2The State Budget

8/16/2019 2The State Budget

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The State BudgetThe State Budget

The Financial program or plan of the governmentThe Financial program or plan of the government

activities for a coming fiscal year.activities for a coming fiscal year.

Comprehensive structure of all estimated publicComprehensive structure of all estimated publicrevenues and proposed public expenditures.revenues and proposed public expenditures.


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The Four stages of the StateThe Four stages of the State

BudgetBudget1. Formulation1. Formulation

-- Long and complex process.Long and complex process.

-- Participation of different departments and levels.Participation of different departments and levels.

-- Consists cutting, trimming, rearranging.Consists cutting, trimming, rearranging.

. !evie"ing and enactment. !evie"in

g and enactment

-- #ubmitted to the parlement.#ubmitted to the parlement.-- #eparate parts by different subcommittees.#eparate parts by different subcommittees.

--The eligibility of altering and reconsidering.The eligibility of altering and reconsidering.- $ut "ithin certain limits.- $ut "ithin certain limits.

%. &mplementation ' (xecution )%. &m

plementation ' (xecution )

-- (very department spends and collects revenues.(very department spends and collects revenues.

*. Control and +uditing*. Control and +uditin

g

-- The parlement revises and audits the financial performanceThe parlement revises and audits the financial performanceof governments departments.of governments departments.

- ital to discover and discourage any fraud.- ital to discover and discourage any fraud.


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Principles of the State BudgetPrinciples of the State Budget

1- Yearly Covers all seasons.

2- Comprehensiveness No deductions ofexpenses.

3-Condominium No specic fund to be

appropriated for certain activity.4-Clarity Clear and digestible byparlment, members executing studying all appropriations not total

but classied. !- Accuracy "ll gures #$xpenses

%eturns& accuracy and care

'naccuracy leads to unbalancedbudget.


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Two approaches for formulation of Public Two approaches for formulation of Public

Revenues.Revenues.

1- Accounting approach

*ased on rate of t)e recorded

gro+t) of publicspending in pervious year for

eac) source.

2- Economic approach

*ased on national economic

parameters.


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The framework governing the State Budget of The framework governing the State Budget of

Egypt.Egypt.

• )e article No. 124 of t)e)e article No. 124 of t)eConstitutionConstitution

)e *udget draft must be presented)e *udget draft must be presented

to t)e parliament at least 3 mont)sto t)e parliament at least 3 mont)sbefore t)e beginning of t)e scalbefore t)e beginning of t)e scal year. year.

• )e a+ No. !3 of 1/3 #$xecutive)e a+ No. !3 of 1/3 #$xecutive

%egulations of t)e *udget& amended%egulations of t)e *udget& amendedby a+ No 0/12!.by a+ No 0/12!.

"& "& )e *udget is t)e nancial plan to)e *udget is t)e nancial plan toac)ieve obectives +it)in t)eac)ieve obectives +it)in t)egeneral plan #$conomic, ocial andgeneral plan #$conomic, ocial and


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C& )e *udget includes all uses andresources performed by its

administration. 1- "ll ministries.

2-ocal governments units including

governorates. 3-ublic organi5ations, agencies and

nance funds.

*udget of $conomic 6rgani5ation

"s petroleum organi5ation and

ue5 Canal "ut)ority

•


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Classication of the Egyptian State Budget.Classication of the Egyptian State Budget.

$ig)t C)apters of 8eneral $xpenses$ig)t C)apters of 8eneral $xpenses

1- 7ages and Compensation of$mployees.2- urc)ase of 8oods and ervices.3- 'nterest.4- ubsidies, 8rants and ocial

*enets.!- 6t)er $xpenditures (- urc)ase of Non- 9inancial "ssets :

investments:

/- "c;uisition of


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Classication of the Egyptian State BudgetClassication of the Egyptian State Budget..

• 9ive C)apters of 8eneral %evenues

1- axes.

2- 8rants.3- 6t)er %evenues.

4- %eceipts of ending and9inancial

"ssets. !- *orro+ing.


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The State Budget Circular ! The State Budget Circular !

)e =inister of 9inance issues a circular >

?alues to be applied by t)eadministrations +)en preparing t)eirbudgets.

Organiational of Budget Formulation !Organiational of Budget Formulation !)e ministry of nance prepares t)econsolidated budget.

- $ac) minister is responsible to ustify )isproposals

- Coordinating +it)>

Central *an@

Central "gency for 6rgani5ation and


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- )e =inister of 9inance submits t)e

draft to t)e cabinet council

A )e nal approval by t)e president.

A )e draft is for+ard to t)e )ouse of

representatives.

A )e draft is attac)ed by note.

A pecic committees discuss t)e draft

+it) t)e

ministry of nance. )e nal draft is

sent bac@

to t)e president for a decree to be

approved by


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A ublic budgets is one of t)e crucialnance control tools.

- ?oting on t)e draft is performed one

c)apter after anot)er.- )e )ouse of representatives may notamend t)e draft budget +it)out t)egovernment approval.

- "ccording to t)e la+ eac) department +ill be aut)ori5ed to use itsappropriations.

A $xceeding t)e limit of appropriations of

any c)apter is not permitted +it)out t)ereferral to t)e =inistry of 9inance andt)e approval of t)e )ouse ofrepresentatives.

