zambia national budget and development planning policy (draft)

7/28/2019 Zambia National Budget and Development Planning Policy (Draft)

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(This Document is the Property of the Government of the Republic of Zambia)

The National Planning and Budgeting Policy

Responsive, open, accountable and results-oriented budget and development planning processes

that

enhance the development and service delivery impact of public finance

Ministry of Finance

P.O. Box 50062

LUSAKA

15th

April 2013


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Table of Contents

Foreword ................................................................................................................................................. 3

Acknowledgement .................................................................................................................................. 4Working Definitions ................................................................................................................................ 5

Acronyms ................................................................................................................................................ 7

1. Introduction .................................................................................................................................... 8

2. Situation Analysis ............................................................................................................................ 8

3. The Vision ...................................................................................................................................... 11

4. Rationale ....................................................................................................................................... 11

5. Guiding Principles: ........................................................................................................................ 12

6. Objectives...................................................................................................................................... 12

7. Measures ....................................................................................................................................... 12

8. Integrated National Planning and Budgeting Process .................................................................. 14

9. Implementation Framework for the National Budget and Development Planning Policy ........... 17


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Foreword

Zambia is committed to planned socio-economic development of the country as reflected bythe determination of the Government to improve the Socio-economic conditions of the citizens.The National Development Planning and Budgeting Policy is the first ever policy aimed at

strengthening the coordinated approach in undertaking national development planningprocesses. It further enhances the implementation of the long and medium term plans as itestablishes a link between the plans and the Medium Term Expenditure Frameworks (MTEF)and subsequently the annuals budgets. It equally reaffirms Government commitment to upholdthe provisions of the Constitution of the Republic of Zambia. It is a comprehensive Policy forinclusive development agenda. It builds on the growing strength of the economy and alsoaddresses weaknesses and challenges faced in the implementation of previous NationalDevelopment Plans.

The Policy is therefore, aimed at re-positioning Government in a cost effective and mostefficient manner with regard to attaining the Vision 2030. The Policy has incorporatednational and regional initiatives and has taken into account the various progress reports on the

implementation of National Development Plans and the FNDP Mid Term Evaluation Report.Further, the Policy has repositioned the country on its quest to attain international initiativessuch as the Millennium Development Goals.

The National Planning and Budgeting Policy is as a result of participative process by allstakeholders in the country and provides a development strategy aimed at pursuing initiativesthat systematically addresses development and reduces poverty based on the principle ofequity in the distribution of resources. The Policy presents a logical organization of activitiestowards the achievement of the vision 2030. It is an effective planning and budgetinginstrument for the country as it sets out clear guidelines to be undertaken to harmonizeNational Development Plans, Medium Expenditure Framework and the Annual Budgets at

District, Provincial, Sectoral and National Levels. The Policy provides the bases for effectiveplanning and allocation of resources to the development agenda of the country.

The important aspect which Government has fully taken into account in the preparation of thePolicy is the integration of Planning and budgeting into a single coordinated process byenshrining the Planning and budgeting process in the Republican Constitution. The mainobjective of the Policy is to provide for the co-ordination of national planning and budgetingfunctions and processes participation of stakeholders in the planning and budgeting processfor transparency, accountability and ownership of national development plans and providesfor the effective institution arrangement in the development, implementation and monitoringand evaluation of development plans and budgets.

In conclusion, the implementation of the National Development Planning and Budgeting Policywill depend on the commitment of all stakeholders, I, therefore, urge each and every one of usto put in every effort to the successful implementation of the policy.

Alexander Bwalya Chikwanda, MPMinister of Finance


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Acknowledgement

The Ministry of Finance would like to acknowledge with gratitude all organizations, institutionsand individuals that contributed to the development of this policy. Special thanks to the SectorAdvisory Groups, Provincial Development Coordinating Committees, District Development

Coordinating Committees, the Civil Society, Non-Governmental Organizations and Faith BasedOrganization to mention but a few.

The effective participation of these organizations and their valuable contributions made itpossible for the development of this policy which is aimed at providing the much neededguidance in the preparation, implementation and monitoring and evaluation of nationaldevelopment plans and the Medium Term Expenditure Frameworks and subsequently theannual budgets.

