Transcript PBB.Singapore

Country Case Presentation: Bangladesh
The Medium Term Budgetary Framework
Course: Performance Based Budgeting in
Governments
Venue: Civil Service College, Singapore
13 October 2008
Team Members:
Mohammad Nurul Islam, Deputy Secretary, MoP
Md. Rezaul Karim, Deputy Secretary, MoP
Gautam Kumar Ghosh, Deputy Secretary, MoE
Md. Rizwanul Huda, Sr. Asstt. Secretary, MoF
Shirajun Noor Chowdhury, Sr. Asstt. Secretary, MoF
Delwar Hossain, Assistant Chief, MoF
The Economy & the Budget of Bangladesh
Some Geographic, Social, and Economic Indicators:
Capital:
Area:
Population:
Population (annual growth rate):
Density of Population (per Sq. Km.):
Per capita national income:
GDP growth at constant price:
Agriculture as share of GDP:
Export as share of GDP:
literacy rate (age 7+):
Dhaka
147,570 Sq. Km
140.60 million (2007)
1.41%
953 (2007)
US $ 599 (2007)
6.2%
20.87% (2007)
18% (2007)
52.5 (2006)
Life Expectancy: 64.5 (2007)
People below the poverty line: 40% national, 43.8% rural, 28.4 urban (HIES 2005)
Budget at a Glance (2008-09):
Non-Development Expenditure: US $ 10.06 Billion
Development Expenditure: US $ 4.22 Billion
Total Expenditure: US $ 14.28 Billion
Total Revenue as % of GDP: 11.17
Total Expenditure as % of GDP: 17.27
Budget Deficit as % of GDP: 6.1
Net External Financing as % of GDP: 2.4
Net Domestic Financing as % of GDP: 3.7
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The key Differences between the
MTBF and the Traditional Budget
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The MTBF integrates both recurrent and investment expenditure
rather than the two traditional budgets of development and nondevelopment.
Traditionally a budget has been formulated for 1 year - the MTBF
introduces a multi-year time horizon for budget planning - in Bangladesh
that is 3 years.
MTBF brings together the policy planning and budgeting processes.
Resource allocation is linked to the policies and priorities of the
Ministry. The traditional budget approach is incremental i.e. a percentage
added to last year’s allocation.
The traditional budget focuses on inputs only. Under the medium term
framework the output and outcome expected from the budget
allocation is considered.
Under MTBF line ministries are given enhanced authority to allocate
funds according to their specific needs.
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Background and Timeline of PFM Reforms in Bangladesh
1990
1989 – 1990
Committee on
Reforms in
Budgeting and
Expenditure
Control
1995
2000
1993 – 2002
Reforms in
Budgeting and
Expenditure
Control Project
2005
2003 - 2009
Financial
Management
Reform Project
2010
2009 - ?
PFM Vision
Experience tells us that maintaining
impetus for the reform process is key
– minimise the “gaps”
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MTBF - Background
The 1st phase of public financial
reforms in Bangladesh, which
originated from the CORBEC report
in 1989 focused on technical
improvements, examples:
 Computerisation and consolidation of
financial data;
 New classification of accounts;
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MTBF - Background
The 2nd phase of public financial
reforms focused on improvements to
resource management, through:
• Macro modelling, debt management;
• Strengthening the linkage between
policy planning and budgeting;
• Devolution of responsibility for planning
and budgeting to the line ministries;
• Increased focus on monitoring and
evaluation both internal and external.
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Operational Components of the Financial Management
Reform Programme
Component 1
Social
performance
auditing
Entity based
auditing
Debt
Management
Component 2
Macro
economic
framework
Systems based
financial
auditing
Treasury
Management
Institutional
support for the
Comptroller and
Auditor General
Training
Capacity Building
Systems
maintenance
Institutional support
for the planning and
budgeting process
Information
Technology
Gender
poverty
Computerisation of
the accounting
system
Budget Call
notice support
Support to District
& Upazilla
Accounting Offices
Component 4
Institutional support
for the Controller
General of Accounts
and
issues
Budget
Management
Committees
Internal
audit
Performance
Monitoring
Ministry
Planning
Functions
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Component
3
MTBF The Main Features
 A medium term outlook to budget
planning – 3 years
 Linking policy priorities to resource
allocations – NSAPR to budget
 Emphasizing the efficient use of
limited public resources
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The Objectives of MTBF
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The Objectives of MTBF in Summary:
 Operationalising the NSAPR;
 Enhancing line ministries capacity to
formulate policy and programmes;
 Delegating more responsibility for budget
setting;
 Performance measurement;
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Success Achieved: MTBF Approach
Macro economic
forecasting
RESOURCES
PRIORITIES
ACTIVITIES
OUTPUTS
NSAPR/National
Policy Documents
OUTCOMES
Ministry Objectives
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Success Achieved: MTBF Approach (Cont.)