A )e la+ allo+s internal transferring of


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Formulation of the State BudgetFormulation of the State BudgetPreparation of budget estimate

forms and instructionsThe Budget Circular

Preparation of revenue andexpenditure estimates agencies

Review and consolidation of agencyrequests by competent ministries

Transmission of ministry requests to central agenciesCentral Bank-Central gency for organi!ation and

management-ministry of planning

"egotiations between competent

ministries and central agenciesPreparation of draft budget

Cabinet approval of budget#Transmission of revisions

$inal budget submitted to theparliament for approval


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"orms of the State Budget"orms of the State Budget

"#$"#$ Traditional BudgetTraditional Budget1- 6rgani5ed on t)e basis of agencies +it)out regard to interdependenciesamong dierent agencies.

"ll costs of particular activities arenot revealed $stimation of benets isdiicult.

2- 6rgani5ed to stress inputs +it)outreference to output.

3- 's a strictly one-year basis +it)out

regard to future.


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"%$"%$ &odern Budgets&odern Budgets

A 'rogram budgeting replacement of t)etraditional performance budget.

Elements of program BudgetingElements of program Budgeting

1- rogram classication of t)e 8ov.transactions.2- erformance measurements.3- erformance reporting.


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The characteristics of program Budgeting

1!


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'rogram Budgeting and Traditional Budget

(i)er in three *ays+

1.1.$xpress in terms of goals.erformance instead of by inputcosts.

2.2.9ill out t)e program outline +it)intermediate missions.

erformance overtime comparepresent and past performance.

3.6utline t)e outputs and re;uiredover t)e entire program.Not onl one ear or t+o.


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(i,culties facing program Budgeting+

1.1.


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)e program *udgeting is usually inade;uate and s)ould be supplemented +it) ot)er

tec)ni;ues.B '+ '+ B+ S+Three -evels!

1- olicy =anagement

- 6ptions rograms . 9ormal needs . "nalysisoptions

. election programs . "llocation

resources2- %esource =anagement

- *udget structure - 9inancial management

- $stablis)ment of support systems


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The &ain Aspects of ' ' B S+

Three main componentsThree main components

1.1. tructural "spects

Classication of 8ov. transactions2.2. "nalytical "spects

"pplication of ;uantication criteria forappropriate programs.

3. 'nformational "spects


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(i,culties of Applying ''BS

1.1. pecication of outputs>

2.2. 6bectives and priorities>

3. Centrali5ation of


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Speci.cation of outputs!

• ervices not clearly distinguis)edfrom t)e activities involved in t)e

production of t)em #education&.• Not easily measured.

• =any activities involve a number

of sub-products.• Not easily measured.


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Ob/ectives and priorities!

•


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Centraliation of (ecision0

&a1ing!

• )is lessens innovation and

concentration po+er.• ee@s to eliminate political

vie+s from decision ma@ing.

• ignicant value udgments.

•


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Administrative ad/ustment!

• =aor obstacle 'mplementationof programs may be restricted by

t)e structure of administrativeorgani5ation.

• )ere may be no single

organi5ational structure couldbe satisfactory forimplementation of

programming.


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C 2ero 3 Base Budgeting

ec)ni;ue of systematic increases orec)ni;ue of systematic increases ordecreases in t)e level of operations ofdecreases in t)e level of operations ofdepartments.departments.

*ureaucrats ustify t)eir programs at

alternative levels, including a 5erobase or lo+ level of operation.

9irst developed in D.." in privatesector in t)e (sEach agency head is re4uired to !

1-


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(ecision 'ac1ages


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Critics Arguments

ries to ac)ieve too muc).ries to ac)ieve too muc). 'nvolves excessive amount of extra

paper+or@.

oo costly, relative to t)e benetsreceived.


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(evelopment of Egypt5s State(evelopment of Egypt5s State

Budget !Budget !

)e state budget for scal year)e state budget for scal year2/E20 presents t)e expression2/E20 presents t)e expression

of t)e nancial program for t)e rstof t)e nancial program for t)e rst

year of ne+ ve years plan year of ne+ ve years plan

#2/E20 211E212&.#2/E20 211E212&.

't involves t+o points >'t involves t+o points >

1.1. 't reBects t)e ne+ constitutional't reBects t)e ne+ constitutional

amendments +)ic) eect t)eamendments +)ic) eect t)eperspective of t)e state budget asperspective of t)e state budget as

an indicator of internal and externalan indicator of internal and external

balances.balances.


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(evelopment of Budget(evelopment of Budget

6nstruments !6nstruments !

1.1. Custom amendments.Custom amendments.2.2. 'ncome, stamp and sale taxes'ncome, stamp and sale taxes

amendments.amendments.

3.3. tructural adustments intructural adustments intabulating t)e state general budget.tabulating t)e state general budget.

4.4. "utomation of t)e components of "utomation of t)e components of

t)e state budget.t)e state budget.

!.!. "ctivation of t)e treasury single "ctivation of t)e treasury single

account.account.


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)e modication of t)e state general)e modication of t)e state generalbudget classication aimed atbudget classication aimed at

clarifying t)e economic concepts ofclarifying t)e economic concepts oft)e state budget to be accessible tot)e state budget to be accessible tot)e ordinary citi5en.t)e ordinary citi5en.

)is classication allo+s t)e)is classication allo+s t)eautomating t)e nal account in orderautomating t)e nal account in orderto lin@ it +it) t)e state budget andto lin@ it +it) t)e state budget and

its actual results.its actual results.

"utomation of all public revenues "utomation of all public revenuesand expenditures allo+s utili5ing t)eand expenditures allo+s utili5ing t)e

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2The State Budget

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