TRANSPARENCY AND ACCOUNTABILTY OF THE BUDGET PROCESS IN ZAMBIA

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TRANSPARENCY AND ACCOUNTABILTY OF THE BUDGET
PROCESS IN ZAMBIA

• Presentation at Collaborative Africa Reform
  Initiative Seminar, 1st to 3rd December Pretoria.

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Contents of the Presentation

• This presentation will focus on the following
• Budget Classification Prior Reforms
• ABB Classification
• Improvements associated with ABB classification
• Improvements in Budget debates
• Political and Stake Holder Involvement in Budget
  process
• Linking Budget implementation through
  Classification and Chart of Accounts

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BUDGET CLASSIFICATION PRIOR TO ABB

• Budget structure has been limited to an
  administrative and broad economic classification.
  
• It lacked functional or programmatic
  classification and was not linked to policy
  priorities of government.
• The structure hid the detailed activities of the
  programmes being carried out by the ministries
  and provinces.
• It also followed that the budget presentation was
  limited to administrative and economic
  classification and made it difficult for other
  stakeholders , in particular Members of
  Parliament (MPs ) and donors, to understand,
  limiting their decision making.

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ABB Classification

• Activity Based Budgeting is intended to provide
  a detailed functional classification as a basis
  for budget management
• Provides the link between resource inputs and
  specific activities or outputs

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Diagramatical Represenation -ABB
Policy Framework
Strategies Programmes
Output
output
output
output
output
Activities
Activities
Activities
Input
input
Input
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ABB CONTD

• After piloting for several years (from 1996-t0
  2003) GRZ introduced a fully fledged ABB to all
  MPSAs in the 2004 budget.
• It has also been integrated in the funding system
  and the accounting system.

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IMPROVEMENTS ASSOCIATED WITH ABB CLASSIFICATION

• Transparency has been achieved
• Provided a much more effective framework for
  translation of policy objectives into the budget
  instrument
• Integration of ABB in the internal control and
  accounting system has improved the transparency
  of the budget by highlighting specific activities
  or functions being carried out by Government
  including identification of Poverty Reducing
  Programmes.

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IMPROVEMENTS CONTD

• ABB has led to a reduction in misclassification
  of expenditures that occurred in the old system.
  (e.g Repatriation and House rentals under the old
  system were classified as operational cost and
  not PEs related).
• ACCOUNTABILTY
• The presentation of the budget in the ABB format
  has increased the ability of civil society

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IMPROVEMENTS CONTD

• In exercising there right to monitor Government
  policies (operationalised)

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IMPROVEMENTS IN BUDGET DEBATES

• ABB Classification has led to informative debates
  and decisions. For example the 2004 budget debate
  saw a lot of activities cancelled that were said
  to be misplaced and funds reallocated to the
  rightful ministries.
• Has provided insight for the MPs and other
  stakeholders on the allocation of resources
• Has made the decision making for the MPs simpler.
  

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POLITICAL INVOLVEMENT IN THE BUDGET PROCESS

• To make the budget process more transparent, a
  green paper has been introduced for discussions
  by the Estimates Committee of Parliament, civil
  society and donors about the broad policy
  directions Government would pursue.
• The green paper is published after Cabinet
  approval of the outcome of the top-down process
  of preparing the draft macroeconomic and fiscal
  frameworks and the indicative three-year
  expenditure ceilings for spending agencies.

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STAKEHOLDER INVOLVEMENT

• Government also introduced SAGs who were
  recognized as important stake holder in the
  budget preparation process. SAGS are simply
  technical advisory groups constituting
  stakeholder in various sectors and regions.
• At preparation stage these technical groups
  advise on the sector priority policy actions,
  programmes and projects and also provide input
  in the budgetary proposals ( budget framework
  papers) for the next MTEF period

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STAKEHOLDER Contd

• One of the major roles include
• Review of sector performance and report on
  implementation and monitoring of PRPs on a
  quarterly basis ( ABB in place has made it much
  easier for such monitoring)

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Linking Budget implementation through
Classification and chart of Accounts

• Government has completed a corresponding
  restructuring of the chart of accounts to that of
  the ABB.
• This has been incorporated in to the computerised
  Financial Management System.
• With such a reform, the accounting reports that
  are consistent with the budget structure are able
  to be generated. This is being to monitor budget
  performance.
• With IFMIS (Integrated financial Management
  Information system) Government hopes to enhance
  accountability. It is hoped that it will be up
  and running in 2005.

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Conclusion

• The improvements in Public expenditure has
  brought confidence in the cooperating partners.
  There are moving from specific project support to
  general budget support.
• Stumulate a lot of interest and debate.