SECRETARY TO THE TREASURY


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Working Definitions

Annual Budget - the estimates of public revenue, public expenditure and public borrowingfor a financial year as enacted by Parliament in an Appropriation Act or as altered byParliament through a Supplementary Appropriation Act.

Appropriations-in-Aid - monies received by a department of Government and collectedunder the provisions of any law which authorizes that department to retain and expend part,or the whole, of these monies for defraying the expenses of the department.

The Budget (Estimates) Committee - a committee of the National Assembly tasked withoversight responsibility over the Executives processes for allocating public resources through

the annual budget.

Charge - in relation to public expenditure, is expenditure that is so designated in theConstitution, and is authorized by the Legislature for an unrestricted duration by charging it onthe Revenues of the Republic and does not require further annual appropriation by the

National Assembly in an Appropriation Act.

Contingency fund - the fund established by section 24 of the Public Finance Act No. 15 of2004.

Contingent liability - a financial liability that may have to be met from public revenues, butthis imposition is contingent upon a particular event either occurring or not occurring.

Controlling Officer - an officer designated as such in accordance with section 7 of the PublicFinance Act No. 15 of 2004.

Cooperating partner - a country or international organization that renders material, humanor financial assistance to Zambias development programme.

District Budget and Development Plan Committee -a committee, to be established at districtlevel in place of the current District Development Coordinating Committee, to coordinate theformulation, implementation, monitoring and evaluation of the districts annual budgets and its

development plans.

Deconcentration - the transfer of functions and resources to sub-national units of the sameadministrative system while authority over decision making and the use of such resourcesremains with the centre.

Delegation - the assignment of authority and responsibility to sub-national levels ofgovernment to execute specific functions as the agent for a Central Government entity which,as principal, remains accountable for the execution of the delegated function.

Devolution - the transfer to sub-national levels of government of functions and resourcestogether with the power and authority to determine how these functions are to be executedand the resources utilized.

Extra-Budgetary Fund - a fund where public monies are deposited and used in accordancewith an enabling statute and which may not be reflected, or only partially reflected, in theAnnual Budget.

Financial Year - the period of twelve months ending on the 31st December.


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Functional classification - the classification of the expenditure plans of the GeneralGovernment Sector according to the broad purposes of these expenditures.

General Government Sector - the Central Government, including Provincial administrations,grant aided institutions and the district and sub-district offices of Central Line Ministries

together with District Councils but excludes public corporations.Medium Term Budget Plan - a three year General Government Sector financial plan that islinked to development programmes, projects and targets in the National Development Plan, orannual updates thereof, and is formulated with the Medium Term Expenditure Framework(MTEF) as a central element.

Medium Term Expenditure Framework - a three year projection of the resources of theGeneral Government Sector and their allocation across heads and functions to finance theoperational and development expenditures of the General Government Sector as specified inthe National Development Plan, or its annual update.

Non-state Actor - any individual or entity that is not part of the public sector.

Provincial Budget and Development Plan Coordinating Committee - a committee, to beestablished at provincial level, to coordinate the formulation, implementation, monitoring andevaluation of the provinces annual budgets and its development plans.

Public sector - the General Government Sector and public corporations.

Revenue assignment - the division of control over public revenue sources between Central,Provincial and Local Governments.

Sector Advisory Group - a group established to facilitate the structured participation of non-state actors in the formulation, implementation, monitoring and evaluation of budgets anddevelopment plans at the level of Government where they operate.

Subsidiarity - the principle that public taxing, spending and regulatory functions should beexercised by the lowest level of government that can execute them effectively.

Supplementary Budget - a further budget for a particular financial year, submitted to theNational assembly prior to the end of that financial year, requesting the National Assembly toapprove additional expenditures over and above what was first appropriated by Parliamentfor the financial year in question.

Supply expenditure -public expenditure that is authorized annually by the Legislature andprovided for in appropriation legislation in response to demands presented by the Executivein the form of estimates. Authority for incurring supply expenditure lapses at the end of thefinancial year.

