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Public Expenditure Management: Budget Execution. Bill Dorotinsky, PREM public sector group. PEAM Course March 21, 2005. Expenditure Management Cycle. Financial management system boundaries. Project. Resource. Annual budgets. Medium term. appraisal. allocation. Development,. Planning.

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Public expenditure management budget execution

Public Expenditure Management:Budget Execution

Bill Dorotinsky,

PREM public sector group

PEAM Course

March 21, 2005


Expenditure management cycle
Expenditure Management Cycle

Financial management system boundaries

Project

Resource

Annual budgets

Medium term

appraisal

allocation

Development,

Planning

plans, e.g. three

recurrent and

system

year rolling plans

revenue

Expenditure

Liquidity

management

review

Public expenditure

Institutions

review

Fund release

procedure, e.g...

warranting

Accountability

Expenditure

Project monitoring

control

Audit system

Post event

Accounting for

Monitoring

review

revenue and

& controlling

expenditure

Reports and

financial statements

Source: Adapted from Integrated Financial Management.Michael Parry, International Management Consultants Limited.Training Workshop on Government Budgeting in Developing Countries. THE UNITED NATIONS. December 1997.


Why is budget execution important
Why is budget execution important?

Credibility of the Honduran Budget – In-year Deviations by Agency

(percent of the executed over the approved budget)


What is budget execution
What is budget execution?

  • Processes and institutions to implement the budget

  • Incentives – principle-agent problem

  • Reflects that budget is NOT only an accounting document

    • also a political document

    • Planning/steering device


Objectives of budget execution
Objectives of budget execution

  • Manage Spending and Revenues to budget

    • support choices of elected officials

    • allow budget to be planning and steering tool

    • promote macrofiscal discipline

    • Reduce opportunities for corruption

  • Enable program implementation

    • Assure resources flow to programs

    • allow budget to be aid to operational efficiency through spending unit advance planning, efficient administration

    • enable program managers to achieve objective


General phases of execution
General Phases of Execution

  • Phase 1: Allocation

  • Phase 2: Ministry Spending Plans

    • link actions with finances; cash flow needs

  • Phase 3: Commitments

  • Phase 4: Verification

  • Phase 5: Liquidation of Financial Obligation


Phases of execution
Phases of Execution

Source: Integrated Financial Management.Michael Parry, International Management Consultants Limited.Training Workshop on Government Budgeting in Developing Countries. THE UNITED NATIONS. December 1997.


Core functions
Core Functions

- internal control

- program management

- spending (commitments)

- recording & reporting

- payment orders

- verification of receipt of

goods/services

- program/cash plans

Financial Management is Everyone’s Responsibility


Expenditure system
Expenditure System

External

Audit

Self-correcting

system

No scandals

does not mean

clean system

Procurement, Personnel, Physical Asset, Contract, Performance Management




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