R OLE OF THE F INANCE C OMMITTEE OF P ARLIAMENT IN THE G OVERNMENT B UDGET P ROCESS AND THE C ONTROL OF C ORRUPTION A P resentation By M ike S tevens C apacity B uilding U nit A frica R egion W orld B ank

2 ROLE OF PARLIAMENTARY FINANCE COMMITTEE  Setting the scene  Central importance of Government budget  Parliament’s role in:  authorizing taxes  approving expenditures  monitoring performance  scrutinizing results  And in:  debating new policy  approving new laws

3 HOW CAN THIS ROLE BE PERFORMED?  Daunting task  Technical language of public finances  Obscure budget conventions  Size of budget documents  Interpretation of fiscal reports  Understanding government financial statements  Identifying the important issues.  Global trend towards greater fiscal transparency  OECD best practice  IMF code  Developing country best practice  Tools for understanding budgets  The Bank’s 3 level framework

4 THE BANK’S 3 LEVEL FRAMEWORK A well performing budget system functions effectively at 3 levels. Level 1 -- Macro: A budget which sets and achieves realistic fiscal targets. Level 2 -- Strategic: A budget which allocates resources according to the government’s objectives. Level 3 -- Micro: A budget which resources projects and programs in a way that enables them to be executed efficiently and effectively

5 THE GOVERNMENT BUDGET CYCLE

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9 SHOULD PARLIAMENT TRY TO CHANGE THE BUDGET? Contrasting experience of countries  Rubber stamping legislature  Scrutinizing legislature  Transforming legislature

10 HOW CAN PARLIAMENT HELP FIGHT CORRUPTION? Ensure committee meetings are open Examine tax proposals Conduct hearings on main revenue agencies performance Take audit reports seriously, and support budget of Supreme Audit Institution Scrutinize public movement Focus on performance Support regular corruption surveys Stiffen the resolve of the finance ministry.

11 SUMMARY OF ACTIONS TO STRENGTHEN PARLIAMENTARY SCRUTINY  Demand more transparent and readable budget documents.  Seek publication and regular updating of the Government's fiscal framework and underlying macroeconomic assumptions.  Focus on strategic allocations and major programs rather than details of submitted budget.

12  Require monthly reports of aggregate revenues and spending.  Require annual reports from main spending ministries and agencies, ensure they contain performance information, and scrutinize.  Hold government accountable for end-year financial statement.  Support Supreme Audit Institution, scrutinize its report and monitor follow-up.  Keep committee hearings open