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Budgeting in Bulgaria - Jungmin PARK, OECD

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This presentation was made by Jungmin PARK, OECD, at the 15th Annual Meeting of OECD-CESEE Senior Budget Officials held in Minsk, Belarus, on 4-5 July 2019

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Budgeting in Bulgaria - Jungmin PARK, OECD

  1. 1. OECD Budget Review of Bulgaria - Preliminary assessment - Jungmin Park Senior policy analyst, Budgeting & Public Expenditures OECD CESEE SBO, Minsk, Belarus, 5 July 2019
  2. 2. Context (1) : Steady economic growth 2 -6.0 -4.0 -2.0 0.0 2.0 4.0 6.0 8.0 2000 2003 2006 2009 2012 2015 2018 Real GDP growth rate European Union (28 countries) Bulgaria (%) Source: Eurostat database of June 2019.
  3. 3. Context (2) : Robust public finance 3 0 10 20 30 40 50 60 70 80 90 100 200720082009 2010 2011 2012 2013 2014 2015 2016 2017 2018 General government debt EU (28 countries) Bulgaria (% of GDP) Source: Eurostat database of June 2019. -8 -7 -6 -5 -4 -3 -2 -1 0 1 2 3 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 EU 28 Bulgaria Threshold General government budget balance (% of GDP)
  4. 4. • Explain reforms undertaken since the previous OECD budget review (2009) • Assess alignment with the OECD 10 recommendations on Budgetary governance • Identify priority areas for further reforms Objectives of the OECD budget review 4
  5. 5. PRELIMINARY ASSESSMENT 5
  6. 6. Public Finance Act (2013) 6 Significance • Primary budget law for the general structure of public finances* * amended in 2015, 2016, 2017 • Prudent fiscal policies consistent with the European Union Main contents • Strengthening medium-term budget framework and budget forecasting according to ESA(European System of Accounts) 2010 • Strict fiscal rules (Debt, budget balance and spending) • Social insurance, health insurance and municipal budget consistent with state budget • Sustainable implementation of a programme budget format • Increasing the budget transparency and accountability through monitoring and reporting
  7. 7. Budgeting within fiscal objectives OECD Principles of Budgetary Governance Quality, integrity & independent audit Performance, Evaluation & VFM Comprehensive budget accounting Effective budget execution Alignment with medium-term strategic plans and priorities Performance, evaluation & VFM Transparency, openness & accessibility Participative, Inclusive & Realistic Debate Fiscal Risks & Sustainability Capital budgeting framework Alignment with medium-term strategic plans and priorities
  8. 8. Performance, Evaluation & VFM Preliminary assessment Main changes/progress - Fiscal rules underpin Government commitment to counter-cyclical, sustainable fiscal policy - Budget targets are strongly respected by Council of Ministers - Medium-term forecasts are realistic and prudent Recommendations - Improve the alignment between medium-term strategic plans and the budget to make the expenditure ceilings less indicative - Closer cooperation between MoF and other centre of government bodies on strategic planning - Enact the draft Law on Strategic Planning to ensure that progress to date is built upon Alignment with medium-term strategic plans and priorities Budgeting within fiscal objectives
  9. 9. Performance, Evaluation & VFM Main changes/progress - Performance-based budgeting is used widely* * policy area, programs, performance indicators, etc. - MoF launched an initiative to review and prioritise performance indicators in the key sectors - MoF started joint spending review projects with the World Bank - MoF carried on the process of preparing spending reviews, based on the World Bank public spending manual Recommendations - Improve the linkage between performance information and budget process (i.e. using the reprioritisation of resources) - Introduce an agenda for implementation of spending reviews Preliminary assessment Transparency, openness & accessibility Performance, evaluation & VFM
  10. 10. Performance, Evaluation & VFM Main changes/progress - Independent Fiscal Council was established in 2016 - Fiscal Council serves as a reference point for fiscal policy and enhances the quality of budget process - National Audit Office is well designed to deal authoritatively with financial accountability Recommendations - Strengthen an involvement of Parliament in the budget process - Requires adequate resources and timely access to information and fiscal plan for the Fiscal Council - Value-for-money audit by NAO for enhancing the effectiveness in managing public funds Preliminary assessment Quality, integrity & independent audit Participative, Inclusive & Realistic Debate
  11. 11. Performance, Evaluation & VFM Preliminary assessment Capital budgeting framework Main changes/progress - Capital budgeting integrated within overall fiscal policy of the Government - Ordinance adopted by CoM in 2015 establishes a framework for approving capital investments Recommendations - Adopt a standard methodology for public investment management to enable CBA and comparison across sectors - Develop institutional capacity to appraise, procure and manage large projects - Place more emphasis on monitoring and reporting and ex-post evaluation
  12. 12. 12 Preliminary assessment Comprehensive budget accounting Main changes/progress - Administrative, economic and functional classifications in the budget nomenclature - Monthly reporting in-year and modified accruals for year-end reporting Recommendations - Establish consolidated modified-accruals financial statements for the State and consider a move to full accrual accounting - Establish a quality insurance mechanism for accounting standards (independent standards setter or advisory council) - Provide more detailed and legible on transfers in monthly budget execution reports - Consider formal approval from the Parliament for major changes in budget execution (between policy areas) Effective budget execution
  13. 13. http://www.oecd.org/gov/budgeting/ 13

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