This Public Expenditure andInstitutional Review presents the findings of an analysis ofthe budget, and institutions of public expendituremanagement, and accountability, fundamental to policydecisions, and economic management. It builds on extensiveanalysis undertaken by the Special Ad Hoc Committee onFiscal Transparency, and Public Finance, and, the reviewsuggests that the current economic crisis is deep-rooted inthe institutions of collective decision making ingovernment, confirming that unless fundamental improvementsare made to the processes for formulating public policy,allocating resources, and implementing budgets, any economicrecovery will almost certainly be fragile, and short-lived.Thus, from the perspectives of system performance, andstructural and institutional aspects, an improved budgetarysystem should enable the government to achieve aggregatefiscal magnitudes, based on expenditures, sustained by tax,and non-tax resources; the budget should generate theadequate information to ensure funding of key policyobjectives; and, public accountability should generateincentives to support performance objectives. The reportidentifies aggregate fiscal management as a major weakness,compromised by the significant growth of off-budgetactivity, while the weakness of the budget system in termsof ability to support decision-making, is equallypernicious. A series of actions to restore fiscal disciplineare outlined for the short-term (2001), and initiatives fora multi-year budget commencing in 2002 are included.Recommendations include strengthening the aggregate fiscalprogram management capacity; reviving policy formulationcapacity, and institutional framework to define budgetarypolicy; and, initiating budget control devolution,introducing a budget performance approach.
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