By Amin Kef Sesay
Principally due to the adverse financial effects of the Ebola disease outbreak of 2014 to 2015, the former Government was forced to embark on tight budgetary controls aimed at curtailing Government expenditures in order to keep both local and international debts within bounds.
Given that the country’s debts keep mounting, there is a need for Government to control its expenditure.
In that regard, what the Auditor General picks up in her annual reports over the past ten years is that many Ministries, Departments and Agencies overspend beyond their budgetary approved by Parliament.
What this point to is that the budget is not been efficiently managed to implement policies incorporated in the budget.
Budget execution processes are not simply mechanisms for ensuring compliance with the initial programming. Even with good forecasting systems, unexpected macroeconomic developments may occur during the year, and need to be reflected in the budget – Such as has happened with the COVID crisis.
In such case, budgetary adjustments should be accommodated in a way that is consistent with the initial policy objectives so as to avoid disrupting the activities of agencies and project management. Successful budget execution depends on numerous other factors as well, such as the ability to deal with changes in the macroeconomic environment and the implementation capacities of the agencies concerned.
Because budget execution involves a greater number of players than budget preparation, this calls both for assuring that the “signals” given in the budget are correctly transmitted, and for taking into account feedback from actual experience in implementing the budget.
Hence, efficient budget execution calls for:
- ensuring that the budget will be implemented inconformity with the authorizations granted in the law, both in relation to the financial and policy aspects;
- adapting the execution of the budget to significant changes in the macroeconomic environment;
- resolving problems arising during implementation; and,
- Managing the purchase and use of resources efficiently and effectively.
From what the Auditor General observes about uncontrolled procurement excesses, it goes without saying that, systems for budget execution system should ensure rigorous aggregate expenditure control, but also effective and efficient uses of resources in accordance with budget priorities.
Aggregate expenditure control requires defining fiscal targets which is largely concerned with budget preparation. Budget execution procedures must ensure that fiscal targets are effectively enforced and that managers comply with the budget authorized by the legislature.
However, this should not consist of replicating the “traditional” budget execution systems, which focus on detailed input controls, often performed by the ministry of finance. Such an approach is aimed at assuring fiscal discipline, but generally poses two different sorts of problems.
On the one hand, excessively detailed controls are time-consuming, making the budget rigid, and do not give managers the flexibility in the allocation of inputs needed to implement their budgets efficiently.
Traditional compliance controls are not sufficient to ensure fiscal discipline. They tend to focus on cash payments for supplies, while the most crucial problems are often found elsewhere (overstaffing, entitlements, arrears, etc.).
Keeping budget execution under control requires effective management control systems, not excessively detailed compliance controls.
The general features of the budget execution cycle, including the issues related to compliance controls, with the specific methods and systems that are required for effective budgetary control that the Auditor General finds are generally lacking in the MDAs include:
- Payables and public procurement
- Cash management and the treasury function
- Internal (management) controls and internal audit
- Accounting and financial reporting systems
- External audit
- Overspending and under-spending
As such, Parliament and the Executive can better deal with this lack of compliance by MDAs through strengthening the audit system, the reporting system, and ensuring the effectiveness of the basic budget execution controls.