Strategic phase
Resource Allocation phase
Budget Call Circular I
Budget Call Circular II
Issued October
Issued February
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The Strategic Phase
 Provide a direction for the ministry
 Inject a sense of purpose into the
ministries activities
 Decide WHO we are, WHAT we do,
and WHERE we are going
 Provide a 3 year projection of total
aggregate budget allocation –
development and non-development
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The Strategic Phase
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Budget Call Circular I – Ministry Budget
Framework (MBF) - Contents:
• Mission Statement to reflect the management’s
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vision of what the ministry seeks to do and
become
The medium term strategic objectives
The key activities
Key performance indicators
Targets against which performance can be
measured
Prioritisation of the use of resources
Assess the poverty and gender impact of the
strategies
Initial allocation of aggregate development and
non-development resources for 3 years
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Detailed Resource Allocation Phase
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Budget Call Circular II
• The MBF (BCCI) will be evaluated by FD and
PC. Based on this evaluation, and considering
any changes in macro economic trends the
ministry resources ceilings may be slightly
revised,
• Within the revised ceiling the ministry must
undertake a detailed allocation of resources,
• The resources are applied to achieve the
targets and KPIs contained in the MBF
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Budget Implementation
and Monitoring
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Once the budget has been set the Ministry has an
obligation to turn it into action;
One key element of this is to compare actual
performance against what was expected;
This requires the regular production of
performance reports for discussion at
management level;
Periodic Reports
• ADP monthly review
• CGA/CAO monthly financial information
• Departmental performance information
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Annual Reports
• Ministry Wide Accounting
• Entity Wide Audit
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NSAPR/National
Policy Documents
Ministry Objectives
RESOURCES
ACTIVITIES
OUTPUTS
OUTCOMES
Performance
Measurement
ECONOMY
EFFICIENCY
EFFECTIVENESS
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Who’s who in MTBF (Line Ministry)
Secretary
BMC
Joint Sec./
Chief
BWG
Sr./ Asstt. Chief
Sr. /Asstt. Sec
- Consists of Addl.Secs/ Jt. Secs,
Organizational Heads, Representatives of
FD, PC, IMED & CAO
- Budget Approval authority within Line
Ministry
- Guides the process
- Acts as member secretary of BMC
- Presides BWG
-Consists of organizational representatives
and representative from FD, PC
- Assists BMC with necessary support for
decision making
Dy. Sec./Chief
Budget
Mgt.
Branch
-Leads the process as Principal Accounting
Officer
-Acts as president of BMC
- Coordinates the process
-Does the groundwork
-Collects and compiles information
-Drafts MBF with budget allocation
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Budget Management Committee
The Chairperson of the BMC – Secretary
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RESPONSIBILITIES:
Managing the entire budget Revenue and
Development of the ministry/division;
Developing a strategic plan to guide budget
management;
Preparing a medium term budget within the
Resource Ceiling;
Monitoring the performance of the ministry
in both financial and output terms;
Preparing and publishing annual report(s) on
the financial and non-financial performance of
the ministry/division;
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Working Groups and BMC
Sub Committees
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Budget Working Group (BWG)
• To assist the Budget Management
Committee (BMC),
• The BWG has specific terms of
reference but it is not a decision
making body. Key role is to prepare
MTBF related reports for the BMC,
• The chairman of the BWG is the Member
Secretary of the BMC.
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Time line for Budget Preparation under
MTBF Process
FD
Initial Ceiling
Final Ceiling
LM
BCCII
April
March
Feb
Jan
Dec
Nov
Oct
Budget Compilation and Approval
Sep
FD
Aug
Finalizing ADP
July
PC
June
FD
May
BCCI
LM
LM = Line Ministry
PC = Planning Commission
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FD = Finance Division
MTBF Line Ministries
Year 1 (2005-06): 4 Pilot Ministries
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Ministry
Ministry
Ministry
Ministry
of
of
of
of
Education
Social Welfare
Women and Children’s Affairs
Agriculture
Year 2 (2006-07): 6 additional Ministries
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Ministry of Primary and Mass Education
Ministry of Health and Family Welfare
Local Government Division
Ministry of Fisheries and Livestock
Ministry of Water Resources
Ministry of Communications
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MTBF Line Ministries
Year 3 (2007-08): 4 additional Ministries
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Ministry of Science and ICT
Rural Development and Cooperatives Division
Ministry of Environment and Forest
Ministry of Food and Disaster Management
Year 4 (2008-09): 2 additional Ministries
• Ministry of Shipping
• Ministry of Land
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Total Budget & the MTBF Ministries
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Gaps in PFM Reform
 Involving senior officials in the MTBF process that is lack
of ownership (what Finance Secretary is doing now by
visiting line ministry with FD senior officers to motivate
them in the process)
 Updating financial and administrative powers in line with
MTBF process
 Insufficient training for MTBF related officials in the line
ministry
 Absence of regulations for retention of
trained/experienced officials
 No manual for MTBF process
 Consultant driven and dependent
 Lack of holistic approach
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Challenges Faced
 Frequent transfer of key staff
 Avoiding duplication of other existing
processes e.g. ADP preparation, review
 Strengthening the BMC role in budget
implementation and monitoring
 Moving from input monitoring to output
and finally outcome monitoring
 Availability of timely monitoring
information – both financial and output
but especially outcome
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Next steps?
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Continue to extend the process to more
line Ministries;
Review and refine the process every year;
Institutional change at line ministry level
Strengthen the performance reporting
systems in the line Ministries:
• More effective Key Performance
Indicators;
• Data collection and analysis;
• Impact evaluation;
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Next steps?
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Improvements in the efficiency and
effectiveness of Government’s
delivery of services will depend on
building the policy analysis and
financial management skills within all
of the Ministries.
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THANK YOU
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