluate and Recommend Revue with sponsor Authority Authoritize Accoutning Authoritize Budget 7. Models and Processes
  • 15. Role Activity and Results The Deliberative Process • Legislative institute structure change the budgetary process • Greater time afforded for review of executive requests. Examples include – United States Congress receives budget 8 months before fiscal year – United Kingdom presents estimates two weeks before Parliamentary consideration • Committees as the heart of legislative influence – Emergence of Budget Committees – Roles of authorizing committees Paul L. Posner George Mason University
  • 16. Roles for integrating project budgeting into Fiscal Management Framework • Role Code Activity • External Agent XA Individual / enterprise with project for government funding • Regional Admin RA Regional administration of Local Governments • Line Ministry OMA Responsible for national sector activity & funding government • Nat’l Planning NPC National Planning authority, standards, coordination • Ministry Finance MOF Financial Management authority for standards and practices • Parliament PAR Legislative body for allocating state revenues and expenditures Budgeting Role and Activity integration into a Legislative Based Fiscal Management Framework
  • 17. FY2006 Cabinet Prime Minister Minister of Finance Minister of Economy, Trade and Industry Minister of Internal Affairs And Communications ・・ ・ Other Ministers Minister of State for Economic and Fiscal Policy Budget Bureau Tax Bureau ・ ・ ・ Cabinet Governor, National Bank Chief Cabinet Secretary Prime Minister Minister of Finance Minister of International Trade and Industry Minister of Home Affairs・・ ・Other Ministers Budget Bureau Tax Bureau ・・・ Chief Cabinet Secretary Council on Economic and Fiscal Policy corporate executive scholar scholar corporate executive Example council on Economic and Fiscal PolicyExample council on Economic and Fiscal Policy Until 2001 Paul L. Posner George Mason University
  • 18. Budget Execution • Appropriations Accounts as Foundation of Legislative Accountability – Legislatures in Korea, Italy and France broaden account structures to promote performance accountability • Legislative Controls Over Budget Execution Mixed – Transfers across appropriations items – Carry over of funds across fiscal periods – Contingency Funds
  • 19. Entity Model of Multi Sector Tutorial Demonstration Capital Entity DisbursementCapital Project supports creates enables Loan Annual Depreciation Exchange Rate Revenue Collection External Bank Fund Foreign Currency funds Sector Program includes Accrues ServicesGoods repay Foreign Direct Investment Capital Project for Sector Function Results in Goods & Services Revenue Collection External Debt
  • 20. Legislative Oversight • Enhanced Reporting and Information – Some legislatures require monthly, bimonthly, quarterly and annual reporting • Performance and financial management reforms yield systematic information – United Kingdom Spending Reviews – France Performance Plans and Reports – United States and Korea PART • Legislative oversight committees – Public Accounts Committees – Netherlands Public Expenditure Committee • Roles of National Audit Offices – From Financial Audits to Performance Audits
  • 21. Macroeconomic view of Functional Data Implementation Data Schema • External Bank Fund = • External Debt = • Foreign Currency = • Loan = • Disbursement = • Capital Project = • Capital Entity = • Sector Program = • Goods = • Services = • Revenue Collection =
  • 22. Issues to Consider: Strengthening the Budget Process XA OMA Review Project Proposal Archive Documents ParliamentRegion NPC Review Project set- up prepare project accounting Package MOT/ IT Message MoF Development Project Proposal/Approval & Funding Evaluate and Recommend Revue with sponsor Authority Authoritize Accoutning Authoritize Budget 7. Models and Processes

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