Introduction Purpose – guide to MDAs, Regional Secretariats (RSs) and Local Government Authorities (LGAs) in the preparation of plans and budgets consistent with the FYDP I FYDP I 5 key priority areas are infrastructure; agriculture; industry; skills development; and tourism, trade and financial services. PBGs 2012/13 are in 2 parts - instructions and information in part 1; and standard forms are in part 2. PBGs 2012/13 jointly issued by the MoF and the POPC

Process Strengths Participation of key stakeholders at early stages of preparation – RBA team and PBGs committee meeting to gather technical inputs Discussed at various levels in the government – IMTC (Permanent secretaries), the Parliament, and the Cabinet (including approval) Timing - issued early (Feb 2012) for the MDAs, RAS, and LGAs to have enough time to prepare their plans and budgets Posted on the MOF website for budget transparency

Process Weakness Limited participation of key stakeholders at various stage of the PBGs preparation (technical inputs); different drafts could be shared for comments before final document is issued. Timing – could be issued much earlier say (Dec/Jan) so that MDAs, RAS, and LGAs can have more time for preparing their plans and budgets Lack of discussion on final approved PBGs with key stakeholders like DPs

Content Strengths Emphasis on key priority areas of FYDP I and MKUKUTA II Review of the performance on implementation of FYDP in the 1 st half of 2011/12 Provide clear focus areas for MDAs, RAS, and LGAs in preparing Annual Development Plans and Budgets for 2012/13 Clear message on improving domestic revenue collection (including from natural resources, and controlling exemptions) Clear message of the government decision to maintain debt sustainability by ensuring that non concession borrowing is directed to specific projects with high economic returns to the country; and suspension of government guarantees. Specific measures in order control recurrent expenditure and reduce cost – including government vehicles, allowances, workshops and seminars, furniture, procurement management, and accumulation of arrears And ……

Content Weakness Long list of priorities in a limited budget space Lack budget ceilings for different MDAS. RAS, and LGAs Large difference between the PBGs and the PSI framework. While timing is different, the variations in the PBGs and the preliminary IMF budget frames are significant (revenues, expenditures, debt, and overall deficit targets). Budget frame and stated messages in the PBGs document are not fully consistent. For instance, (i) recurrent spending is projected to increase while development spending will decline; domestic revenue will continue less than 100% of recurrent spending for sometime. Also, huge projected increase in the wage bill, especially in this FY.