Question

Who should be responsible for decisions made about how to spend money within the public sector?

Answer 1

The responsibility for preparing the budget usually lies with the ministry of finance with input from the line ministries and some smaller spending agencies. This exercise is normally controlled by a central budget department located in the ministry of finance, or sometimes in a separate budget ministry.

The character of central budget departments differs widely between countries, however. Some are only responsible for preparing the current budget, excluding debt. In such cases, the capital budget may be prepared by a planning or development ministry (or even at a higher level in the prime minister's or president's office), while the debt service costs are assessed (and paid) by another entity. Some budget departments are in charge of preparing the entire budget, although not involved in implementation of the budget. Others have a say on expenditure commitments, and some are also in charge of monitoring budget execution. It is therefore important to know the precise responsibilities of the budget department. It is particularly useful to know if the budget department is responsible for supplying partial or complete data on budget preparation, expenditure commitments, and full budget execution data.

In many developing countries, only partial data on budget preparation may be available in the budget department. It is important that all data on the current budget, the capital budget, and the debt service (including data on secondary and tertiary tiers of government) are consolidated to ensure that, in total, they are consistent with macro objectives. In some countries, research departments of the central bank may carry out this task.