Budget Process Presentation_kyamani 2

8/13/2019 Budget Process Presentation_kyamani 2

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PLANNING ANDBUDGET PROCESS IN

TANZANIA

Ministry of Finance andEconomic Affairs

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INTRODUCTIONThe Government Budget is animportant tool for implementation ofpolicy decisions to achieve social,economic and political objectives.

Essentially it involves the determination

of resources and their use forattainment of government objectives.


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INTRODUCTION (cont)Budget serves as a tool for economicand financial management as well asaccountability

It also serves as a mechanism forallocating resources among differentneeds and priorities as well as bringingeconomic stability and growth


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THE LAWS AND REGULATIONSGOVERNING THE BUDGET

There is a body of laws, regulationsand administrative procedures whichgovern the budget system.They regulate format, timing andprocedures as well as the allocationof formal powers and rights in thebudget cycle or process.


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The Constitution of UnitedRepublic of Tanzania of 1977Chapter 7: Articles 135 144 of theConstitution outlines the provisionsregarding the finances of United Republicof Tanzania .It indicates who has the mandate toprepare the budget and submit it to theParliament, type of revenue receipts,accounts and authorization of payments .


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The Public Finance Act, 2001 (asamended in year 2004)

It is a legal instrument which

provides the legal frameworkfor the budget system withregard to revenue,expenditure control andaccountability .


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The Annual Finance Act(AFA)

The AFA empowers the Minister forFinance and Economic Affairs to raisemoney by imposing taxes, levies,fees and charges to mobilize funds tofinance the budget.

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The Annual AppropriationAct (AAA)

The AAA empowers the Minister forFinance and Economic Affairs to drawmoney from the Consolidated Fund

and allocate it to various votes.It also provides powers forreallocation of funds between votes.

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The Public Procurement Act,2004

This Act and its correspondingRegulations provides the legalframework for the procurement ofgoods and services using publicfunds.This Act replaced the former PublicProcurement Act, 2001.


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Local Government Finance Act No. 9 of 1982(As amended by Miscellaneous Act No. 6 of

1999)

It stipulates the requirements and

procedures to be followed by LGAs inpreparing annual estimates ofrevenues and expenditures

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The Pay Master GeneralsCirculars

The Pay Master General (PMG) issuescirculars from time to time includingthe budget implementation circular.It prescribes directives to be followedby the Accounting Officers in theaccounting and control of

government revenues andexpenditures during the financialyear.


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THE BUDGET PROCESSThe budget process involves anumber of ongoing activities in acircle throughout the year.

It starts with macro-economicpolicies and objectives, settingrevenues and expenditure ceilings,approval and its execution.The following are important steps inthe preparation of the budget.


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THE BUDGET PROCESS1. Formulation of Budget Policy and

Resource ProjectionsThe budget process begins with formulation of budgetpolicy objectives, priorities and resource projectionsbased on macroeconomic performance review.

The macroeconomic review is facilitated by the BudgetGuidelines Committee (BGC), which is charged withthe responsibility of preparing annual BudgetGuidelines.

This committee is composed of officers from theMinistries of Finance and Economic Affairs, PresidentsOffice -Planning Commission (PO-PC), Prime MinistersOffice - Regional Administration and LocalGovernment (PMO- RALG) and Presidents Office -Public Service Management (PO-PSM).


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THE BUDGET PROCESS (cont)Review of macro-economic

performanceThis review of macroeconomic

performance starts with an assessmenton performance of the previous budgetassumptions and targets to determinethe level of achievement.Other variables, which are reviewed,include economic growth rate, inflationand government finance.


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THE BUDGET PROCESS (cont)

Setting of Macroeconomic Policy Targets

Based on the macroeconomic and otherdevelopments as indicated in the economicperformance review, the overall framework

for the future is then formulated.The framework generally covers thefollowing: -(i) Projected economic growth (GDP)

(ii) Level of inflation(ii) External sector performance(iv) Sector Performance i.e. PRS Sectors(v) Budget Frame

(vi) Financing


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THE BUDGET PROCESS (cont)o Once the macro-policy performance review

and resource projections are completed, theGovernment then sets objectives and budgetpriorities to be achieved in the annual andnext two years of the Medium ExpenditureFramework (MTEF).

o In setting the priorities, Ministries,Department and Agencies (MDAs)/RegionalSecretariats (RSs)/Local Government

Authorities (LGAs) are asked to fill in theStrategic Budgetary System (SBAS) and textelaboration of the requests.


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o This is an ideal time for stakeholdersto be involved in the process as forLGA`s they start from Wardmeetings (O and OD)

o The PER process and Annual Reviewis also another avenue for DPs,members from Academic Institution,Political Parties, CSO`s, CBO`sparticipation in the budget process

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Distribution of resourcesThe first charge to be considered in the allocation ofresources is the Consolidated Fund Service (CFS).The second consideration is outlays of meetingcurrent expenses for MDAs, RSs & LGAs. These aremeant for payment of Personal Emoluments (PE)and Other Charges (OC).PE covers salaries and wages of Governmentemployees while OC are outlays for financing goodsand services needed for government operations.The other important area is the Development budgetfor projects and programmes highly supported byDevelopment Partners (DPs).


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Issuance of the Budget GuidelinesThe Budget Guidelines are submitted toInter-Ministerial Technical Committee(IMTC) and Cabinet fordiscussion/approval and of recently toParliament (January House) fordiscussion/approval before they aredistributed to spending agencies


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Revenue & Expenditure EstimatesPreparationBudget estimates preparation consists ofestimates of revenue, recurrent and

development expenditures by Ministries,Departments and Agencies (MDAs) aswell as Regions and Local Governments.

