Download Budget alignment to MKUKUTA

PEFAR UPDATE:
RAPID BUDGET ANALYSIS FOR THE
2007 ANNUAL REVIEW
Dar es Salaam,
October 31, 2007
Poverty Reduction Budget Support for Tanzania
Outline
 The Aggregate view
 Alignment of budget with MKUKUTA
 Execution of expenditures
 Local Government expenditures
 Value for Money
 Transparency of presentation
The Aggregate view: the trend
The last few years have seen a major
expansion of public expenditures
As % of GDP
35.0
30.0
25.0
14.0
12.0
10.0
Government
Expenditure
20.0
15.0
8.0
6.0
Aid (grants &
net foreign
loans)
10.0
5.0
0.0
4.0
2.0
0.0
01
03
04
05
06
07
08
02
/
/
/
/
/
/
/
/
00
02
03
04
05
06
07
01
Domestic
Revenue
Fiscal Deficit
(net of Aid)
The Aggregate view: the question
• As public expenditures head towards 30% of GDP in
Tanzania, and result in the government growing much
faster than the rest of the economy
• Mkukuta is clear that the productive sectors in
Tanzania should be private sector driven – the major
public spending programmes are supposed to reinforce
growth and poverty reduction, not smother it.
• A clear statement of government policy in as to the
overall weight of public expenditures in the economy
would be highly valuable in informing economic operators
about the overall economic context for the next few years.
Budget alignment to MKUKUTA
MKUKUTA sectors are receiving substantial share
of the increase spending, with the social sectors
benefiting most
120.0%
Consolidated Fund
Services
100.0%
Productive Services
80.0%
120.0%
100.0%
80.0%
Economic Services
60.0%
40.0%
Social Services
20.0%
60.0%
40.0%
20.0%
Defence and Security
0.0%
Budget
Budget
Budget
2005/06
2006/07
2007/08
Administration
0.0%
Actual
Actual
2005/06
2006/07
Budget alignment to MKUKUTA
These trends show the government’s commitment to implement
MKUKUTA, and its ability to make good use of foreign aid
MKUKUTA
MKUKUTA
Sectors (Total
Budget
Sectors
Budget)
600
support
(Recurrent
Budget)
500
Project+Budg
400
et support
Tsh. m
700
MKUKUTA Sectors
(Total Budget)
MKUKUTA Sectors
(Recurrent Budget)
Project+Budget
support
300
200
Budget support
100
0
Increase from 05/06 to 06/07
Budget alignment to MKUKUTA
The SBAS systems does not seem to play a
critical role in helping align the budget and the
MKUKUTA strategies and goals:
•Inconsistent link across sectors to MKUKUTA objective and goals.
•Time consistency
•Large proportions of total resources allocated on a few general categories
suggest that the classification may not be the most useful in directing
resources in a detailed way towards MKUKUTA goals.
•Cross link to key programs is unclear (e.g. in transport, it is not possible to
identify expenditure by trunk, regional and rural roads).
•Very limited consistency across MDAs (Except for HIV Aids)
Budget execution: FY06/07 overall
Execution of the government budget remains weak for
the development budget and in terms of within -year
disbursement…
80%
ADMINISTRATIO
N
60%
DEFENCE AND
SECURITY
40%
SOCIAL
SERVICES
20%
ECONOMIC
SERVICES
0%
-20%
-40%
-60%
-80%
Recurrent Budget Development Budget
PRODUCTIVE
CFS - State
house
CFS - Public
Debt and
General Services
Deviation Analysis for Central and Regional
Votes FY2006/067
45.00%
40.00%
35.00%
30.00%
25.00%
20.00%
15.00%
10.00%
5.00%
0.00%
Development
Budget
Recurrent
Budget
Total Expenditure Deviation
Budget execution: FY06/07 within-year
Underspending in Q1 (on pro-rata basis) was significant for several votes
Some (e.g. Water, Prime Minister) caught up in the following quarters,
others – most notably PMO-RALG and to a lesser extent Health – executed
the bulk of their budget in Q4.
