Monitoring-PRS Budget Links THE MOZAMBICAN CASE Jose Sulemane PREM Knowledge & Learning Forum 17 April 2007

Planning/Budgeting: System Overview GOVERNMENT’S 5-YEAR PROGRAMME (PQG) AGENDA 2025 MEDIUM-TERM PROGRAMMING ANNUAL OPERATIONAL PLANS Integration of objectives & targets + Coordination of monitoring process Action Plan to Reduce Absolute Poverty (PARPA) ECONOMIC & SOCIAL PLAN (PES) Prioritization of resources Harmonization of sectoral policy & strategy Sectoral & Provincial Strategic Plans Integration of Sector objectives & targets Consistency of budgeting with policy actions and objectives Integration of sectoral policy & strategy Global resource envelope & allocation amongst sectors Macroeconomic & sectoral scenario Medium Term Expenditure Framework (CFMP) Expenditure limits STATE BUDGET (OE)

Planning/Budgeting: Annual Cycle PES/OE GBS/IMF Jan Drafting Review of PES (BdPES) (yr n – 1) Feb BdPES/Budget Execution Report IV Semester (RTEO) year n-1 (annual also) Mar State Accounts (CGE) (n-2) analysis in AR Preparation of Joint Review; IMF Mission Apr CFMP discussed in Cabinet Joint Review May CGE(n-1) submitted to TA and AR; Budget Ceilings (31 May);, RTEO I Quarter Commitments for GBS (4 weeks after the end of JR) Jun Drafting PES/OE (n+1) by sectors Jul Drafting PES/OE (n+1) by sectors, submitted to MPD/MF by 31 July Aug Globalization of PES/OE (n+1); BdPES First Semester; RTEO II Quarter Preparation of Mid-Year Review Sep Submission of PES/OE to Cabinet and AR (end Sep) Mid-Year Review; IMF Mission Oct Nov RTEO III Quarter Dec Discussion/Approval of PES/OE (n+1) in AR

Planning/Budgeting: Monitoring Instruments PES/PAF monitored by PES Review (produced in Feb each year) & PES Half-Year Review (Aug). PES Review = overall review of GoM performance, including an evaluation of performance vis-à-vis PAF targets. PAF targets derived from key objectives of the PQG/PARPA  PES Review key instrument for PARPA monitoring. PAF set jointly by GoM & Direct Budget Support donors (PAPs). Budget monitored through Annual Execution Report (CGE) and Half-Year Execution Report (RTEO). CGE & REOE both include monitoring of expenditure in PARPA priority areas (current target = 65% total exp. to priority are Quantitative (HH Survey) and qualitative analysis (QUIBB)

Integration Issues: Assessment to Date Some barriers: CFMP = medium-term macro/fiscal projections. Not a “classical” MTEF (programme-based etc). CFMP  State Budget link weak, let alone with planning instruments (PQG, PES etc). First Time discussed in Cabinet in 2006 Budget split btn. “current” & “investment” (project rather than capital expenditure!) MPF divided (2005)  MF = current budget & overall execution, MPD = “investment” and overall budgetary ceilings, inc CFMP. Some positive points: PAF =  monitoring of PARPA.  integration of planning, budgeting & monitoring instruments. Good progress made in some Provinces/Districts (e.g. Nampula’s integrated Planning & Budgeting);

Integration Issues: Constraints & Opportunities Key constraints to integration: Sequencing of reform (full integration not feasible now!); Capacity constraints; Aid: Off-budgets, project-focus, unpredictability; Institutions: Separation of Planning, Finance & Cooperation; Lack of electronic budget management system, &; Monitoring tied to PAP conditionality   GoM incentive to improve it Weak Parliament and its technical commissions (need more oversight role) Opportunities for improvement: New PARPA to be costed and aligned with CFMP (more on this…); Ongoing integration & strengthening of planning/budgeting documents; Aid effectiveness agenda (lead by PAPs & GoM)  aid beginning to reinforce rather than undermine integration; Increased emphasis on role of district in planning and budgeting, &; New electronic budget management system (SISTAFE) set to begin roll-out.

New Developments: PARPA 2006 - 2009 PARPA II = “operationalization of the PQG” (also taking into account MDGs & Agenda 2025). Time horizon altered to electoral cycle, i.e. period of PQG  Next time, no PARPA, only extension of PQG! Participatory drafting process including civil society, provinces, districts, international partners.

Final Remarks Working Groups and mechanisms should be part of a normal routine of doing business in public administration in particular on policy design and following the planning/budget cycle Institutional framework, in particular levels of decision-making are critical for better integration, and now that emphasis is giving to decentralization (this might require institutional reforms!!!) Domestic Coordination in public administration is critical. Domestic institutions have to talk more among themselves Key challenges to  PARPA integration in planning/budgeting: Ensuring GoM/sector ownership Prioritisation & Costing of activities/policies Matching plans with overall CFMP fiscal framework Taking into account external funding Alternative Scenarios???

THANKS FOR YOUR ATTENTION! PREM Knowledge & Learning Forum 17 April 2007