A Simple Guide to Working with Finances in Education - Tanzania ...

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4. Introduction to Budget ProcessesSection 2.3 explained what the budget cycle is like. It is an ideal pattern, but theproblem is that it doesn’t create budgets which are in favour of the poor. Section 2.4explained some of the reasons for this. All of the reasons have a strong politicaldimension, but they can be made worse by technical problems with budget systemsand processes. Some of these are ‘internal’ and some of them are ‘external’, meaningthey are related to the activities of donors. They are explained below.4.1 Internal Problems4.1.1 Annual bidding systemGovernment budgets are prepared using a bidding system, in which each ministry anddepartment ‘bids’ for how much money they would like to have, and then this getscut back to fit with the amount of resources available or in line with priorities. Thisway of making budgets can make it difficult to relate inputs to activities orperformance as measured by the services provided (outputs) or their impact on thepublic (outcomes). This leads to inefficient and wasteful use of available resources.4.1.2 Base budget is not reviewed, but used for automatic“add-ons”Ministries and Departments’ bids generally take the previous year’s budget as the baseand request additional funding. Ideally this would be on the basis of an expansion ofthe services to be provided, but more often it is just a percentage increase. With thisapproach there is little scope to review the relevance, efficiency and effectiveness ofexisting programmes or the level of administrative overheads.4.1.3 Expenditure isn’t related to resource availabilitySince base expenditures are taken as fixed, they can become the starting point for thewhole budget process rather than determining expenditures on the basis of resourceavailability.4.1.4 Strange spending incentives (spending in order to spend,or arbitrary cuts)Ministries and Departments’ will tend to bid high because they expect their proposalsto be cut back. As a result,• The Ministry of Finance will be faced with overall spending proposals that greatlyexceed the overall resources, and they impose cuts. They have to work to a tight timedeadline and don’t always understand the needs and priorities of the spendingministry or department, so what they cut may not be what the Ministry would choose.15
• Since the ministry or department, does not feel directly responsible for the finalbudget figures it has little commitment to the limits imposed.• Spending ministries and departments will tend to commit funds asquickly as possible, for fear that later cuts will be imposed. They may even commitbeyond their official spending limits. The recently introduced computerized systemof government Local Purchase Orders in Tanzania is meant to put an end to this,as it is not possible to order something if there isn’t the money to pay for it.• Ministries and departments have no incentive to make savings. Each agencyneeds to fully spend its budget by any means necessary. To avoid underspending,there is often a surge in agency spending in the last quarter, often onitems which are not very high priority.4.1.5 Unrealistic revenue projectionsThese may make the problem worse, because the amount that finally is available tospending ministries or departments is not in line with what they expected and planned for.4.1.6 Departmental rather than programme or output orientationBudgets are prepared by, and for, administrative units rather than on the basis of thegovernment’s objectives, programmes and activities. The first priority is keeping theadministrative machinery running smoothly, and often not enough is left for activities.This results in schools without books, or inspection services without fuel for theirvehicles so they cannot visit schools.4.1.7 Budget does not capture all spendingIt was said above (3.4) that a good budget is ‘comprehensive’ meaning that everythingon which government spends money is included. If the budget does not give a fullpicture it is very difficult to see whether spending allocations are being made in line withstated policy priorities. Commitments to parastatals are often not covered in the budget.Until recently most donor support came in the form of projects, which meant thatgovernment didn’t actually know how much was being spent. There is more about thisbelow.4.2 The impact of external aidImplementation of governmentpriorities may be held back by theway donors or developmentpartners work.How many of theseproblems are also true ofNGOs?What can be doneabout it?16
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Page 6 and 7: 1. Achieving Education for All -whe
Page 8 and 9: 2. Introducing Budget Work2.1 Budge
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Page 13 and 14: Budgets, gender and meeting the nee
Page 15 and 16: 3. Introduction to Budget SystemsTh
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Page 25 and 26: 4.3.4 Public Expenditure Reviews (P
Page 27 and 28: 4.3.6 Sector Wide Approach (SWAP)In
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Page 31 and 32: The basic tools for budget analysis
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Page 35 and 36: 6.4 Work with PartnershipsThere are
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