It involves linking institutional strategicplans and the budget (i.e. recurrentexpenditure and development projects)and the MTEF.


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Essentially, this process is about linkinginstitutional objectives, departmentaltargets and activities and identifyinginputs and their prices and costingthem for each year of the MTEF period.Institutional Budget Committees areresponsible for carrying out all theseactivities.

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Finalization of Budget Formulation

Final phases of budget preparation includesscrutiny of estimates, Government/DPsConsultations, submission of estimates toInter-Ministerial Technical Committee (IMTC)and submission of the Budget Cabinet Paperto the Cabinet for approval of proposedBudget frame for revenue and expenditure.

Government/DPs consultations facilitate thebudget process by confirming DPs financialcommitments in the coming annual budgetand MTEF period.


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2. Budget Authorization byParliamentThe process of obtaining Parliamentary

authorization starts with discussions bySectoral Parliamentary Committees.After the sector committees of theParliament have reviewed the Estimates,the Budget Proposals are tabled to theParliament for debate and authorization .


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3.Budget ExecutionIt is at this stage that actual revenuecollections and service delivery takes place.Execution of the budget therefore is about the

collection and accounting for revenue, provisionof services through the recurrent budget andimplementation of development projects


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Budget Execution (cont)Collection and accounting forrevenue collections by TanzaniaRevenue Authority (TRA) and otherMDAs.Accounting Officers are appointed asreceivers of revenue and alsoaccountable for expenditure in theirrespective votes.

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Budget Execution (cont)

Maintenance of proper Accounts forcontrol and Accountability.Reporting on budget performance

(both financial and physical) andevaluation.Project inspection/expenditure

tracking is undertaken at differentlevels, from central ministries likeMoFEA, PO-PC, PMO-RALG toSector/MDAs level.


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THE BUDGET PROCESS (cont)4. Monitoring, Control and Evaluation

Mechanisms for control and monitoring areessentially: - Periodic reporting and follow-up. Specific formats

have been issued for budget monitoring andfollow-up in the PBG.

Internal Audits External Audits Parliamentary control- Public Accounts Committee

(PAC), Local Authorities Accounts Committee

(LAAC) Budget Reviews and Adjustments Public Expenditure Tracking and Physical Project

inspection

Evaluation


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.July 1 Beginning of Fiscal Year 2008/09

Sep Ministry of Finance and Economic Affairs, ThePresidents Office -Planning Commission, PMO-RALGand PO-PSM starts planning for FY 2009/10

Nov-Jan Government budget frame is approved by IMTC, TheCabinet and PBG tabled in Parliament

Jan-Feb Government budget guidelines are distributed toMDAS, RSs and LGAs

Feb-Mar MDAs, RSs, and LGAs budget preparationApril-May Budgets are submitted to MoFEA for scrutinization

and thereafter data entry and submitted to PSCsJune Parliament approves government budgetJuly 1 Beginning of Fiscal Year 2009/10 and

Budget execution for fiscal year 2009/10

July 1-June 30

Budget plans are executed: revenues are collected,grants are disbursed and expenditures are made

July 1-June 30

Monthly and quarterly financial reports are produced

July 1 Beginning of Fiscal Year T+1 and


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Challenges on budget process

How to determine the resources andtheir use for the purpose of attainingthe desired goals. The resources arelocal or foreign fund.How to harmonize and assess theachievement in linking the NationalStrategy for Growth and Reduction ofPoverty-NSGRP, Strategic Plans-SPsand MTEFs

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Challenges on budget process(cont)

How to improve the preparation ofPE estimate in Central government,Local government and parastatals.How to improve prioritization ofprojects, programmes and activitiesby MDAs, RS and LGAs.Non-timely submission of reports fordecision making.

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Budgeting deficiencies and setting ofpriorities-MDAs do not set theirpriority rightNon-tax revenue collections- most ofMDAs, RSs and LGAs under-estimatethe expected revenues to becollected and sometimes do notexpose the actual collections.

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Not adhering to ceiling-some MDAs,RSs and LGAs propose specialrequests which exceeds the budgetceiling, and sometimes, specialrequest include the basic functions ofthe institutions that might be funded

within the ceiling, this reveal thatbudget request are not realistic

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How to capture and manage the LGAsown source-what if the LGAsespecially do not disclose their ownsource of revenues?Budget reallocation-Issue of budgetreallocation is still a problem as maycause divergence from the originalbudget

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RecommendationsTax and non-tax revenue collectionsmust be disclosed and boosted.The process of prioritization must bedone accordingly by scaling down thetargets and activities.MDAs, RSs and LGAs must adhere tothe set ceiling after resourcesenvelope has been determined.

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Recommendations (cont)

Avoid divergence from originalbudgetFulfillment of Donor commitmentaccording to Joint Assistant Strategyof Tanzania (JAST)Accounting Officers must be

accountable and very responsible topublic funds.

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CONCLUSIONThe government budget is indeed a key and

strategic tool that is used to provide services tothe public. The processes and activitiesinvolved in budget management requireattention of all stakeholders to ensureefficiency, accountability and transparency.The budget reforms are necessary foraddressing some of the concerns in budget

management at both the Central governmentlevel and the Local government level. Moreconcerted efforts are needed to enhanceefficiency and effectiveness in the use ofresources.


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THE END

THANK YOU FOR

YOURATTENTION

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Budget Process Presentation_kyamani 2

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