Budget performance in 2013

For some reason, the majority of analysts try most of the time to measure budget performance by comparing the actual figures of the subject year to the corresponding figures of the previous year.

This method of comparison reveals direction and trend. It shows whether things are improving or worsening. But the problem here is that the previous year may not be an ideal benchmark.

The other method, rarely used, is to compare the actual revenue and expenditure figures to the figures targeted in the budget.

This method emphasises the importance of sticking to the plan. It shows the areas of success and failure in the application of the budget.

The assumption is that the budget is an acceptable blueprint for fiscal performance in a coming year, duly formulated, discussed and approved by the appropriate authorities.

Upon comparing the present figures to the figures of the 2013 budget, it was revealed that domestic revenues achieved 96.7 per cent of the target, while actual proceeds of foreign aid achieved only 75.2 per cent of the target. Thus, total revenues achieved 93.7 per cent of the amount targeted in the budget.

On the other hand, it was found that 97.4 per cent of the allowed current expenditure was actually spent, along with 81.8 per cent of the budgeted amount for capital expenditure. The total actual expenditure reached 94.8 per cent of the amount earmarked in the budget.

On the negative side, we find partial failure in two areas: attracting foreign aid and implementation of projects on schedule.

The end result was that the rate of performance on the current expenditure side exceeded the rate of performance on the revenue side, but with only slight differences.

The rate of fiscal self-sufficiency, being the rate of covering current expenditure from domestic revenues, came to be 84.7 per cent, against a budget target of 85.3 per cent. Both are very low.

On the positive side, the budget deficit before and after grants was lower than that allowed in the budget, and both revenue and expenditure were broadly in line with the budget.

For obvious reasons, the Ministry of Finance prefers to present its performance in comparison to the previous year.

In this respect, it has to be admitted that a tangible improvement has taken place by all measures. So much so that the International Monetary Fund delegation commended what it described as wise financial policy of the government, which, it indicated, is going in the right direction.

There was a time when the budget was one thing and the actual performance something else. 

The budget was treated as an unbinding indicative document. Deviation from the budget used to be lower revenues and higher expenditure.

Respect for the budget is now restored. It is treated as a binding law. Finally the government is adhering to the budget.