Public%20Expenditure%20Management:%20Budget%20Execution

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Public Expenditure ManagementBudget Execution
Bill Dorotinsky, PREM public sector group
PEAM Course March 21, 2005
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Expenditure Management Cycle
Source Adapted from Integrated Financial
Management. Michael Parry, International
Management Consultants Limited. Training Workshop
on Government Budgeting in Developing Countries.
THE UNITED NATIONS. December 1997.
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Why is budget execution important?
Credibility of the Honduran Budget In-year
Deviations by Agency (percent of the executed
over the approved budget)
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What is budget execution?

• Processes and institutions to implement the
  budget
• Incentives principle-agent problem
• Reflects that budget is NOT only an accounting
  document
• also a political document
• Planning/steering device

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Objectives of budget execution

• Manage Spending and Revenues to budget
• support choices of elected officials
• allow budget to be planning and steering tool
• promote macrofiscal discipline
• Reduce opportunities for corruption
• Enable program implementation
• Assure resources flow to programs
• allow budget to be aid to operational efficiency
  through spending unit advance planning, efficient
  administration
• enable program managers to achieve objective

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General Phases of Execution

• Phase 1 Allocation
• Phase 2 Ministry Spending Plans
• link actions with finances cash flow needs
• Phase 3 Commitments
• Phase 4 Verification
• Phase 5 Liquidation of Financial Obligation

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Phases of Execution
Source Integrated Financial Management. Michael
Parry, International Management Consultants
Limited. Training Workshop on Government
Budgeting in Developing Countries. THE UNITED
NATIONS. December 1997.
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Core Functions
Financial Management is Everyones Responsibility
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Expenditure System
Self-correcting system
No scandals does not mean clean system
Procurement, Personnel, Physical Asset, Contract,
Performance Management
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Control Approaches
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Criteria for Assessing Budget Execution System