Composite Budgeting and Decentralization: Issues and Solutions

Description

Composite Budgeting and Decentralization provides a useful basis to think about and analyse PFM issues at both the Central Government and Sub National Government levels and meaningfully discuss solutions/options through the use of simple analytical frameworks. It takes into account both the system dimensions of formal PFM institutional practice, as well as the political economy elements that can complicate and obscure PFM practice in a given country. The particular challenge of PFM practice in the developing country context is addressing the range elements of PFM expenditure and revenue management carried out over typically long management pathways positioned over a weak financial administrative network; and also carried out in a political economy context that makes it difficult to achieve the first step for sound PFM performance – fiscal discipline.

The emphasis for the course is on an analytical framework which approach provides the participant withrelevant and effective tools to assess and understand a given country´s PFM rather than simply provide a menu of best practice options that may or may not be relevant in a given developing country.The professional development workshop covers the PFM context – the macroeconomic context, thepolitical economy context and the financial administrative network upon which the PFM systems operate. It explores the institutional arrangements supporting PFM and specifically focuses on the intergovernmental fiscal transfer arrangements. It discusses the general government structure and composite budgeting. It explores the full integrated budgeting cycle, reflecting the central government practices as well as the sub national government practices and their interrelationships. It specifically covers strategic planning, budget formulation – introducing Medium Term Expenditure Frameworks(MTEF), budget classification, the budget process, budget releases and cash management, predictability and control in budget execution, budget and expenditure control, payroll management, procurement,and internal audit. It also touches upon revenue management both at the central and sub nationalgovernment levels, debt management, simple accounting and financial reporting.

This introductory course also looks at parliamentary oversight and audit. Each of these topics are discussed within a context of composite budgeting.The course ends with a survey of PFM reforms including introducing an MTEF, adopting the COFOG/GFSstandard, program based budgeting, the implementation and roll out of IFMIS, adopting the IPSAS standard, introducing accrual accounting, introducing revenue management reforms, payroll reformsand procurement reforms.

Objective

The principal professional workshop objective is to provide participants with the introductory tools to effectively understand and discuss composite budgeting and decentralization and to identify many ofthe current issues faced by developing countries and the solutions being adopted to address these issues. Further, the workshop is designed to allow discussion and interaction with other participants who may share common challenges by encouraging interaction between central government PFM officials, sub national government PFM officials and development partner officials.

Audience

The target audience is Government officials from both the central government and sub national government level, and Development Advisors whose work is impacted by public finance management but with only basic exposure to and experience of public financial management.

Pre-requisites

This course is designed for people with basic exposure to public finance management. Given its intensive and comprehensive approach, it will be useful for participants to have attended a course suchas P1-PFM-001 Foundations of Public Finance Management.

Learning outcomes

By the end of the course participants should:

• Be aware of the context within which the composite budget operates – the political economy,the macro-economic context and the typical macro-fiscal policy posture of developing countries, the legal and regulatory framework, the institutional framework including inter-governmental fiscal arrangements, the constraining dimension of functional linkages and the financial administration network;
• Be equipped with some basic frameworks for identifying the strengths and weaknesses of a country’s PFM systems as it pertains to implementing a single composite general government budget;
• Be equipped with some basic analytical frameworks for looking at Public Finance Management –based upon the objectives for sound PFM: fiscal discipline, allocative efficiency and technica lefficiency; 
• Understand Strategic Planning; Budget Formulation; Budget Classification; Budget Preparation; Budget Execution encompassing Budget Releases, the Treasury Single Account, Commitment Control Systems, Establishment Control, the Expenditure Cycle, elements of revenue management, payroll management and procurement, financial management and reporting, and internal control; external audit and parliamentary oversight addressed at both the central government as well as at the sub national government level;
• Understand elements of revenue management (tax, non tax, royalties, grants and dividends) at the central government level as well as the main elements of revenue management at the sub national government level ( property taxes, business licenses, ceded revenues, royalty transfers);
• Appreciate the rationale for the different aid modalities adopted by the Development Partners;
• Be able to question the relevance as well as assess the risk and potential benefits of some popularly promoted PFM reforms – such as performance budgeting, the use of MTEF, accrual accounting, IFMIS, and the adoption of the IPSAS standard. 

Learning methods

The learning methods will include the following

• Introduction to key concepts through the “teaching and discussion” methods
• The use of original source material of key writers/thinkers in this area
• The use of extensive examples from many different countries with different experiences toillustrate the points put across
• The use of exercises (in particular short "buzz-group" sessions) to provoke and consolidate certain points raises
• The use of major case studies –to illustrate in more detail some of the key points of the course.