Public Expenditure Management Conference Presentation by Ministry of Finance of Georgia

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Public Expenditure Management ConferencePresenta
tion by Ministry of Finance of Georgia

• Warsaw
• February 7-9, 2005

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Budget Systems Law - BSL (effective since
January 2004)

• Introduction of detailed and optimal budget
  schedule
• Clear Outline of Competencies of Budget
  Organizations and the Ministry of Finance in the
  Budget Process
• Establishment of the equality of all budget
  items, abolishment of so-called protected terms
• Establishment of a unified Budget Process, where
  Key Priorities are relating to the Resource
  Envelope by Abolishment of targeted programs
• Accumulation of all budget inflows on a single
  treasury account

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MTEF next step to implement BSL

• Problems
• Lack of strategic, long term thinking
• Absence of a mechanisms for translation of
  strategic priorities into financially justified
  plans of actions
• Prerequisites
• BSL Requirements to shift towards Medium Term
  Planning for the consecutive two years by
  developing
• Medium Term Macroeconomic Forecast,
• Medium Term Fiscal Projections
• Basic Directions for Budget and Tax Policy
• 2005 Budget Instructions require Spending
  Agencies to submit information abut their
  activities/programs, including description of
  objectives and performance indicators
• MTEF
• is to facilitate and to provide reform direction
  for strengthening the link between planning and
  budgeting

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Basic Approach to MTEF

• The focus is on bottom-up and top-down approach
  covering 3 areas
• (i) improvement of macro-economic and fiscal
  forecasting
• (ii) analysis of cross-cutting expenditure
  issues
• (iii) development of sector strategies and
  expenditure plans.

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MTEF and EDPRP
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Budget Users

• Two levels of engagement in developing the sector
  analysis
• Tier 1 agencies prepare sector expenditure
  strategies. These would comprise those
  ministries (Pilot Ministries Education, Health,
  Agriculture) that are strongly submitted to the
  MTEF exercise and which have technical assistance
  to support the development sector expenditure
  strategies.
• Tier 2 agencies comprising the remaining
  ministries for which more rudimentary costings
  and prioritisation would be undertaken.

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Pilot Ministries - Improvement of Budget
Submissions

• Tier 1 spending agencies, have to prepare Sector
  Strategy Expenditure Matrices. These involves
• (i) identifying the key programmes areas that
  together make up the overall expenditure plan for
  the sector
• (ii) analysis of each of these program areas in
  terms of major issues, specific objectives,
  reform actions necessary to achieve the
  objectives, and implications for the sector
  budget.
• These spending agencies will proceed with costing
  of programs, including the identification of
  performance indicators. Depending on the quality
  of the Strategic Matrices and the capacities in
  the spending agencies, one or more programmatic
  areas will be selected to be analysed and costed
  in detail.

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Other Sectors

• Tier 2 spending agencies will be phased in,
  using the experience of the implementation
  process of the Tier 1 ministries. Meanwhile by
  means of simple matrix format they will
• Provide a basis for the analysis of
  inter-sectoral priorities that the MoF would need
  to undertake in determining sector recourse
  ceilings for the MTEF
• Highlight the most important expenditures reform
  issues and requirements in each sector