1. Improving Budget Preparation in KR
Geoff Dixon
World Bank PPER consultant
Mark Silins
DFID Senior Consultant

2. Government is reforming budget preparation
MTBF
Program budgeting
BUT PEFA assessment of budget process is mixed
Question: does this mean reform is not working well?

3. Answer: YES! Reform is parallel and subordinate to deeply entrenched old budget preparation process
Instead of good annual budget preparation we have three parallel processes
deeply entrenched input focused line item budgeting
beginnings of a program budgeting results focus
MTBF submissions which do not connect with either of the above

4. Program budgeting has been a parallel process to budget preparation
line ministries are confused AND their
capacity is over-stretched
MOF plays post office role

5. Weak MTBF submissions due to weak sector strategies costing is weak
submissions fail to prioritize proposals
due to weak sector strategies
costing is weak

6. Consequences of parallel processes
Existing spending is reviewed each year from input perspective rather than results perspective
Resulting lack of budget flexibility means existing spending rolls forward year by year, crowding out new spending priorities

7. Conclusion 1:
Connecting the parallel processes requires sector ministries to improve their internal spending planning
identifying results of their activities
assigning costs to these results
managing sector policy priorities
ABOVE ALL line ministries need to use cost and results information in preparing their budget requests to MOF

8. Conclusion 2:
Connecting the parallel processes also requires MOF to
require both economic line item and results information in ministry budget requests
bounce submissions which don’t conform

9. They now need to be used as intended.
The necessary processes (program budgeting, MTBF) are in place.
They now need to be used as intended.

10. Four Separate Budget Processes - Reform in isolation

11. Policy Driven Budgeting
This diagram shows the relationship from the strategic policy setting right through to the inputs which are required for each ministry/agency
Not just the NPRS but all strategic processes of government and of the specific ministries/agencies should be consulted in formulating the budget
The MTBF provides the processes by which the budget is determined and ensures the budget reflects the strategic priorities of poverty reduction and enhanced economic performance
A program is simply a grouping of similar services or activities performed by an agency or ministry to achieve an objective.
Each program has a goal. A goal is a broad statement describing a desired outcome for an agency or program
In contrast to goals, objectives are specific, quantified, and time-based statements of accomplishment or outcome
An objective is measurable statement about the end result that a service or program is expected to accomplish in a given period of time consistent with the resources available. Objectives emphasize the results of agency actions
Inputs are the resources consumed or proposed to be consumed in achieving the objectives eg the staff, and other costs consumed
Measurement of inputs, outputs and outcomes will be discussed later in the presentation

12. What is the Progress In 2005
MoF led workshops with budget institutions focussing on linking the budget to strategic processes
Review of Programme submissions for compliance with the Budget Circular
In each of the five sectors in the MTBF process, improvements were noted in submissions for 2006

13. Review of the MTBF
Seeking to better align the three budget formulation Processes
Focussing on presentation of baseline data – eg 2004/2005 data
Comprehensiveness of presentation –examine whether capital budgets can be allocated to sectors for presentation purposes

14. 2006 Better integration of the three budget formulation processes
Chart of Accounts anomalies addressed
MoF, with support of donors, will convene more bilateral educational processes around the budget cycle – these will be focussed on addressing practice rather than theory

15. Early Thoughts on 2006 Budget Process