Better governance with new budget

Ministry of Finance's new budget system is a step in the right direction, for the right reasons

Last week, the Ministry of Finance outlined a new system of budgeting that contributes to more transparency in government spending. The move, in line with Federal National Council recommendations, was a step forward in the accounting process.

In a session last month, members of the Federal National Council refused to endorse the 2010 annual report because of numerous irregularities and errors in accounting for federal spending. The session tested the FNC's role and, very likely, contributed to the Finance Ministry's new budget reporting. The new "zero-based budgeting" requires line-item details on expenditures rather than just headline figures, which of course provides a greater resolution in spending - and any irregularities that need to be explained.

These developments are significant for two reasons. The new budget system helps to ensure that ministries are transparent and responsible in reporting their budgets, which in turn encourages financial probity. Transparency makes it easier to assess, for example, why certain government' programmes have failed or been delayed - something that sometimes occurs because of shifting budget allocations involving salaries for staff, among other reasons.

According to previous FNC reports, as much as 80 per cent of the Education Ministry's budget is spent on salaries for its 35,000 staff, and the remainder is not enough to cover expenses. This is an important facet of the Council's work - to promote quality in key sectors, even if that role is advisory.

That leads to the second significant point: Government is increasingly engaging with the FNC, especially in terms of ministries' policies and budgets. This aspect of the Council's work, known as its supervisory role, is what makes it increasingly relevant in a growing nation. Since the 2011 election process, the Council has taken an increasingly prominent role in public affairs.

In 2010, FNC members complained that none of their recommendations had been implemented in ministerial agendas. Less than a year into the current session, the Ministry of Finance has been willing to listen. It is up to the FNC members to keep the same level of engagement going forward.