120.00%
% Pro-rata
Expd. Q1
100.00%
80.00%
% Pro-rata
Expd. Q2
60.00%
40.00%
% Pro-rata
Expd. Q3
20.00%
0.00%
Regional Ministry Prime TACAIDS Water Energy Health
Admin. & of Minister’s
and
and
Local Livestock Office
Minerals Social
Govt. Dev. (vote 37)
Welfare
% Pro-rata
Expd. Q4
Local Government expenditures
 More
25%
2005/06 Estimates
20%
2006/07 Estimates
15%
2007/08* Estimates
10%
2005/06 Actual
5%
2006/07 Actual
2006/07
Actual
2005/06
Actual
2007/08*
Estimates
2006/07
Estimates
0%
2005/06
Estimates
More funding to
LGAs over past
2 years..
New budget shows
a 2% decline
% of total GOT Expenditure
funds are flowing directly…
FY 2006/07
Estimates
% of total LGA budget channelled 18%
through central votes
FY 2007/08
Estimates
7%
Local Government expenditures
25% of LGA budget was not spent in 2006/07 compared with
13% for Central GoT
Deviation Analysis for LGA Sub-votes
0.00%
de
r-s
pe
nd
he
r
du
cti
ve
Ot
un
no
To
ta l
mi
c
Se
Se
r
Pr
o
vic
rvi
ce
es
n
tio
ial
Ec
o
-40.00%
So
c
Ad
m
ini
s
-20.00%
-30.00%
s
8,000,000,000
tra
-10.00%
Water Expenditure at LGAs - FY 2006/07
7,000,000,000
6,000,000,000
5,000,000,000
PE Spending
4,000,000,000
OC Spending
3,000,000,000
DEV Spending
2,000,000,000
-50.00%
1,000,000,000
-60.00%
0
-70.00%
Recurrent Budget
Development Budget
Under spending in both recurrent
and development sectoral budgets
First Second Third Fourth
Quarter Quarter Quarter Quarter
In year spending still concentrated
in last two quarters
D by D Challenges
LG Discretionary budget under pressure…
Secondary Education Budget and LGAs Contributions
Tsh Million
Type
2005/06
2006/07
% change
FUNDS FROM MINISTRY OF EDUCATION – SECONDARY EDUCATION
Recurrent
40,140
62,287
55%
Development
64,343
63,035
-2%
Total
104,483
125,322
20%
FUNDS FROM LOCAL GOVERNMENT
LGCDG
17,500
Implementation of D By D policy…
Sector reviews should address D by D compliance
to advance implementation
Why Look at Value For Money?
- Sustained
rapid expansion of public spending usually create
pressure on the quality & efficiency of expenditures;
- Theoretically, sector reviews are supposed to bring together work on value
sector
reviews largely fail to relate expenditures to results
for money in key pillars of public expenditure, but this year;
- the problem is not so much a lack of data as a failure to analyse it – rapid
budget analysis in the education sector shows it’s feasible
to
combine some existing expenditure data with
performance information.
Example of Education
Spending on education is increasing fast, including spending per pupil –
which is what we require to see increased quality as well as access.
But…
LG education spending per
capita in top five and bottom five
Districts, 2006/7
16000
500000
14000
400000
12000
8000
100000
6000
0
4000
2003/ 4
2005/ 6
2006/ 7
2000
0
VFM;
Spending per pupil
seems to be rising
faster than quality is
improving
120
60
0
200000
40
10000
per St d VII passer
20
per St d VII ent rant
300000
District id
80
600000
( variation in district PTR)
100
Recurrent Unit Costs Primary
EQUITY: Variation
between districts is
very large, questions
re efficiency and
equity
20
40
60
Students per teacher
QUALITY
Capitation grant
is 50% unfunded,
despite being
highest priority
expenditure
80
100
Transparency
For stakeholder to be able to debate and address some
of the challenges:
A more transparent and easily comprehensible budget.
Clear presentation of:
•Money to the broad sectors (Ed, health, Infra, etc)
•Money to LGA, by district, per-capita
•Economic classification of expenditures (invest., wag
• Key government programs