Budget Practices and Procedures - Results of 2013 / Survey - Joung Jin JANG () / Deanna AUBREY () Presentation to 10 th Meeting of -CESEE SBO 26 June 2014 1
Outline 1. Who are the Budget Community of Practice of? - Gelardina Prodani (Secretary General, MoF, Albania and BCOP Chair) 2. Developments and Priorities in Budgeting - Joung-Jin JANG (Budgeting and Public Expenditures Division, ) 3. - Budget Practices and Procedures Survey - Joung-Jin Jang (Budgeting and Public Expenditures Division, ) - Deanna Aubrey ( BCOP resource team) 4. Next Steps and Reform Priorities for Countries - Deanna Aubrey ( BCOP resource team) 5. Budget reforms Country Case Studies - Russian Federation (Ilya Sokolov, Director of Budget Policy Department) - Turkey (Hakan Ay, Deputy Director General, DG Budget and Fiscal Control, MoF) 2
1. Who are the Budget Community of Practice? Total of 147 representatives from Ministries of Finance from 21 countries in Europe and Central Asia attended 13 BCoP events in 2013 and 2014. Funded by MoF Russian Federation and Swiss Government SECO PFM reforms supported by benchmarking and sharing information through video conference and face-to-face meetings, study visits, website library, BCOP wiki. Led by Executive Committee of 8 member countries, World Bank resource team, and supported by Secretariat (Slovenian Center of Excellence in Finance).
BCOP, Antalya Turkey March 2014
2. Developments & Priorities in budgeting from annual to medium-term budgeting Heightened focus on management of fiscal risks Budgeting across levels of government from inputs to outputs, performance and impacts from MoF to independent institutions Greater engagement of parliament and citizens Budgeting as an instrument of public governance
3. - Budget Practices & Procedures Survey Covers key aspects of public budgeting Standard questions / topics for all countries Fiscal sustainability / fiscal rules MTEF Capital budgeting Budget flexibility Budget transparency Independent fiscal institutions Regional : LAC-, Asia-MENA (future)
3. - Budget Practices & Procedures Survey 13 BCOP countries participated in the survey in 2013 Albania, Azerbaijan, Belarus, Bosnia and Herzegovina, Croatia, Kyrgyz Republic, Macedonia, Montenegro, Russia, Serbia, Tajikistan, Turkey, Uzbekistan Workshop at Riga (-, 26 th June 2013) Presentation of preliminary results of Budget Survey Q&A sessions on Survey Questionnaires Logistics of the survey participation (entering the data and data cleaning etc) Answering the on-line questionnaire (, ~Oct 2013) Data quality control (-, ~Dec 2013) Comparison with IMF data and 2007 survey results Check internal consistency among the answers Analyzing the data and drafting the survey results (~Feb 2014)
Fiscal rules Percentage of countries using fiscal rules Average number of fiscal rules when applied 10 4 8 3 6 54% 94% 2 1 2,7 3,6 0
Number of fiscal rules % of countries using fiscal rules according to number of rules applied 5 3 1 One Two Three Four Five Six
Types of fiscal rules applied 5 45% 35% 3 25% 15% 1 5% Budget balance Debt Expenditure Revenue
Medium-term Expenditure Framework (MTEF) % of countries with MTEF in place Levels of ceilings of MTEF 10 7 9 8 6 7 5 6 5 3 3 1 1 MTEF in place MTEF not in place Overall/ total expenditure Other aggregate levels Organisational level Other level
Length and Revision of MTEF Ceilings 10 Length of ceilings 8 Frequency of revision of ceilings 9 8 7 6 7 6 5 5 3 3 1 1 3 years 4 years 5 years 6+ years More than once per year Annually Every 2 to 3 years Other
Long-term fiscal projections Time span and revision frequency of long-term fiscal projections Revision frequency Every year Every three years Other intervals Not applicable 90 % 80 % 70 % 60 % 50 % 40 % 30 % 20 % 10 % 0 % Up to 5 years Between 6-10 years Between 11-30 years Between 31-50 years Over 50 years Time span of long-term fiscal projections
Ceilings on the line ministries' initial request 6 5 3 1 Total/overall expenditure of the line ministry Other aggregate levels (e.g. programme or sector) Agency level or other organisational level No such limits
Budgetary settlement Resolution of disputes between ministries in the budget formulation 6 5 3 1 Resolved by the cabinet Resolved by the finance minister Resolved by the President or the Prime Minister Other The issue is sent to a ministerial committee
Key findings (summary) : Fiscal rules & MTEF More than half adopted fiscal rules, but still less than 2~3 fiscal rules are adopted in general ( : 4~5 rules) Four types of rules are almost evenly adopted ( : BB & Debt) Legal basis : mostly Legislation ( : Int l treaty & legislation) No enforcement mechanism : more than 3 ( : 14%) MTEF in place in more than 8 (= ) Level of ceilings : Overall (= ) & Organizational level ( ) Length of ceilings : mostly 3yrs ( : 3 or 4 yrs) How often are ceilings revised? : once or twice a year ( : annually) Long-term fiscal projections : mostly up to 5yrs ( : 31~50 yrs)
Capital budgeting Capital budgets in central governments Funding of multi-year capital projects 7 8 6 5 7 6 3 5 3 1 1 Separate capital and operating budgets Integrated capital and operating budgets Other Incrementally each year The entire cost up-front Other Case by case basis
