Steps in the Budget Cycle
It is important to note that there may be activities related to several stages of the cycle happening at the same time, and what happens in one stage can influence decisions made in the others. For example, while the executive is formulating the budget proposal for the coming year—making decisions about what programs to invest public funds in and at what level—the various ministries and departments are executing the budget for the current year, and the supreme audit institution (SAI) is evaluating the expenditures from the prior year. Both the execution and auditing can provide critical information to the executive as it develops its next budget. Thus each stage in the budget cycle is important and provides civil society organizations (CSOs) with opportunities to influence the outcomes.
The executive branch normally formulates the annual budget behind closed doors. In some cases, the executive may release a discussion document or an overview of the budget in advance, but generally the legislature and civil society have little direct access to this stage of the process. Nevertheless, because the budget is rarely constructed from scratch, major parts of the budget may be anticipated by stakeholders outside the executive. This creates an opportunity for analysis and advocacy at the formulation stage. During the development of the budget, civil society groups can release analyses on issues known to be under consideration, or that they believe ought to be priorities, with the hope of influencing the budget being formulated. There also might be opportunities for CSOs to establish informal lines of communication with executive branch officials. In countries where the legislative process has little impact on the budget, CSOs may have to concentrate on the formulation stage, as that is when the key decisions are made. Key Budget Documents: Pre-Budget Statement, Executive’s Budget Proposal
It is during this phase of the budget cycle that civil society groups often have the most potential for input. Since interest in the budget is typically at its high point when the executive presents its budget to the legislature, this creates opportunities for civil society groups to get media coverage and other attention for their budget analyses. Further, in countries where the legislature plays a more active role in the budget process, CSOs are frequently asked to serve as expert witnesses at hearings and to comment on budget proposals in other ways, as well. Their analyses and testimony can influence the debate and highlight important issues about the impact of budget proposals on the poor and most vulnerable in society. Key Documents: Enacted Budget, Citizens Budget
Execution (implementation, monitoring, and control)
Implementation of the budget is, of course, an executive function. Unless the executive issues public reports regularly on the status of expenditure during the year, CSOs have limited ability to monitor the flow of funds. But CSOs do have an interest in an effective oversight system that promotes adherence to the budget and reduces mismanagement or corruption. Groups may advocate reforms to strengthen budgetary control. Similarly, they may engage in some monitoring activities in an independent oversight role. For instance, CSOs can focus on whether amounts for specific projects, such as a school or a road, have been used for the intended purpose. They also can assess whether the government funds allocated for these purposes are being used effectively and have reached the intended beneficiaries. Key Budget Documents: In-Year, Mid-Year, and Year-End Reports
Auditing and legislative assessment
This budget stage presents a valuable opportunity for budget groups to obtain information on the effectiveness of particular budget initiatives, as well as to advance accountability by assessing whether the legislature and executive branches respond appropriately to the findings of audit reports. This may be one area where applied budget organizations have not sufficiently exploited the potential opportunities. When available in a timely manner, audit reports often document a litany of poor expenditure practices, leakages, and procurement irregularities. CSOs should attempt to spread such information widely and use it to advance reforms. Key Budget Documents: Audit Report Though ultimately seeking to play a meaningful role at each stage in the cycle, CSOs have different strengths, which allow them to have greater influence at some stages than at others. In other words, an organization with significant analytical skills may have greater influence at the formulation or approval stages, while those with strong advocacy skills and close community connections might play a greater role during the execution and monitoring stages. Therefore, CSOs seeking to maximize their impact on the budget process and its outcomes should identify and join with other organizations that share their goals and can complement their strengths.
Access to Information
In addition to key allies and partners, to be effective throughout the budget process civil society needs timely access to different types of information at each stage in the cycle. For example, to play a meaningful role in the approval stage, at a minimum CSOs need access to complete information about the executive’s budget proposal and could be even more effective with information about how current programs are operating (data on execution) and how effective programs have been in the past (audit information). On the other hand, CSOs seeking to improve budget execution would need detailed information on the approved budget, ongoing data from periodic reporting on the current year budget, and information from prior audits of the agencies or departments administering the programs. In addition to translating policy goals and priorities into action, a country’s budget system and processes also are crucial in determining the degree to which it has an open, participatory, and accountable system of governing. Unfortunately, in many countries, the general absence of publicly available information on budget issues—particularly in accessible forms using straightforward language—has seriously hindered the efforts of national and local organizations to participate in the discussion on the distribution of public resources. More detailed information on budgets in general and the various aspects of the budget cycle can be found in the Library.