LAHORE, Jan 26: Several departments of the Punjab government are said to be facing difficulty in preparing their budgetary estimates for the next financial year in the Medium Term Budgetary Framework (MTBF)
mode due to lack of enough capacity and training, say sources.
The Punjab government has decided to switch over to the MTBF mode from the fiscal 2005-06 as part of budgetary reforms it has undertaken under the $500 million Punjab Resource Management Programme (PRMP) being funded by the Asian Development Bank.
The change over to the MTBF mode from the existing budgeting system, which is incremental in nature, is expected to help the provincial government link its policy objectives in the priority areas with its future spending plans.
The Punjab is the first province in the country to adopt a multi-year (or three years in case of the Punjab) approach to budgeting with the implementation of the MTBF.
According to official sources, at least 14 provincial departments had failed to send their expenditure projections for the next budget. "These departments have been issued a reminder.
The finance department is helping all the departments prepare their projections in the new mode," they said. They were hopeful that the snags in the way of preparation of budgetary projections for the next year would be overcome.
The preparation of the budget in the MTBF mode will ensure effective and efficient public spending on development projects aimed at poverty alleviation by allocating greater resources to the social sectors and ensuring their constant flow for the medium term, officials told Dawn on Wednesday. Besides, they said, it would improve governance.
The switching over to the MTBF would help the government and its departments define their measurable, medium-term objectives in a rolling three-year plan, the term used to indicate a budgetary cycle where a year is added at the end as each initial year passes.
The officials said the line departments had been asked in the Budget Call Circular issued earlier this month to give details of both current and development expenditure projections in the MTBF mode.
The new budgeting mode, according to officials, would also help the provincial administration to move ahead towards performance budgeting and performance auditing.
A budget prepared in the MTBF mode ensures for the departments a greater level of certainty about the availability of financial resources, improving the fiscal predictability and allowing the government to make a more accurate economic forecast over the medium term.
Officials say the government is trying to gradually switch over to budgeting in the MTBF mode since 2002-03. They concede that implementation of the MTBF in its "entirety" is a long-drawn process which may take a decade or more.
"We would have to bring about a cultural change and alter the entire mindset of the departments and officials from top to bottom to move away from the existing one year budgeting to three-year planning," they say.
"It is because this particular reason that in the initial years the government is going to lay emphasis on rudimentary MTBF, which does not put too much strain on the existing capacity," the officials say
At the MTBF Forum held a few months back, provincial finance minister Sardar Hasnain Bahadur Dareshek had stated budgeting in the MTBF mode provided necessary continuation to budgets and predicts with reasonable accuracy, resources and expenditure of over a medium term period.
It is said by the officials that there was a growing realisation that the annual incremental budgeting process had been unable to deliver the desired results and that there was a need for a new strategic direction to achieve the policy goals of the government.
"The MTBF exercise is supposed to address this issue as it will provide a medium term planning perspective, which entails developing a revenue mobilization strategy not for single year as had been the practice, but over the medium term," they say.
