Key Priorities for Budget Reforms in Africa

1

• Key Priorities for Budget Reforms in Africa
• Liberia
• An Early Reformer Perspective
• Anthony G. Myers
• Special Assistant to the Minister of Finance
• Monrovia, Liberia

2
Outline

• 1. Liberian budget process before 2006
• 2. Objectives and scope of reforms
• Policy and administrative reforms
• Ensuring resource maximization
• Efficiency in budget utilization
• Frameworks to increase budget resources
• 3. Outcomes of the reforms

3
Budget Process Before 2006

• Weak or non existent administrative and policy
  framework
• No defined linkage between resource outlay and
  output
• Delays and inconsistencies
• Constricted fiscal space
• Poor governance
• Revenue leakages
• Poor donor relations
• Minimum to zero accountability and transparency
• Even Govt MDAs not well informed
• Vast and unexplained differences between approved
  and executed budgets
• Limited to non-existent public awareness
• Inadequate legislative scrutiny
• Highly unsustainable debt burden
• Nearly US1 bn domestic

4
Objectives and scope of reforms

• Policy and Administrative Reforms
• Internally driven reforms
• Participatory and consultative budget process
• Adherence to regulations of the budget process
• Budget calendar and budget guidelines/circulars
• Budget laws
• Enactment of law on virements
• Financial rules and ordinances
• Increased interaction with public stakeholders
• Collaborative reforms
• GEMAP, IFMIS, LECAP, PRS, PRGF, EGIRP
• HIPC (MTFF, MoF BoB merger, tax code reform,
  PFM law, periodic audits)

5
Objectives and scope of reforms

• 2. Ensuring Resource Maximization
• Hard expenditure ceilings
• Recurrent cost
• Non-recurrent expenditure
• Essential and non-essential programs
• Clear linkages between spending and outputs
• Policy linkages
• Example iPRS, PRS
• Strategic priority linkages
• Example HIPC, Kimberley

6
Objectives and scope of reforms

• 3. Efficiency in Budget Utilization
• Cash flow management for balanced budget
• Conformity of spending plans with cash flow.
• Dynamic spending plans (Flexible for
  backward/forward rollover)
• Accountable and time-bound procurement
• Budget approval vis-à-vis procurement plans
• Accountable and transparent procurement

7

Objectives and scope of reforms

• 4. Establishing frameworks to increase budget
  resources
• Improved revenue administration
• Consolidating revenue accounts
• Centrally generated revenues
• Administrative service charges and fees
• Preshipment and destination inspection regime
• Moves towards automation
• ITAS
• AYSICUDA
• Bringing aid on budget
• Reforms for aid or aid for reform, a
  chicken-and-egg dilemma
• Accounting for off-budget aid
• Channeling funds to growth sectors and critical
  social development

8
Gains and Challenges

• Successive budgets underpinned by policies
• FY2005/06 recast to reflect policy of new
  Government
• FY2006/07 and FY2007/08 anchored in iPRS
• PRS to determine budget policy from July 2008
  June 2011
• Legal requirements generally observed
• Greater Legislative power of the purse
• Appropriation law scrupulously followed
• SAI (required by Constitution) functional
• Expenditure inputs and program outputs linked
• Budget preparation forms that justifies requests
  for funds
• Approved budget links appropriation with
  deliverables
• PRS relevance identified for each MDA and
  organizational units
• Budget process has become more structured,
  predictable, and open
• Budget calendar, guidelines and call for
  estimates regularly issued
• Increased participation by governmental and
  non-governmental stakeholders
• Deliberate public awareness (publicizing
  draft/approved budgets, periodic outturns

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Gains and Challenges

• 5. Phenomenal growth in revenue and budget
  expenditure
• 2005 US80M
• 2006 US129 M
• 2007 US199M
• 2008US269M
• 2009 US293M (projection)
• 6. Improved relations with donors
• Over US20M direct budget support since 2007
• Commitment to finance 68 of US1.6 bn PRS
• Concerted support to Liberias debt relief
• 7. Continuing challenges
• Capacity constraint at budget authority and MDAs
• Accounting/reporting on off-budget aid
• Managing the fiscal constraints of multilateral
  reform programs
• Impact of procurement process on budget
  implementation timeline