THE BUDGET PROCESS What happens When does it

THE BUDGET PROCESS: What happens? When does it happen? Who does it? Workshop on Gender Responsive Budgeting (GRB) Dili, 23 January 2009 Cristina Pinto Finance & Budget Adviser, Ministry of Justice 1

THE BUDGET PROCESS q Budget. General aspects. q Budget process q Preparation of RDTL budget proposal q Approval q Budget execution q Inspection 2

Budget. General aspects 3

Budget. General aspects The General State Budget is an estimation of the public expenses and revenue for a certain period of time (fiscal year) fiscal year = calendar year 4

Budget. General aspects The limit of the public expenses is determined considering factors such as: § § § Strategic options of the Government Economic situation of the country Revenue expected The needs of the Agencies (Ministries). . . The distribution of the funds among the different Ministries is named fiscal envelopes 5

Budget. General aspects The budget is structured by: § Source of fund* § Organization (ministry, department, division) § Programs (sectors, sub-programs, activities) § Type of Expenditure (category, item, line-item) § Geographic (location: district, sub-district, village) * State general revenue, revenue of autonomous bodies, external aid, etc. 6

Budget. General aspects Type of Expenditure (categories): § Salaries & wages § Goods and services § Minor Capital § Capital & Development § Transfers 7

Budget process 8

Budget process Preparation Government - Budget Proposal should be send to Parliament until 15 December Approval National Parliament - Discussion and approval in generality and speciality Execution Government Inspection National Parliament & Administrative, Fiscal and Accounts Superior Court - through each Agency 9

Preparation and approval 10

Preparation and approval Preliminary works by Mo. F - Review of macro-economic indicators - Calculation of Sustainable Revenue (Petroleum Fund Law) - Strategic policies & priorities Council of Ministers - Co. M discuss & approve the budget process and its calendar (timetable, deadlines) - Approval of ‘Fiscal Envelopes’ (maximum of expenditure by Agency) - Definition of priorities areas Budget CIRCULAR - Guidelines for Agencies Rules, requirements & deadlines Templates / forms Government priorities for the fiscal year Fiscal envelopes 11

Preparation and approval Each Agency/Ministry prepared its own submission. Agencies Budget Submissions Steps: √ Identify activities & priorities (AAP) Through a planning process that should be participated, discussed and disseminated. √ Fill in forms / costs calculation √ Summary and justification √ Final verification (complete & correct) 12

Preparation and approval The submission should: Agencies Budget Submissions √ Based on Annual Actions Plans (AAP), which identifies the projects and activities to be develop during fiscal year √ Consistent with National & Sector priorities* √ Identify resources needed to implement AAP* √ Respect Budget Circular √ Delivered on time √ Respect the fiscal envelope 13

Preparation and approval Advantages of a good budget submission: Agencies Budget Submissions § Save time in reviews and discussions (between Agencies, Mo. F and BRC) § Facilitates the approval § Create a image of credibility and professionalism § Facilitate future requests of additional funds (when document is based on evidences) § Facilitate the budget execution 14

Preparation and approval Budget Office Recommendations BUDGET REVIEW COMMITEE Co. M Parliament - Budget submission analyses - Review of carry-overs of each agency & budget execution reports - Written opinion to BRC: suggestions & recommendations (“green file”) - Meetings with Ministries - Discussion budget submissions - Decisions (cuts, amendments. . . ) - Final review - Budget documentation (Books 1 & 2) - Proposal of Budget Law - Discussion & Approval (art. 145 CRDTL) √ Commissions 15 √ Plenary sessions

Budget execution & inspection 16

Budget execution & inspection Mo. F - Dissemination - Authorization to initiate expenditure - Power to execute budget is committed to Government, through each agency Government (Execution) - Budget execution involves: √ expenditure approvals √ procurement & award of contracts √ registry of commitments & obligations √ payments √ transfer of sums 17

Budget execution & fiscalization Government (Reporting) - Government is obliged to Report to Parliament in a quarterly basis - Annual Reports - Preliminary Anual Report (31 Mars) - Final Report (audited) (30 Junho) Audit & inspection - Audit by an independent auditor is compulsory - Parliament discuss and take decisions Parliament Court of Accounts - Superior Court of Accounts has the power to check legality of public expenditure and judge public accounts 18

Budget Execution - Total amount of expenses and/or revenue needs to be review (increase/decrease) Budget Middle Review - Similar process of preparation and approval - Exceptional situation: additional funds needs to be very well justify 19

Legislation p Constitution Act of RDTL p UNTAET Regulation 2001/13 p Budget Law (annual) p Budget Circular (annual) 20

Thank You 21