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Budgeting matters

The budget presents government priorities in terms of policies, programmes and underpins them financially. As such, it is the central instrument for political steering and an indispensable basis for internal and external accountability. It offers a powerful lever to assess and promote the inclusiveness, coherence, efficiency and sustainability of public policies. This places budgeting at the heart of achieving Good Financial Governance – understood as the legitimate, transparent and development-oriented state action in the area of public finance.


What it takes

Effective political steering through budget processes presupposes the orderly planning and execution of clear, comprehensive and credible budgets. Budget planning must refer to all public expenditure, should reflect a multi-annual perspective and needs to build on plausible estimates. Programme-based and results-oriented modes of budgeting can facilitate political steering. Reliable and readily accessible information systems need to inform budget execution and fiscal reporting.

Only a transparent budget allows for sound analysis, thorough monitoring and a meaningful exchange on the means put to declared ends. Budget transparency is essential to the deliberation on the proposed budget, its orderly in-year execution and accountability ex-post. The provision of timely, relevant and factual information needs to relate to diverse accountability actors, including Supreme Audit Institutions, Parliament and civil society.

Allocative and operational efficiency considerations suggest linking funding to annual and medium-term objectives, assessing costs and benefits of investments prudently and reflecting long-term impacts of budgetary choices. Linking cross-cutting policy objectives such as Gender Equality to standard budgetary processes can contribute to policy coherence. Participatory budget processes can strengthen citizen-state relationships, leading to greater legitimacy of state action.


Challenges

Around the world, many countries lack adequate preconditions for efficiency, effectiveness and accountability in budgeting. Challenges include unrealistic planning, inflicting high costs associated with borrowing short-term or failing to realise policy objectives to the fullest. Failure to account for recurrent costs of public investments limits fiscal space for future administrations. Budget transparency remains at low levels, failing to provide oversight institutions and civil society with appropriate information. The need to address these challenges transcends national policy objectives, as national budget policies and systems will have a crucial role to play in underpinning the agenda for sustainable development laid out in New York and providing data for monitoring commitments.


What GIZ offers

GIZ's support in the areas of public budgeting covers all aspects from budget preparation, to implementation, to control. It is guided by the Good Financial Governance approach, calling for effective, fair and accountable state institution on all levels of governance. Key partner institutions are budget departments within ministries of finance, line ministries and parliamentary budget committees.

Advisory services address:

  • Budget preparation processes within government; programme-based budgeting; results-oriented budgeting; Gender Responsive Budgeting; participatory budgeting; Mid-term Expenditure Frameworks
  • Budget implementation inline ministries; internal control mechanisms/internal audit
  • Budget transparency and accountability; support to parliamentary committees
  • Cooperation among key stakeholder across the full budget cycle
  • Legal framework of the budget process

     

 

 

 

 

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