Tax Expenditure - a tax privilege conferred on a non-state actor or a public sector entitythat reduces government revenues and has a similar impact to that of providing a directsubsidy to the beneficiary.

Virement - the movement of public funds during the financial year within an amount alreadyappropriated by Parliament for that financial year.


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Acronyms

ABBActivity Based Budgeting

APRAnnual Progress Review

COFOGClassification of the Functions of Government

DDCCDistrict Development Coordinating Committee

FNDPFifth National Development Plan

HIPCHighly Indebted Poor Country

HDIHuman Development Index

MMDMovement for Multi-Party Democracy

MPSAMinistries, Provinces and other Spending Agencies

MTEFMedium Term Expenditure FrameworkNCDPNational Commission for Development Planning

NDCCNational Development Coordinating Committee

NDPNational Development Plan

NERPNational Economic Recovery Programme

PDCCProvincial Development Coordinating Committee

PFPatriotic Front

PRSPPoverty Reduction Strategy Paper

PSRPPublic Service Reform Programme

SAGSector Advisory Group

SNDPSixth National Development Plan

UNIPUnited National Independence Party


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1. IntroductionThis National Planning and Budgeting Policy is designed to guide the processes used to plan,implement, monitor and evaluate National Development Plans and Annual Budgets. CurrentAnnual Budget/Medium Term Expenditure Framework (MTEF) preparation, implementation,

monitoring and evaluation processes - and those for the formulation, implementation,monitoring and evaluation of National Development Plans - are not underpinned by a clearstatement of policy. This has led to a number of shortcomings, including, inter alia,weak linkagebetween budgeting and development planning procedures; ambiguous and variableprocesses used in practice for preparing MTEFs, budgets and development plans; and nolegally binding institutional structures in place to undertake budgeting and developmentplanning procedures in a manner that ensures informed participation by relevant stakeholdersand effective oversight by the National Assembly. Arising from these shortcomings, the socio-economic development and public service delivery impact of public finance has been less thanoptimal.

As a consequence, in 2009 Parliament enacted an amendment to the Constitution by the

inclusion of a new Article - Article 118A - that requires that Parliament shall enact budgetingand planning legislation which shall provide for matters that relate to the annual Budget andto medium and long-term development plans.

This policy document provides a clear statement of the principles, procedures, structures,timelines and responsibilities that are to be used in formulating, implementing, monitoring andevaluating annual budgets and National Development Plans so that the current shortcomingsare addressed. It is thereby envisaged that the development and service delivery impact ofpublic finance can be enhanced so that, alongside the goal of sustaining robust economicgrowth, Government can attain the wider development objectives of the nation, including:

reducing poverty (especially in the rural areas); economic empowerment through employment creation and entrepreneurship

development (especially for the burgeoning numbers of the youth); and

reversing rising levels of inequality in the nation to ensure social justice.The structure of the policy document is as follows: Section 1 covers the Introduction, Section 2,covers the situation analysis of the current planning and budgeting process. Section 3 presentsthe Vision. Section 4 provides the Rationale for the policy. Section 5 provides the guidingprinciples. Section 6 outlines the key policy objectives. Section 7 outlines the proposed newmeasures and systems of planning and budgeting. Section 8 outlines the implementationframework which includes; the institutional arrangements, legal, resource mobilization and

financing and monitoring and evaluation framework.

2. Situation AnalysisFrom Independence in October 1964 up to the early 1990s, Zambia produced a series ofNational Development Plans (NDPs) to guide national development efforts. However, acommon criticism of these early development plans, especially after the collapse ininternational copper prices in the mid-1970s, was that they were not sufficiently based onrealistic projections of the macroeconomic and fiscal circumstances that were likely to prevailduring implementation. Further, their implementation processes themselves were (a) notadequately integrated into the annual budget process such that the actual allocation of public

resources through the annual budget did not reflect the development programmes andpriorities they contained and (b) plans were not flexible enough to adapt to changedcircumstances during implementation and became increasingly outdated and irrelevant. As a


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consequence, their development objectives were, at best, only partially achieved. In addition,from the 1970s, national development planning was undertaken in the context of a one partystate with the Government adopting a socialist economic orientation. As a consequence, theprocesses and procedures for the formulation and implementation of development plans wereoverly centralized and lacked participation by citizens and sub-national governments. Thus,

development programmes were not very responsive to the development and service deliveryneeds, as perceived by the communities and people who ostensibly were their mainbeneficiaries.

