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Parliament and PFM Basic PFM Training Program The World Bank Group
Outline of the Presentation • Overview • Parliamentary Functions and PFM • The Budget Process as part of PFM Systems • Parliamentary Committees • Differing PFM Systems: Implications for Parliamentary Oversight
Overview • Parliament is the institution that enacts the budget, monitors its implementation, and holds the government to account • It is through the “power of the purse” that parliaments exert their influence over the collection, allocation, and use of public resources for public purposes • Many legislatures are reasserting their role as active players in the budget process
Parliamentary Functions and PFM • Representative Function • Legislative Function – Legislative Framework (Budget and Finance Act, Audit Act, Anti-corruption Act, Public Procurement Act, Access to Information Act) • Oversight Function – Parliamentary Audit Committees – Accountability = Answerability + Enforcement
The Role of Parliament in Financial Oversight • An agent of anti-corruption • Legislative role – Legal frameworks – Incentives • Oversight role – Scrutiny through committees – Enhance oversight through anti-corruption commissions, SAIs and the media • Financial control role – The Budget Cycle
The Budget Process as part of PFM Systems PFM deals with all aspects of resource mobilization and expenditure management in government: – Resource mobilization (Revenue/ taxation) – Prioritization of programs (Policy making/ planning) – The Budget Process – Efficient management of resources (Budget execution); and – Exercising controls (primarily internal controls, such as government accounting, banking, and fiscal reporting).
The Budget Process as part of PFM Systems cont’d
Parliamentary Committees Ex-Ante Stage of the Budget Process: • Budget Committee and/ or Finance Committee • Finance Commission Ex-Post Stage of the Budget Process: • Public Accounts Committee – Accounts and Operations of PACs – Use of Audit Reports – Relationship with the SAI • Finance Commissions PFM systems and how parliaments engage PFM systems differ between Anglophone and Francophone systems. Ultimately, every parliament is different, with particular differences in budget execution and internal controls in different PFM systems.
Differing PFM Systems: Implications for Parliamentary Oversight • Differences in the PFM systems used in Francophone and Anglophone countries has an impact on how parliaments oversee budget execution and contribute to external control • The type of PFM system in place has implications for who in the government the parliamentary oversight committee holds to account: – Francophone system: Most appropriate starting point is the Ministry of Finance – Anglophone system: Most appropriate starting point is the line ministries • External control is influenced by the relationship between the parliament and the SAI
Conclusion • PFM systems encompass more than just the budget process • Parliaments influence all elements of the PFM system; however, have the most clearly defined role in the budget process • Parliamentary engagement with the budget process influenced by two factors: – Type of parliamentary system – Type of PFM system