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Budget Reform and Policy Implementation

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Title: Budget Reform and Policy Implementation


1
Budget Reform and Policy Implementation
  • General Course on Good Governance
  • Centre for Human Rights
  • 8 July 2002

2
What is the MTEF?
  • MTEF sets out 3-year rolling spending and revenue
    plans for national and provincial government
  • 2002 Budget is the 5th MTEF budget tabled in
    Parliament

3
Advantages of a MTEF
  • Greater certainty for depts to plan and budget
    for services in line with policy priorities
  • Affordable spending in the medium term
  • Strengthened political decision-making and
    accountability
  • Greater transparency of budget and service
    delivery information for the public
  • Improved management of public finances

4
Key players in process
  • Cabinet
  • Parliament
  • Ministers Committee on the Budget
  • Budget Council
  • Budget Forum
  • FOSAD
  • Supporting technical committees

5
Main steps in budget process
Policy priorities
6
MTEF process and reforms
  • Early discussion by the Ministers Committee on
    the Budget Cabinet on policy priorities (May-
    July)
  • Preparation and submission of departmental MTEF
    budgets (May to Aug)
  • Review of departmental budget submissions (Aug)
  • Division of revenue medium term priorities
    (July-Aug)
  • National provincial MTEC allocation process
    (Sept-Nov)
  • Medium Term Budget Policy Statement (Nov)
  • Preparation of budget documentation (Nov-Feb)
  • Tabling of Budget in parliament (3rd week of Feb)

7
Fiscal framework
Borrowings
Expenditure
Debt Servicing
Tax Revenue
Contingency reserve
Available Expenditure
8
Division of Revenue
Available Expenditure
National Share
Provincial Share
Local Share
9
Budget documentation
  • Intergovernmental Fiscal Review (Sept)
  • Medium Term Budget Policy Statement (Oct)
  • Budget Review and Budget Speech (Feb)
  • Estimates of National Expenditure (Feb)
  • Provincial Budget Statements (Feb March)

10
  • New national and provincial budget formats
    developed in line with s215 of Constitution s27
    of PFMA
  • New formats aim to
  • Reduce duplication in budget documentation
  • Move to Government Financial Statistics (GFS) in
    the new economic classification
  • Strengthen link between planning and
    prioritisation, budgeting and service delivery

11
Key Budget format reforms...
  • Extension of medium term information
  • 7-yr trend information enables comparative
    analysis
  • Service delivery information - specifying outputs
    and output measures and indicators
  • Emphasises value for money
  • Move towards quantity, quality, timelines and
    cost measures and indicators in subsequent
    Budgets
  • Tracking and making progress in service delivery
    is key message

12
  • Helps departments plan, budget and manage
    programmes better
  • Improves accountability and control
  • Informs policy- and decision making
  • Provides information to the public about what
    goods and services government buys

13
Policy priorities reforms
  • Strengthening link between Govt policy priorities
    and public expenditure is key message of MTEF
    budgeting
  • Spending plans translate policies into service
    deliverables - a key tool for public goals
  • Budget reform aims to strengthen political
    oversight of policy and budget prioritisation
  • Facilitates policy priorities for sustainable
    development

14
Budgeting and policy choices
  • Budget prioritisation policy choices and
    trade-offs against resource constraints,
    contributing to Governments strategic goals,
    incl
  • Reducing poverty and vulnerability
  • Increasing employment
  • Increasing investment
  • Lowering the costs of economic activity
  • Improving safety and security of citizens

15
Strengthens MTEF Budgeting..
  • Strategic set of budget priorities strengthens
    credibility of MTEF budgeting
  • Guides resource allocation decisions in budget
    process
  • Strengthens political oversight of budget process
  • Reinforces link between policies, spending
    service delivery
  • Advances public goals of social and economic
    development

16
Building on 2001 2002 Budgets
  • In 3-year rolling MTEF
  • Priorities decided on in 2001 2002 Budgets form
    basis for review of priorities for 2003
  • Existing priorities evident in forward estimates
    of 2002 MTEF (i.e. year 2 year 3 estimates)
  • Review of priorities is about guiding resource
    allocation at the margin within the new MTEF
  • Additional available resources through economic
    growth, increased revenue collection and economic
    growth

17
Existing Budget priorities
  • Budget priorities reflected in 2001 2002
    Budgets include
  • Investment in new infrastructure and
    rehabilitation maintenance of existing
    infrastructure
  • Deepening the skills capacity of the economy
  • Reducing poverty and vulnerability among our
    citizens
  • Encouraging partnerships with communities to
    improve access to basic services
  • Strengthening capacity to combat crime

18
Infrastructure allocations
19
Priorities reflected in DoR
  • Budget priorities choices reflected in Division
    of Revenue to 3 spheres
  • Strengthening capacity to fight crime increases
    the national share
  • Extending coverage and raising the value of
    social security grants adds to the provincial
    share
  • Improving access to basic services (water,
    sanitation, electricity, refuse removal) raises
    the local government share

20
2002 Division of Revenue
21
Process of prioritisation.
  • Review of priorities for 2003 to evaluate
  • How policy options and priorities contribute to
    Governments strategic social and economic goals?
  • What factors should be taken into account in
    assessing trade-offs against resource
    constraints?
  • How do various kinds of economic and social
    policy concerns complement each other or compete
    for resources?
  • What should the sequencing of policy
    implementation be for sustainable economic and
    social development?

22
Looking ahead to 2003 .
  • Looking ahead to the 2003 MTEF
  • The correct budget priority choices may be to
    deepen and strengthen existing priorities rather
    than introducing new priorities
  • Questions often arise on how to implement these
    choices are just as NB as they determine how
    successful policy choices are in practice

23
Policy implementation challenges
  • Increase capacity to spend on infrastructure
  • Lever private sector finance and expertise
  • Enhance environment for step up in private sector
    investment
  • Further tax reform
  • Strengthen employment creation incentives
  • Reinforce labour-based infrastructure and service
    delivery
  • Address regulatory impediments to increased
    formal sector job creation
  • Enhance support services to SMMEs and informal
    sector

24
Policy implementation challenges
  • Reduce poverty and vulnerability
  • Improve access to services for the poor
  • Extend coverage and improve quality of basic
    social service delivery
  • Reinforce crime prevention capabilities
  • Implement sector policing
  • Improve prison management
  • Rationalise courts
  • Harness information communication technology
    improvements
  • Options to complement telecommunications growth
    competition

25
Budget Reform and Policy Implementation
  • General Course on Good Governance
  • Centre for Human Rights
  • 8 July 2002
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