The one party state ended in November 1991 with the re-introduction of multi-party politicswith the new Government swiftly proceeding to liberalize the economy. As part of thiseconomic liberalization process, development planning was allowed to lapse and, in the mid-1990s, the National Commission for Development Planning (NCDP) - the institution that wasmandated to spearhead national development planning and that was institutionally separatefrom the Ministry of Finance - was abolished. This led to the development of stand-alonesector investment programmes (e.g. Road Sector Investment Programme, Basic Education Sub-Sector Investment Programme and the Agriculture Sector Investment Programme) which were

not anchored around common national objectives and strategies. Alongside these planningdevelopments, and in the absence of a central institution to coordinate national development,Cabinet Office issued Cabinet Office Circular No. 1 of 1995 which administrativelyestablished District, Provincial and National Development Coordinating Committees tofacilitate coordinated development at national and sub-national levels. However, thesestructures were not established by law and the National Development Coordinating Committeehas never met.

In 2003, Government initiated a first generation of budget reforms when formulating the2004 Budget. This entailed moving from incremental line item budgeting- where the focuswas on the inputs to be bought by Ministries, Provinces and other Spending Agencies (MPSAs)

- to Activity Based Budgeting (ABB) - where the focus shifted to what programmes andactivities were to be supported by the spending plans of MPSAs. Further, the annual budgetformation process began to be undertaken in a more strategic, medium-term context byproducing a Green Paper prior to Budget Day containing a rolling three year Medium Term

Expenditure Framework (MTEF).

However, the implementation of these first generation of budget reforms has not been

entirely successful. In particular, the specification of many programmes and their constituentactivities by MPSAs in their expenditure estimates has not been very rigorous or strategic, andthe outputs and outcomes to be achieved through these programmes has been ambiguous; notclearly linked to those in National Development Plans and not reported in budgetdocumentation. Indeed, a criticism often heard is that incremental line item budgeting hasbeen replaced with incremental Activity Based Budgeting with no significant mindset change tosupport a more results/performance orientation. Further, the MTEF has proved to be a poorpredictor of eventual actual resource allocations in the two outer years of each MTEF, withwork on each successive MTEF starting afresh with new base numbers which are significantlydifferent from those published in earlier MTEFs without adequate public explanation for thesewide divergences. This has undermined a major objective of the MTEF - to provide reliableforward estimates of resource allocations to MPSAs for them to be able to make realisticmedium term public expenditure plans.

Further, absent from these first generation of budget reforms were fiscal decentralizationmeasures to facilitate the implementation of the National Decentralization Policy which was

launched in 2004 and envisaged the devolution of a wide range of public services to localauthorities. This shortcoming has meant that decisions concerning the allocation and use of


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public finances has remained highly centralized which, in large measure, explains thegeographic inequality in access to public services, with areas outside the national (and to alesser extent provincial) capitals suffering as a result. In addition, the fiscal capacity of localauthorities has been undermined over many years through the erosion of their revenue base.

At the same time that the first generation budget reforms were being introduced, nationaldevelopment planning began to re-emerge in the form of the articulation of a long term Visionfor the Nation in the form of the Vision 2030 (a long term aspirational document with theobjective of making Zambia a prosperous middle income country by 2030) and a PovertyReduction Strategy Paper (PRSP).

The PRSP led to the preparation of a Transitional National Development Plan in 2004 andthen the launch of the Fifth National Development Plan (FNDP) for the period 2006-10. Duringthe preparation of the FNDP, Sector Advisory Groups (SAGs) were established to facilitatethe channeling of advice from non-state actors into its formulation and, later, in monitoring itsimplementation.

