5.4. Effective budget execution
As governments begin to focus on performance as the basis of budget allocation decisions, the role of public managers at the line ministry and agency level becomes increasingly relevant. Delegating authority to managers regarding the allocation of funds within their own budget envelopes could lead to more effective public spending, as agency heads may be in the best position to choose the most efficient mix of inputs to carry out the institutional mission. This is expected to lead to the adoption of more comprehensive approaches to annual and multi-annual planning. Spending flexibility can also play a major role in light of changing economic conditions and political priorities.
In Albania, North Macedonia and Kosovo, the re-allocation of funds by Ministries and Agencies is possible – although it is based on approval by the Central Budget Authority (CBA) in all cases. This is also the most common practice in OECD countries, at place in slightly more than one quarter of them. In turn, Serbian-spending units also require CBA approval, and re-allocation can only take place up to certain limits. In the case of Montenegro, re-allocation is permitted without authorisations but with a limit of 10% of the budget of each spending unit. Finally, it is worthwhile mentioning that 23% of OECD countries do not allow reallocation of funds within ministries or agencies.
A budget carry-over is the ability of line ministries to transfer unused funds or appropriations from one fiscal year to the next. This form of spending allows ministries to use previous budget appropriations for their undertakings the following fiscal year. Carry-overs are not permitted in any of the countries in the Western Balkan region regardless of the type of expenditures. This is in stark contrast to the OECD where under different modalities carry-overs are practiced for all types of expenditures. In about three quarters of OECD countries carry-overs are allowed for investment and operational spending, more than half allow them for discretionary spending while only about 40% permit them in the case of mandatory spending.
Data were collected through the 2019 Survey for the Western Balkans on Budget Practices and Procedures. The survey was completed in 2019 in the Western Balkans – Albania, Bosnia and Herzegovina, Kosovo, Montenegro, North Macedonia and Serbia. The data for Bosnia and Herzegovina, reflects the consolidated response (unless shown individually), submitted by the State level, based on individual responses received from different levels of administration – the State level, the Entities and Brcko District. Data for OECD countries are derived from the 2018 OECD Budget Practices and Procedures Survey. Respondents were predominantly senior budget officials. Unless specified otherwise responses refer to central/federal government.
An allocation is the designation of funds in the budget to a government programme or organisation.
Discretionary spending refers to public expenditure that is governed by annual or other periodic appropriations, rather than by formulas or criteria set forth in authorising legislation. Mandatory spending refers to public expenditure that is governed by formulas or criteria set forth in authorising legislation, rather than by periodic appropriations alone. It includes certain kinds of entitlement spending in many OECD countries.
Performance information refers to metrics/indicators/ general information on the input processes, outputs and outcomes of government policies/programmes/organisations, and can be ultimately used to assess the efficiency and cost effectiveness of government activities. Performance information can be found in statistics; the financial and/or operational accounts of government organisations; performance reports generated by government organisations; evaluations of policies, programmes or organisations and/or spending reviews among others. Performance information can be generated by both government and non-governmental organisations, and can be both quantitative and qualitative.
Further reading
OECD (2019), Budgeting and Public Expenditures in OECD Countries 2019, OECD Publishing, Paris. https://doi.org/10.1787/9789264307957-en
Downes, R., D. Moretti and S. Nicol (2017), “Budgeting and performance in the European Union: A review by the OECD in the context of EU budget focused on results”, OECD Journal on Budgeting, vol. 17/1, https://doi.org/10.1787/budget-17-5jfnx7fj38r2.
Hadley, S., D. Kraan and B. Welham (2018), “Recent developments in the work of the Budget Office”, OECD Journal on Budgeting, vol. 18/2, https://doi.org/10.1787/budget-18-5j8fz1k92gvh.
Figure notes
Data for the United States are not available.
Source: OECD (2019), 2019 Survey for the Western Balkans on Budget Practices and Procedures; For the OECD data, OECD (2018), OECD Budget Practices and Procedures Survey.
Source: OECD (2019), 2019 Survey for the Western Balkans on Budget Practices and Procedures; For the OECD data, OECD (2018), OECD Budget Practices and Procedures Survey.
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