This report, the first PublicExpenditure Review of Belarus, will remain focused on broadsystemic questions. A number of the problems emphasized inthe subsequent chapters fall into four broad categories.These categories are all closely interrelated: Thecomplicated array of extrabudgetary and quasi-fiscal sourcesof state finance imposes substantial losses on the economy.Budgetary preparation and approval lacks focus, realism, andan appropriate balance of political influence. Theimplementation of the budget suffers from excessively weaklegality, and allows for too much discretion in theallocation and re-allocation of state expenditures. Theconnection between state objectives and public expendituresis often unclear or weak. There are many recommendations forchanges that could help to improve fiscal discipline,strengthen allocative effectiveness and improve thetechnical efficiency, we present the most critical actionsthat are needed: Improve realism in budgetary planning andthe management of state obligations. Develop institutions tosupport commitment to budgetary implementation. Expand thecoverage of the budget to account for most activities withfiscal impact. Develop a framework for identifying,quantifying and addressing fiscal risks. Develop asustainable wage and compensation policy. Streamlinesubsidies to the productive sectors. Focus on development ofsector strategies, one or two sectors at a time: identifyobjectives, determine performance measures and the linksbetween inputs and positive outcomes. Improve the short andmedium term revenue and expenditure forecasting capacity.Put in place systematic rules for budget revision. Introduceguidelines for the allocation of resources in the event ofunexpected inflation, cash shortages, or surpluses. Developa concept of accountability beyond the Ministry of Financeand budget.
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