However, there has been a growing lack of understanding as to the functional responsibilitiesof these groups, with some non-state actors seeing their role as approving rather thanadvising. Further, some confusion has arisen due to the increasing proliferation of SAGs whichhas inevitably caused an overlapping of the areas of their coverage. In addition, theeffectiveness of SAGs has been compromised by the perception that they are often donor-driven. As a result, many SAGs now rarely meet and where they so they do so on an ad hocbasis.

Despite an attempt being made during the formulation of the FNDP, to develop districtdevelopment plans, they were not effectively implemented due to the lack of fiscaldecentralization to facilitate this.

The current NDP - the Sixth National Development Plan (SNDP) covering the period 2011-15 -was launched in early 2011, less than nine months before the September 2011 GeneralElections which saw a change in the political party in power. This posed a challenge withregard to incorporating the new Governments aspiration for spearheading nationaldevelopment.

In spite of various attempts by Government to harmonize planning and budget processes,poor linkages still exist between the two. The national budgets are supposed to be informedby the National Development Plans. However, due to lack of a mechanism for effectivealignment of the national budgets to the National Development Plans, programmes aresometimes financed outside national development plans without any laid down guidelines andprocedures for selection and inclusion into the budget. Further, weaknesses exist in the clearidentification, selection and appraisal system for National Development Plan programmes andprojects.

Further, despite the re-emergence of national development planning around the time that thefirst generation of budget reforms was being initiated a decade ago, its links to the annualbudget and MTEF formulation processes remained ambiguous. This ambiguity was not helpedby the various budgeting and development planning processes using different programmenomenclatures and classifications and following different timelines that are not harmonizedand integrated with each other.


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Another major challenge in the budgeting process is the lack of comprehensive coverage ofthe General Government Sector in both the MTEF and the budget. In the current arrangement,the budgeting system does not include information from quasi-government institutions such asthe budgets of local councils and other grant aided institutions that are only reflected to theextent of the grant received from the Treasury. Other income (if any) and their expenditures

are not reflected in the Yellow Book. Further, certain statutory funds (e.g. the LandDevelopment Fund) are not comprehensively covered in the Yellow Book.

Finally, the credibility of the annual budget itself has been undermined for many years bywide in-year variations between appropriated amounts and actual expenditures incurred byMinistries, Provinces and other Spending Agencies (MPSAs).These significant variances arebelatedly regularized by submitting large supplementary budgets to the National Assemblyat the end of the financial year, in the last week of the National Assembly session. As a resultthere is inadequate National Assembly oversight over these supplementary expenditures.Indeed, the technical capacity of members of the National Assembly to form an independentview of the Executives initial and supplementary budget proposals and borrowing plans is

limited such that their ability to challenge these proposals and plans - and thus provide

effective oversight over the Executive - is undermined.

These challenges in development planning and budget processes over the last decade has notled to satisfactory progress in addressing the significant development challenges facing thenation, especially the persistently high rural poverty rates, youth unemployment and thedelivery of efficient municipal services to local communities. A worrying trend is that, despiterapid and sustained economic growth over the last decade, income and wealth inequalitybetween Zambians has risen and not all Zambians are benefiting from this positive growthrecord.

To address these problems in the nations budgeting and development planning processes ,

Parliament enacted an amendment to the Constitution in 20091, in which a new Article - Article118A - was inserted that requires that:

Parliament shall enact budgeting and planning legislation which shall provide for matters

that relate to the annual Budget and to medium and long-term development plans.

3. The VisionA coordinated and integrated national development planning and budgeting system that is

responsive, transparent, accountable and result oriented.

4. RationaleThe Constitutional requirement to enact budget and planning legislation has provided anopportunity to critically review the current national planning and budgeting formulation,execution and monitoring and evaluation processes, timelines and responsibilities - and thelinks between the two. This review - and the identification of the shortcomings as set out in theSituation Analysis above - has underpinned the development of this National Planning andBudgeting Policy.

The Policy is intended to strengthen accountability, oversight and participation mechanisms innational planning and budgeting, so enhancing the responsiveness, openness and results-orientation of these processes. Through the implementation of this policy, a second

1Act No. 20 of 2009


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generation of national planning and budgeting reforms will be initiated that will entail there-engineering of budgeting and national planning processes through which public financesare better allocated and used so that they can more effectively facilitate the delivery of theeconomic empowerment, socio-economic development and service delivery needs of familiesand communities across Zambia.

