Before talking about budget performance, it will not be out of place to say what a budget is all about. A budget is a common financial tool used to mange a company’s finances. To put it simply, a budget is a projection of income and expenditure planned for the next year. Income expected to arise in the next year is estimated and so is the expenditure expected to be incurred. A budget is a plan for how to spend money to achieve an objective or objectives within a certain period of time. Moreover, a budget is a most important tool for the government to use in controlling and managing the projects or activities that are undertaken with public funds for the benefits and welfare of all the people.
Budgets are usually prepared annually. Generally speaking, it is the responsibility of administration departments to draw up budgets for public sector organizations. All offices at different levels of each Government Department, such as Township, District, State/Division and Head Office, are involved in the budget preparation. It must be completed in time to be submitted to the Ministry of Finance, whose job it is to combine the budget estimates from all Government departments into the overall national budget, get it approved by the cabinet and then submit it to Pyi Thu Hlut Taw for final approval before publishing it in the newspapers for public information. As for the private business enterprises, budgets usually are developed by an enterprise’s accounting or finance department on an annual basis, too.
There are different types of budgets used by private and Government organizations. They are: static budget, zero-base budget, incremental budget, operational budget, etc. Of them incremental budget is most widely used especially by the Government organizations. The budget estimates are made for the next fiscal year based on the previous year’s actual revenues earned and actual expenditures incurred.
Increases and decreases in the new budget over the previous year’s budget will be made in terms of the level of business activities or operations planned for the next year.
The Union Budget is drawn up within the limits of the funds expected to be available to the Union Government within the next fiscal year, including borrowings from foreign governments and international financial institutions such as World Bank, IMF, ADB, etc. Once approved by Pyithu Hluttaw, budget provisions are distributed to all the Government departments concerned so that they can start work on the activities that they have to carry out during the budget year.
If I am not much mistaken, most people in the Government think that when the budget has been granted, they can spend the funds within the budget limits, and that is the be-all and end-all. Nothing can be further from the truth. From the point of view of budget performance, that is not really the case. What is important is the outcome from spending the budget funds provided by the Government. It is here that budget performance comes in. Its function is to make a critical analysis of the budget spending to check what outcomes or benefits have been obtained in terms of budget performance indicators. These indicators include (but not limited to) the following:-
(a) Are expenditures within the limits of the budget?
(b) Are there any budget overruns; that is, spending beyond the budget?
(c) Are there proper authorizations for all expenditures?
(d) In case of budget overruns, check the reason why, if supplementary grants have been applied for and obtained, and if such overruns are justified in the light of the findings.
(e) The targets set have been achieved fully and if not, why and to what extent.
(f) Is there a mechanism in place, such as internal audit or inspection section, to monitor budget performance at different levels of the respective departments.
(g) Check that the activities or projects carried out using budget funds are completed on scheduled and if not, verify if they are due to poor planning resulting in delays or because the funds have run out.
(h) Call for explanations for failure to achieve the desired results, checking to see if the failure is due to misuse of funds, wastage, misappropriation, lack of proper
supervision resulting in
poor performance, etc. on the part of responsible officials.
It must be driven home to all staff at different levels of the organizations that the budget represents public money collected in terms of income tax, commercial tax, capital gain tax, customs duty, etc. and that whatever is spent must be directed toward to the benefits and welfare of the people. All expenditures incurred out of the state budget must be strictly in accordance with the financial rules and regulations prescribed by the Government.
If budgets are not properly but poorly managed at every level, the results will prove very damaging to our national interests. For example, budget funds are available, but the projects can’t be started on schedule, because necessary arrangements can’t be made in advance.
Thus work can be started on project only about one-third of the way through the fiscal year. So the project can’t be completed as scheduled at the fiscal year and part of the funds that remains unspent (surplus budget) has to be surrendered to the Government.
However, the surplus budget can’t be carried over to the next fiscal year. The uncompleted project has to wait for the next year’s budget to finish. On the other hand, the funds are spent so with reckless extravagance that budget overruns occur, for which the supplementary budget has neither been requested for nor granted beforehand. It also happens that the moneys left over from the budget provisions at the fiscal year-end are spent for no other purpose than not to surrender the budget surplus to the Government.In such cases, explanations must be called for from responsible persons and if they are found unsatisfactory, appropriate action should be taken against them as a deterrent to possible occurrences in the future. However, in my experience no effective actions have been taken in such cases by the Departments concerned and are soon lost in the mists of time,so to say and not a word was heard of them.
Now is the time for the new Government to enforce fiscal discipline on all the responsible personnel of the Departments, which includes exercising economy, efficiency and effectiveness in using public funds in order to achieve the budget objectives desired. Appropriate actions need to be taken for failure to meet the above criteria. As we all know, though resources-rich, we have fallen behind some of even the neighboring countries through poor management of our economy. It is no use crying over spilt milk, as the saying goes.
After all is said and done, let us all roll up our sleeves and work as best we can to catch up with other advanced countries in terms of economic development through country-wide national unity, understanding, and tolerance by burying for good all that has happened in the past. In my humble opinion, that may prove to be the only way to get out of poverty for the majority of people in the countryside and to reach the goal of national sustained economic growth, wealth and prosperity we all hope for all these years.