CBA approval in capital projects Is CBA required to approve capital projects in line ministries? 10 9 8 7 6 5 4 3 PPP TIP 18 16 14 12 10 8 6 PPP TIP 2 4 1 2 0 Yes for all projects Yes for projects above a certain threshold Yes on ad hoc basis or other No 0 Yes for all projects Yes for Yes on ad hoc projects above basis or other a certain threshold No
Carry-over of expenditure from year to year 9 Discretionary Operational Investment 8 7 6 5 3 1 Yes without requiring any approval Yes but requiring approval No, carry over not permitted
Reallocation of funds Reallocation regimes 10 9 8 7 6 5 6 5 3 Types of approval of reallocations Ex-ante approval Ex-post approval Combination ex-ante/ex-post No approval needed 3 1 1 Reallocations permitted Reallocations not permitted Approval of Ministry of Finance/Economy Approval of legislature Approval of both MoF and Legislature Other type of approval No approval needed
Publicly available budget documents Publicly available Not publicly available Publicly available Not publicly available Not applicable Not applicable 14 35 12 30 10 25 8 20 6 15 4 10 2 5 0 Pre-budget report Budget proposal Citizens budget 0 Pre-budget report Budget proposal Citizens budget
Legislative engagement in budget Existence of a specialized budget research office attached to the legislature 6 Legislative amendment power 20 18 Specialised budget research office exists No specialised budget research office exists 5 16 14 3 12 10 8 1 6 4 2 0 Unrestricted powers Within executive s aggregates Cut existing items only Approve or reject Other
Budget presentation and legislative debate 3 months or more Less than 3 months 3 months or more Less than 3 months 90 % 70 % 80 % 60 % 70 % 60 % 50 % 50 % 40 % 40 % 30 % 30 % 20 % 20 % 10 % 10 % 0 % No.of months budget presented before start of FY No.of months for legislative debate 0 % No.of months budget presented before start of FY No.of months for legislative debate
Key findings (summary) : Capital budgeting/flexibility/transparency Separate Capital & Operating budgets (= ) Funded mostly incrementally ( : incrementally & up-front) Mostly No PPP units (= ) or Within a line ministry ( ) Without CBA approval in PPP ( ), With CBA approval in TIP (= ) Carry-over : mostly not permitted ( ) and need approval Cut/Increase of Spending : permitted in more than half (= ) Reallocation of funds : permitted in more than 8 (= ) Available budget documents varies (= ) IFI existence : only 3 countries ( : 18 countries) Legislative debate period : less than 3 months ( 3 months)
4-1. Next Steps Draft report on results of - Budget Practices and Procedures survey currently circulated for comment. Final Comments due end July 2014. Data of to be uploaded onto International Database of Budget Practices and Procedures (on-line) Report and Database provide valuable knowledge resource for countries. BCOP Executive Committee will consider repeating survey in future and expansion to more countries. 25
4-2. Reform Priorities for Countries On the request of BCOP member countries, all members met and discussed: Selected aspects of program budgeting and performance management in Tirana, Albania, from February 25-28, 2013, attended by 21 countries. Results-based monitoring and evaluation in Antalya, Turkey from March 3-6, 2014, attended by 20 countries. Fiscal transparency and accountability from May 27-29 2014, in Moscow, Russia, attended by all three COPs (budget, treasury and internal audit) Smaller study visits for sub-groups of members were also conducted to: Georgia on IT system for budget planning in Tbilisi from April 15-18, 2013 attended by 6 countries. UK on education financing reforms in London from April 23-25, 2013 attended by 6 countries. Ireland for BCOP Executive Committee on spending reviews from 11-14 November, 2013 attended by 7 countries.
4-2. Reform Priorities for Countries (Continued) Smaller study visits for sub-groups of members were also conducted to: Poland on program budgeting at the local level, in Cracow from December 9-12, 2013 attended by 7 countries. Austria on the role of Parliament in budgeting from January 30-31 2014 attended by 5 countries. Other smaller group meetings: Budget Practices and Procedures Survey peer review meeting in Riga on June 26, 2013 attended by 10 countries. Participation in Senior Budget Officers meeting June 27-28, 2013, Latvia and 26-27 June 2014, the Hague to promote knowledge exchange with and accession countries in Europe and Central Asia Review of revised PEFA framework in the Hague, June 25, 2014 Two video-conference meetings on wage bill management (November 2013, February 2014) and one face-to-face meeting in Moscow, May 26, 2014 Future priorities 2015: fiscal consolidation, management and budgeting of EU funds, budget transparency
5. Budget Reforms : Country Case Studies Russian Federation 3 rd out of 28 countries in MTEF index after Netherlands and Denmark (see Box 3.2 and Figure 3.9 of draft report). 5 th out of 32 countries in Performance Budget Index after Korea, Mexico, Canada and Switzerland (see Box 7.1 of draft report). 1 st in region for Budget Transparency (new initiatives in citizen budgets) Turkey 8 th out of 32 countries in Performance Budget Index (Box 7.1) Identified in World Bank FMIS and Open Budget Data study as scoring highly visible in publishing open budget data (along with Russian Federation) 28
Thank you www.pempal.org www.oecd.org/gov/budget 29