The Commission prepared its Medium-Term Budget for FY 2022/23 – 2024/25 on 16-20th August 2021. The process involved review of the previous budget, projected economic performance, alignment to constitutional timelines and promoting recovery after the COVID 19 pandemic.
The process began with the Cabinet Secretary for National Treasury and Planning issuing all National Government entities a circular outlining the guidelines on the budget process to be followed by MDAs not later than 30th August 2021.
Background to the Medium-Term Budget for 2022/23 – 2024/25
The budget process is being carried out with the economic background in mind. This background is characterized by a strong but uneven economic recovery, emergence of new Covid-19 variants and envisioned heightened political activities especially in the 4th Quarter that is likely to erode investor confidence and affect projected growth.
Policy Framework supporting the Medium Term (MT) Budget for 2022/23 – 2024/25
The MT Budget focuses on the theme Building Back Better through the targeted implementation of Economic Recovery Programmes. The MT Fiscal Framework supporting the budget is anchored on the following assumptions:
- Real GDP is projected to grow at 6.6% in 2021 and 6% over the MT
- Inflation is expected to be maintained within the range of +/-2.5% of 5%
- Interest and Exchange rates are expected to remain stable over the MT
- Revenue is expected to improve gradually to reach 16.5% of GDP in FY2022/23 and 18.5% over the MT
- Total Expenditure is expected to decrease to 24.5% of GDP in FY2022/23 and further decline to about 22% of GDP over the MT
Constitutional timelines and requirements for key activities in the Budget preparation process
MT Budget process is to be fast-tracked given that 2022 is a general election year and Budget Estimates must be approved by Parliament before it proceeds on recess.
Therefore, the following policy documents must be approved within the stipulated timeframes: BROP, SWG Budget proposals, BPS, DoRB, CARB, Debt management Strategy Paper, Pre-Election Report, PBB, Annual Appropriation Bill and Finance Bill.
Institutional Framework to guide the budget preparation process
MDA’s performing closely related functions are mapped to form a Sector Working Group. There are 10 SWGs and CRA belongs to Public Administration and International Relations (PAIR) Sector. This is in line with the UN-Classification of Government Functions.
Form and Content of budget
Programme Based Budget
Budgets are prepared and presented by Vote and Programme in line with Section 38(3)(b) of the PFM Act, 2012. In the review of Programmes, we MUST ensure that:
- Outcomes and Outputs are specific, Measurable, Achievable, Realistic, and Time-bound and derived from Government strategies.
- Performance Indicators and Targets relate to outputs and outcomes and are results-oriented, Clear, Relevant, Economic, Adequate and Monitorable (CREAM). Delivery units with no clear outputs and KPIs lead to reduced funding.
- Programme targets can reasonably influence achievement
Estimates for the 2022/23 – 2024/25 Medium Term Budget
Medium-Term Budgets should be consistent with the MT Fiscal Framework provided in the BROP 2021
Developing ‘Rolling’ Three-Year Medium –Term Budget Estimates
In a Rolling MT Budget plan, the first-year estimates form the starting point for the next Financial Year’s budget Estimates. Budget resources will continue to be appropriated annually, BUT the budget planning process will include expenditure and revenue estimates for the two outer years.
Medium-Term Development Strategy
The MT Budget will be based on MTP III and the PC-ERS and will build on the progress made in the previous financial years.
The ‘Big Four’ Plan
Prioritize resource allocation towards the achievement of the ‘Big Four Plan’.
Align achievement of the Big Four Plan and PC-ERS either directly as Drivers or Indirectly as Enablers
Programme Performance Reviews (PPRs)
PPR reports should indicate both financial and non-financial indicators of performance for each programme.
Prioritization and Allocation of Resources – Criteria for Resource Allocation
Linkage of the programme to PC-ERS
Linkage of the programme to the Big Four Agenda
Linkage of the programme with priorities of MT Plan III of vision 2030
The degree to which programme address Job creation and poverty reduction
The degree to which the programme addresses the core mandate of CRA
Expected Outputs and Outcomes from a programme
Cost-effectiveness and sustainability of Programme
Extend to which programme addresses pending bills
Costing of Programmes
The costing of activities should take into account the ceilings provided to avoid an exaggerated resource wish list.
Recurrent Budget Estimates
Personnel emolument not expected to exceed 35% of Budget
No resource allocations to new recruitments, interns, casuals, upgrading unless prior approval from National Treasury.
Use of Goods and Services
All requirements for use of goods and services should be accurately costed. Each allocation should be supported by service providers agreement or demand notes.