Ministry of Finance gears up for budget 2020 |19 July 2019

PS Thesée

The Ministry of Finance, Trade, Investment and Economic Planning are in the process of preparing the budget for next year, 2020.

The country’s budget is presented to the National Assembly and to the public a few months before the end of the year, usually in October.

In this light, the medium term expenditure strategies (MTES) for the year 2020 to 2022 were brought to the cabinet of ministers for its consideration during a special meeting chaired by President Danny Faure on Wednesday.

According to the principal secretary for finance, Damien Thesée, this is the main process in order to finalise the budget ceilings before the final preparation of the Program Performance Based Budget (PPBB) statement.

To note, the department of finance is tasked each year to come up with a budget for the upcoming year as well as forecasts for the two other consecutive years.

In the MTES, ministries have outlined their priority strategies and programmes which they want funded in the 2020 budget.

“This has provided the cabinet with an overview of what needs funding, and allows them to take decisions that will guide the department for finance in establishing priority areas for funding,” PS Thesée noted.

Ministries have been working on their budget internally since April and each has been given a budget ceiling which they cannot overlap.

Yet, PS Thesée stated that it is too early to provide an insight on the expenditures for 2020 given that there is much work to done.

“In August, the department of finance will also finalise its macro-variables and revise projections on the country’s revenue, tax projections and non-tax projections. We are also working on projections for the public enterprises that pay dividends to the government.”

He highlighted that the country is unable to finance each and every project and programme set out by ministries and, hence, priority areas are chosen depending on the government’s objectives.

The department of finance is expected to present the document to the cabinet for a second review in August, wherein the cabinet will verify whether the department has taken up their recommendations.

PS Thesée further noted that the budget must also take into account the country’s target to reduce debt-to-GDP to 50% by 2021.

“We cannot do everything in one year; this is a constraint we put in front of ministries and stakeholders each year. We need to prioritise programmes to ensure that the government does not overspend, so as to achieve this goal by 2021.”

Targeting a surplus of 2.5% of Gross Domestic product (GDP) each year has been highlighted as the way in which the country can repay its debts and meet its target to reduce debt-to-GDP to the desired level.

Since having implemented PPBB as a new form of budgeting in 2013, PS Thesée said that there have been notable improvements in how ministries manage their budgets.

“We have noted improvement in the way money is managed because the onus is now on the ministries. It engages the whole ministry and its management while before only the accountants, chief executives, principal secretaries and financial controllers that were involved.”

Programme budgeting enhances allocation of resources to government priority policy areas and plans, improves focus on achievement of results and also improves predictability of funds flow to ministries, departments and agencies.

Traditionally, budgets were structured by administrative divisions and units of government and then by administrative line items.

“Before the PPBB, the department of finance simply sent out a budget circular in July or August and it would then submit a budget. These budgets were more or less ‘wishlists’ because they were large sums of money which could not sustain demands,” PS Thesée explained.

“Now with the PPBB, the ministries are provided with a budget ceiling in which to operate which removes ownership from the department of finance in determining how much to give out to ministries. Programme managers and director generals are involved in this process so they can be accountable to the budgets allocated to their programmes.”

PPBB was first implemented as a pilot project in Ministry of Education and the Ministry of Natural Resources, and is now an integral part of all ministries.