Budget support training Module 5 Transparency and oversight of the budget (Third eligibility criterion) Version October 2013

Outline of module 8 1.Why this new eligibility criterion? 2.How to assess initial eligibility: preparing the document for programme approval (supplement to the Action Fiche) 3.How to assess ongoing eligibility: preparing the payment file for the programme 2

Transparency and oversight of the budget New eligibility criterion Definition: Budget transparency is the full disclosure of all relevant fiscal information in a timely and systematic manner. Why is it important for BS? Key element of good governance: domestic accountability requires public availability of comprehensive, timely and reliable budgetary information Allows control bodies (Parliament, auditors, media, civil society) to hold policy makers accountable for the collection and use of public resources 3

Assessment methodology Definition of an entry point for provision of BS operations Assessment of progress based on a dynamic approach The dynamic approach consists of Identifying a baseline and setting realistic medium-term reform objectives during the formulation phase Monitoring progress against the objectives NB: Relevance & role of oversight bodies is examined under the FM eligibility criteria assessment (to avoid duplication) 4

To keep in mind  Budget transparency is necessary but not sufficient for oversight and scrutiny; support is also needed for: Strengthening national legislative and oversight bodies Strengthening internal control mechanisms Encouraging a participative BS approach (e.g.. association of national control bodies to BS annual reviews, use of national audit reports to feed in policy dialogue)  Publication does not necessarily mean availability to the public. Effective accessibility must be assessed.  Reforms of transparency and oversight of the budget take time. Therefore it is important to set realistic objectives. 5

Outline of module 8 1.Why this new eligibility criterion? 2.How to assess initial eligibility: preparing the document for programme approval (supplement to the Action Fiche) 3.How to assess ongoing eligibility: preparing the payment file for the programme 6

1. Assessing the entry point The government must have published its budget proposal or its enacted budget within the past or current budget cycle. Information must be available in print or on the web. Under certain circumstances a programme can be approved if the partner government commits to meet the entry point before the first disbursement (to be specified in the Financing Agreement) for SBC in general and for BS contracts in SIDS/OCTs in exceptional and justified cases 7

2. Identification of key weaknesses on transparency and oversight of the budget Provide:  A short summary of OBI, PEFA (cf Guidelines Annex 6, table Template A, 2.page 117 on the relevant 6 PEFA indicators) to inform on indicators and trends  An analysis of the main weaknesses assessed by focusing on: Key budget documents to be produced Key budget documents to be made available and accessible to the public Timeliness of release of budgetary information Comprehensiveness of budgetary information (content) Quality, integrity and accuracy of budgetary information  Cf. Template table to present the key weaknesses page pp (structure presented in the next slide). 8

Availability: Documents should be available to any person wishing to access them Comprehensiveness: Budget documents should allow a complete picture of central government’s fiscal forecasts, budget proposals and out-turn of the previous year. Quality, integrity, accuracy: Realism and reliability of budget data, accounting standards, data consistency, reconciliation with other data.  Recommendation on comprehensiveness and quality complex issues (narrative) should rely on existing diagnostics (IMF ROSC,PEFA...). Key Budget Document DescriptionProduced (Y/N) Published (date, website) Timeliness of Publication (Y/N) Comprehensi veness & Quality (narrative on key issues)

Budget documentsAvailability due 1. Executive’s budget proposal When presented to the legislature (at least before legislature approves it) 2. Enacted budget< 3 months after legislature approved it 3.In-year report (also monthly and quarterly reports) < 3 months after reporting period 4. Mid-year report< 3 months after reporting period 5. Year-end report< 1 year after end of fiscal year (reporting period) 6. Audit report< 2 years after end of fiscal year Running Head 12-Point Plain, Title Case Key budget documents ( cf. Appendix A of annex 6 page 123 of the Guidelines) 10

Budget cycle and key documents Ensuring transparency and accountability Providing managerial information 11

Parliament Annual Report Budget document Supreme Audit Institution Audit report Minister Management has internal control Audit Committee Audit report Internal auditor Service providers Informatiion Measures Audit 12

3) Identification of the baseline and medium term objectives  Based on the analysis of weaknesses (chapter 2)  Should identify the key weaknesses that can be addressed by the BS programme  Should be used to identify accompanying capacity development.  Should identify realist reform objectives against which progress will be measured during implementation. Use table ( page 120 of Annex 6): 13

Points to keep in mind  If Executive’s Budget Proposal and Year End Report or Audit Report are not published, medium term reform expectations must take them into account  More flexibility for short term programmes (< 3 years) SBCs and SIDS/OCTs  Mention how objectives will be supported and by which means: policy dialogue, conditions for variable tranche disbursement, participatory budget approach, capacity development measures.  Adapt reform expectations to country circumstances 14

Outline of module 8 1.Why this new eligibility criterion? 2.How to assess initial eligibility: preparing the document for programme approval (supplement to the Action Fiche) 3.How to assess ongoing eligibility : preparing the payment file for the programme 15

Assessing the entry point: Same as for programme approval. Assessing progress:  Provide short updated summary of available international data (PEFA, OBI,..) using the template/table of Page 121 of annex 6.  Use the table made at programme approval stage with weaknesses and reform expectations and describe evolutions 16 Key budgetary document Specific weaknesses /baseline Medium term reform expectations (incl. timing) MeansEvolution since last assessment

 Provide conclusion on ongoing eligibility: narrative to reflect confirmation of entry point situation and (satisfactory) progress with respect to reform expectations.  Points to keep in mind: As reforms in this area take time, it is not required to show annual progress but rather demonstrate progress against baseline and medium-term reform expectations. 17