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Budgeting System in Ethiopia: Program Budget System: Email
Budgeting System in Ethiopia: Program Budget System: Email
Email: teferaasefa@gmail.com
Abstract
Program budget system is one of the developed in Ethiopia. Despite some
results of the budget reform which is the progress in introducing program budget at
part of public sector financial management federal level, Ethiopia faced different
reform initiatives. Different budgetary challenges in successful implementation of
reform were undertaken in developed as the reform program. Lack of sufficient
well as developing counties, but most training to the public personnel, absence of
extensively in OECD countries. In the case basic infrastructures (IFMIS, accrual
of Ethiopia, program budgeting system was accounting system and new institutional
introduced recently under the expenditure set-up) which support the reform program
management and control program (EMCP) are not yet developed and improved in
which is one of the sub-programs of the Ethiopia
public sector reform. This budgeting
system was not as such applied and
implemented in government institutions
and levels. In Ethiopia, successful
implementation of program budget system
has been faced different challenges.
Ethiopian government started the program
budget without considering necessary
condition for the successful implementation
of the program. Important institution and
institutional framework are under
governments budget reforms. The PBB is consistent training program for government
slowly started to be embedded in the public officials is also resulted in the difficulties
finance arena of Ethiopia. Like any new in effectively implementing the budget
reform, there were some teething issues at reform in Ethiopia.
the beginning; these issues are being
Different issues with a special reference to
gradually addressed.
Ethiopian budgetary system were discussed
Statement of problem in the paper. The rationality for implanting
Even if it is a principal budgetary reform
program budgeting system, experience in
which was imported to many developing
implementing the budget system, current
countries, program budgeting system had
status and progress of the budget, and
never be practically successful in ether
major opportunity and challenge in
developed or developing countries. Many
implementing the budget.
critics have been raised from different
angles. In Ethiopia the successful Methodology of the Paper
implementation of program budget system Data was gathered mostly from secondary
has been faced different challenges. data including journals, books, articles and
Ethiopian government started the program reports made by MoFD in different times.
budget without considering necessary Some data was also gathered through
countries. Its criticism and failure was not implementation. This criticism was
limited to the developing countries. As stemmed from the reality that many
cited in Owen H. Huge, 2003, the most countries simply introduced the system
prominent critic of program budgeting was with minimum or no consideration for
(Wildavsky, 1979). For Wildavsky, institutional, informational and
program budgeting has failed everywhere technological requirement of program
and at all times. But the failure and budget while program budgeting require
criticism was more extensive in developing more of these condition. Program
countries. As provided in the public budgeting requires considerably more
expenditure management handbook, World information about the activities of the
Bank put the following: agencies than is required for traditional
Program budgeting is the principal line-item budgeting, so is not easy to
budget reform (beyond traditional implement (Huge, 2003). Other critics do
line item budgeting) that has been not see program budgeting itself as a
exported to developing countries. In flawed concept, but rather stress the
practice, program budgeting has not conditions that are needed for program
been very successful in either budgeting to be successful. These might
developed or developing countries. include, for example, adequate information
Criticisms range from those who about programs and about social, economic
believe that program budgeting is and environmental conditions. Critics
so flawed in concept that it would argue that these conditions are not present
be inapplicable in any setting, to in many countries, thereby making it
those who believe that the impossible for program budgeting to take
prerequisites that would be root and flourish (World Bank, 1998). The
necessary to bring the reform to following case shows the introduction,
developing countries are currently implementation and finally failure of
not present.(World Bank, 1998) program budget in Sri Lanka:
PROGRAM
Program budget was also criticized on the BUDGETING IN
basis of necessary condition and SRI LANKA
Sri Lanka engaged in budget reform in
requirement for its successful
earnest beginning in 1969. This ultimately
led to the widespread adoption of a system adherence. Further, by the 1980s, the
that closely paralleled program budgeting. government no longer had any method of
By 1974, virtually the entire government forecasting cash flows. Following the
was presenting the budget in a program recommendation of the IMF, each ministry
budget format. By 1975, a modest amount was required to report monthly
of performance data was also being expenditures, but not in relation to
presented by each of the twenty-three programs or performance. Sri Lankan
ministries. budgeting came full circle; cash flow
budgeting triumphed over performance
The program budgeting reform was monitoring. Program budgeting failed in
spearheaded by a program budget unit, Sri Lanka for these reasons: (a) the reform
which was established in the Ministry of had found no powerful friends in the
Finance in 1971. This unit issued executive or the legislature; (b) there was a
guidelines on budget preparation, designed lack of skilled manpower to carry out the
the required documentation, advised reform; (c) program budgeting occurred
departments on the development of without important parallel financial and
performance measures and objectives, and administrative reforms - particularly
reviewed department performance against related to accounting and auditing - that
budgeted targets. By the mid-1970s, the Sri might have sustained it; (d) the
Lankan budget reform seemed set to replacement of organizational structure
succeed. with programs as the focus of decision
In 1977, the socialist government was making did not occur and, perhaps most
replaced by a free-market focused important; (e) a rapid, comprehensive and
government. The program budget unit was centralized introduction of program
disbanded by the new government, budgeting was ill considered in the Sri
depriving program budgeting of focus and Lankan administrative environment. A
impetus. Department of budget office more cautious and selective approach
continued to submit the required reports for would have increased the likelihood that
a time, but the sanctions that had existed the reform could have been sustained.
for failure to do so were eliminated and The case study was taken without
ministries became much more lax in their modification from World Bank, 1998 as it
was brought from: Government Budgeting
Available online: http://edupediapublications.org/journals/index.php/JSMaP/ P a g e | 589
Journal for Studies in Management and Planning e-ISSN: 2395-0463
Available at http://edupediapublications.org/journals/index.php/JSMaP/ Volume 01 Issue 11
December 2015
in Developing Countries, Chapter 6, and budget was prepared on the basis of line
Peter Dean item budget which does not say something
management. Training was given to the system. This was also intensified with
established program budget reform team by the turnover of highly qualified
foreign experts from IMF. Accordingly, personnel from the government office in
different improvement in the budget reform search of job with attractive salary. This
is there at the federal level. Given the in turn need additional cost and time to
improvement, there are different train another new staff for the
difficulties and drawbacks in implementing implementation of the program
effective and efficient program budget in The shortcoming of infrastructure and
the government bodies. The drawback was absence of the important consideration
partly emanates from the program itself for no- budgetary reform which support
and partly from the lack of emphasis from the effective budgetary reform is one of
the government in considering the the obstacles for the program in Ethiopia.
necessary condition for the successful In different literature, it was found that
application of the program budget. necessary infrastructures are imperative
Generally, the following factors and for the successful reform. These
explanation could be identified and infrastructures are considered as the
recognized for the difficulties of the basics for the budgetary reform. The
successful implementation. Korean government is also seeking to
strengthen budgetary basics. This
Lack of precise explanation and
includes introducing accrual budgeting
clarification of certain technical and
and accounting, double- entry
difficult terminologies and concepts
accounting, IFMIS, and program
related to program budget in manual of
budgeting. These efforts are being
the program budget. This resulted in
directed by the Budget and Accounting
confusion of the government official in
Reinvention Office (BARO), which was
implementing the reform in their
set up for this purpose in 2004.
respective sector.
Accrual and double-entry accounting
Absence of continuous and sufficient
aims to enhance transparency of
training to the concerned government
government accounts. It will further
official and to the training team was also
enable better forecasting of medium and
one of the impediments to the effective
long-term fiscal risks. At this stage,
implementation of the program budget
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