Wednesday April 26, 2017 02:09 PM

How we can manage the budget better

  • Published at 09:15 PM April 20, 2017
  • Last updated at 10:43 PM April 20, 2017
How we can manage the budget better
We need to improve efficiency in budget allocations/MEHEDI HASAN

Here are 11 steps to consider

In pre-budget discussions, over the last several years, we have been discussing the broadening of the revenue base, higher allocation for social sectors, selection of growth impacting projects, timely implementation, human capital development, improvements in education, a non-controversial procurement process, the engagement of local government institutions, and public representatives in the budgetary allocation and implementation process.

In contrast, very little attention has been paid to what other countries are doing, or what we can do to ensure we have an effective budgetary allocation and financial management process to achieve the desired results.

In this year’s pre-budget discussion, we tried to draw the finance minister’s attention towards some of the important but less discussed issues.

1. Strengthening the capacity of the finance ministry in preparing the medium-term budget framework (MTBF) and making effective use of projections/forward estimates: The government of Bangladesh piloted MTBF in 2005, and it has now been rolled out to all ministries. However, the experience has not been encouraging in terms of the institutionalisation of its preparation and implementation. The World Bank-financed project, Deepening MTBF (2009–14), too, was rated unsatisfactory.

In 2015, WB initiated certain other efforts to strengthen its support to four ministries. The term of this project will end shortly.

In this respect, the ministry could initiate a discussion regarding its experience with respect to MTBF, and on whether any further technical support in areas like preparation of forward estimates, enhancing performance/results, orientation of budget, and tailored training programs/analytical support is needed.

2. Design/conduct impact evaluation studies for select schemes: The finance ministry can conduct (a) pre-project evaluation studies to establish the baseline and assumptions before launching a particular project/scheme; (b) concurrent studies for mid-course correction in an ongoing project/scheme; and (c) post-project study to assess the achievement of objectives.

Bangladesh’s budget is increasing, as is the pressure on the capacity to manage and implement the budget

3. Undertaking diagnostic assessments: The ministry can undertake Public Expenditure Reviews (PERs)/Public Expenditure Tracking Surveys (PETS) to help track the end-to-end life cycle of fund flows of select key schemes/programs of Bangladesh and highlight issues for appropriate corrective actions. A PETS exercise was done in 2015 for the World Bank for the implementation of decentralised school/upazila-level plans for the Ministry of Primary and Mass Education. The assessment was well-received both by MoPME and the World Bank.

4. Develop and implement a Contract Management System (CMS): Given that procurement constitutes the bulk of a government’s expenditure, a structured CMS may be developed which captures the entire cycle of procurement, starting from procurement planning and budgeting; pre-tendering work, including clearances/acquisitions/pre-construction surveys and investigations; tendering process followed by post-tendering work entailing contract monitoring, dispute resolution/grievance handling mechanism, etc.

5. Develop and implement a Commitment Control System (CCS): Given that Bangladesh follows a cash-based system of accounting, formal government accounts/fiscal reports compiled do not recognise commitments and stocks/flows of expenditure due to which they are only known when they are actually paid.

Hence, a CCS can be developed to capture the entire life cycle of commitments and assess their impact under the existing and new schemes from a multi-year perspective.

6. Reviewing/strengthening/stabilising implementation of the Integrated Budget and Accounting System ++ (iBAS++): At the concerned discussion meeting, many hailed the proposal of a review of the existing functionalities of the newly introduced iBAS++ and support in strengthening capacity in the use of the system.

7. Develop and implement a Project Appraisal Framework: The ministry can initiate a task force or project for developing an appraisal and monitoring manual for investment projects, including capacity-strengthening for timely and quality appraisal of such projects.

8. Support in Contingent Liability (CL) Management for PPP projects: Through measures ranging from preparing CL management plans, enhancing the CL-related link between project approval/processing and project implementation, developing options for fiscal rules related to PPPs, mainstreaming CL in debt sustainability analysis, MoF can really move towards more effective implementation of public good projects.

9. Review of intergovernmental fiscal relations framework: MoF can undertake an assessment on the key aspects relating to objectivity, comprehensiveness, efficiency, and equity in the existing transfer system.

10. Strengthening Internal Audit Framework: They should get their efforts together in preparing a risk-based internal audit manual and strengthening the capacity of the internal audit wing in verifying internal control systems in addition to transactional audits.

11. Tailored training: They should start conducting training programs on the desired range of topics — for instance, internal control rules and procedures and MTBF for concerned officials.

Bangladesh’s budget is increasing, as is the pressure on the capacity to manage and implement the budget.

We need to improve our efficiency in charting budget allocations as well as managing the allocated funds.

Mamun Rashid is a leading economic analyst, and Partner at PwC Bangladesh.

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