Budget Execution: Tracking Progress and Controlling Funds Case Studies

1
Budget Execution Tracking Progress and
Controlling Funds - Case Studies

• Parminder Brar, FM Anchor
• Budget Management and Financial Accountability
  Course
• March 1-2, 2004

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Outline

• Case Study 1 India Why India? Bank lending of
  around 1.5 bn. Is 1.29 of GoIs budget, and
  around 0.6 of general government spending.
  Supporting budget management reform is critical
  for achieving MDGs. Budget Management System
  based upon Treasury Single Account and
  reimbursement to commercial banks.
• Case Study 2 Nigeria Why Nigeria? Cash
  management crucial for budget management. Role of
  CBN in budget management. Budget management based
  upon cash advances and multiplicity of bank
  accounts and banks for each agency.
• Conclusion

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Case 1 India Expenditure Trends

• Annual expenditure trends are remarkably similar.

Rs. 1 crore Rs.10 million.
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Case 1 India Expenditure Trends

• Annual expenditure trends are remarkably similar.

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Case 1 India Overall Expenditure

• Around 75 of GOI expenditure is recurrent (Non
  Plan) and the rest is capital (Plan) .

There could be some overlap in capital and
recurrent expenditure between Plan and Non Plan.
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Case 1 India Non Plan Trend

• Annual trends of recurrent expenditure are
  remarkably similar.

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Case 1 India Non Plan Expenditure
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Case 1 India - Plan expenditure

• Around 40 of capital expenditure is spent in the
  last quarter.

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Case 1 India Plan expenditure
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Case 1 India - Ministry trends

• The Indian Rope Trick

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Case 1 India - Ministry trends

• The Peaks

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Case 1 India - Ministry trends

• The Rolling Hills

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Case 1 India - Ministry trends

• The Stress Reliever

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Case 1 India - Receipts

• Tax receipts account for 60 of GOI receipts

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Case 1 India - Receipts

• Receipt trends are remarkably similar.

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Case 1 India - Receipts

• Tax receipts have been overestimated for the last
  7 years.

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Case 1 India - Receipts

• Budget Management challenges are partly due to
  overestimating receipts every year.

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Case 1 India - Receipts

• GoIs receipts flow into a Treasury Single
  Account in the Reserve Bank of India.

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Case 1 India - Disbursements

• Disbursements are on the basis of reimbursement
  of funds to commercial banks. One Ministry deals
  with one bank.

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Case 2 Nigeria - Receipts

• Cash management is based on funds available in
  the CRF.

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Case 2 Nigeria - Expenditures

• Disbursement system operates on the basis of cash
  advances to numerous banks.

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Case 2 Nigeria CRF Receipts

• 77 of receipts are on account of Treasury Bonds.

Provisional unaudited data
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Case 2 Nigeria CRF Expenditures

• 79 of disbursements are on account of Treasury
  Bonds.

Provisional unaudited data
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Case 2 Nigeria Net TB Support

• In FY 03 - in ten out of twelve months NTB
  operations reduced monthly cash balances.

Provisional unaudited data
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Case 2 Nigeria Non NTB Disbursements

• In FY 03 Cash constraints severely impacted
  capital and recurrent expenditures.

Provisional unaudited data
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Conclusion

• Poor budgeting can aggravate stress of budget
  management (India).
• Unpredictability of fund flows can severely
  impact project performance (Nigeria).
• Multitude of bank accounts result in sub optimal
  cash management (Nigeria).
• Are there robust systems for linking financial
  progress with physical progress?
• Does flow of funds result in better outcomes?