METHODS OF EXPENDITURE TRACKING Collaborative Africa Budget Reform Seminar. 1st to 3rd December 2004 FARM INN, Pretoria, South Africa

OUTLINE Introduction Planning and Budgeting Budget Execution Expenditure Tracking Challenges Conclusion

Introduction Increased expenditure does not automatically translate into improved service delivery Limited revenue increases do not allow increased allocations to priorities Hence the need for improved efficiency and effectiveness in resource use

Planning and Budgeting Strategic Allocation based on the Priorities (Allocative Efficiency) Linking Budgets to Outputs and Outcomes Unit Cost Monitoring Indicators developed to measure implementation progress

Budget Execution Work-plans (Annual/Quarterly) MoUs Financial Performance Reports Actual vs Planned Expenditures Physical Performance Reports Actual vs Planned targets

Budget Execution Cont’d Transparency Wide participation of stakeholders in planning and budgeting Publication of releases Popular versions PEAP Citizens’ Guide to the Budget Process Budget at a Glance

Expenditure Tracking (ET) Why Expenditure Tracking? To ensure that funds reach the intended target beneficiaries Complements the existing monitoring system Provides a rigorous review of expenditure Highlights issues of operational efficiency due to in-depth analysis

Expenditure Tracking Cont’d Review of processes and systems How funds channelled including the banking system Systems and capacity for recording and reporting on expenditure Linkage between Inputs and outputs – Efficiency & Economy Outcomes – Effectiveness/Incidence

Expenditure Tracking Cont’d Budget Performance Reports (Quarterly, Biannual and Annual) Public Expenditure Reviews Expenditure Tracking Studies Value for Money Audits Surveys (HH, DHS, Impact studies, NSDS, PPAs + voices of the poor) Civil Society – Independent monitoring

Expenditure Tracking Cont’d Examples of Expenditure tracking studies Education Initial studies focused on reach of expenditures Recent studies have in addition to expenditures focussed on other aspects such as quality and drop out rates Health Focussed on flow of funds Who benefits and accountability

Expenditure Tracking Cont’d Value for money audit in water focussed on: Sector planning and management capacity Procurement process Contract supervision and monitoring Functionality of the O&M of structures Financial Management, reporting & accountability Average cost of outputs

Challenges Availability of skills Availability of data particularly on outcomes/impact Some systems/processes are difficult to change eg bottlenecks related to access to banking services Difficulty in reducing the unit costs in the short run

Challenges Cont’d Expenditure Tracking Studies may be expensive Lack of good reporting mechanisms especially on physical performance

Conclusion Increased expenditure alone may not result in improved service delivery Linking budgets to outputs/outcomes and clear unit costs is a pre-requisite for improved ET. Expenditure tracking does not replace monitoring but complements it