This public expenditure review (PER)examines the budget performance for FY00- and the firsteight months of FY01, when domestic revenue remained at thesame low level as in the previous year (1.15 percent ofGDP), while expenditures increased in FY00 by one percentagepoint, i.e., 15.9 percent of GDP. Some progress has beenmade in enhancing funding for priority activities in theareas or primary education, health care, roads and water,with most of the increased spending being at the districtlevel. Likewise, progress has been made in bringing agreater share of donor financed development spending intothe budget. Nonetheless, deviations between the budgetpresented at the National Assembly, and expenditureoutturns, remain significant, especially for non-prioritysectors, and, contingency funds retained by the Ministry ofFinance are substantial. It is highlighted that problems inpublic expenditure management persist, being the main onethe mismatch between available resources, and the intendedscope of Government activities. Under-funding of budgetsundermines prudent budget management, thus recommendationssuggest reviews by Government to ensure fully fundedexpenditures for FY02. Recommendations to ease the mismatchbetween monthly cash requirements, and exchequer releases,suggest the presentation of a cash flow plan to conform toaggregate ceilings, as an instrument to respect overallyearly budget ceilings, but separating contingencyprovisions to minimize unforeseen expenditures. Concerningpayment arrears, a relief program is recommended to clearthe debt stock of poor local authorities.
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