5. Guiding Principles:The fundamental principles that will guide the national planning and budgeting processesinclude the following:

a) Transparency and accountability, make stakeholders roles clear and providetimely financial and non-financial information regarding plans and budgets;

b) Authoritativeness, specify the decision making authority of each arm of the Stateat each stage, and between each level of the planning and budgeting process;

c) Periodicity, define timelines and milestones for planning and budgeting processes;d) Specificity, define the plan targets and ensure that all budgets are in line with the

National Development Plans.e) Credibility, ensure that the approved plans and budgets are fully implemented;f) Subsidiarity, devolve functions, including fiscal responsibilities to the lowest possible

level of government;g) Sustainability, ensure that national development does not compromise the well-

being of future generations.h) Equity, ensure equitable distribution of resources for development.i) Comprehensiveness, ensure that national planning and budgeting systems cover all

public resources.j) Responsiveness, ensure thatnational plans and budgets are responsive to the felt

needs and desires of the citizenry.

k) Results Based Management, emphasis on results as opposed to inputs in planningand budgeting process.6. ObjectivesThe objectives of the National Budget and Development Planning Policy, and the secondgeneration of budget and development planning reforms they will give rise to:

I. Integrate national planning and annual budgeting processes with a greater resultsorientation.

II. Strengthen synergies in the various planning processes.III. Facilitate more participative/decentralized development planning and budgeting

processes.IV. Align the national development planning cycle with the electoral cycle.V. Strengthen the National Assemblys oversight over the allocation and use of public

finances.VI. Enhance Budget Credibility.VII. Facilitate greater evidence-based decision making in development planning and

budgeting.VIII.7. MeasuresThese objectives of the National Budget and Development Planning Policy will be achieved by

adopting the following strategies and will be implemented by the ministry responsible for:


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I. Integrate national planning and budgeting processes with a greater results orientation

Harmonize the programme classification used in development planning with that used

in the annual budget/MTEF process.

Strengthen inter and intra institutional arrangements for linking planning andbudgeting at all levels

Ensure that the timelines for the formulation of Plans, reviews and reports areintegrated with and inform the formulation of budgets;

II. Facilitate more participative/decentralized development planning and budgetingprocesses.

Clearly and periodically specify the functions of each level of Government so as tounambiguously inform each level which functions it is required to plan and budget for;

Local councils with devolved functions are assigned appropriate revenue bases uponwhich to raise local revenues to cover a visible and significant portion of the cost ofdelivering devolved public functions so as to strengthen downward accountability to

local residents and communities.

Local councils have the authority to approve their own budgets for functions devolvedto them in the context of a strengthened accountability framework and clear policyguidelines and the requirement to provide basic minimum service delivery standardswhile operating within a well-defined hard budget constraint.

Legally establish budget and development planning coordinating structures at

district, provincial and national levels to replace the existing administratively formedDevelopment Coordinating Committees at the district, provincial and national levelsand extend the scope of these structures to incorporate coordination of all theformulation, implementation, monitoring and evaluation of development plans, MTEFsand budgets at their appropriate level;

Strengthen existing structures for state and non-state actor participation in theplanning and budgeting process with these structures aligned with the programmeclassification used in plans and budgets to avoid overlaps;

III. Align the national development planning cycle with the electoral cycle.

Develop each national plan after general elections to inform the first budget cycle tobe implemented by the new political administration;

IV. Empower the National Assembly with information to strengthen their oversight role inthe planning, implementation, monitoring and evaluation and budgeting process To require the Executive to table before National Assembly finance and non-financialinformation on a timely basis;

Review the institutional framework that governs the scrutiny of the executives budget

proposals;


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V. Enhance Budget Credibility. Ensure the plan informs the budgeting process

Ensure Supplementary expenditure is only incurred in line with Constitutional

provisions.

VI. Enhance the effective use of information/statistics in planning and budgeting decisionmaking

Expand the scope of Activity Based Budgeting (ABB) to Output Based Budgeting

(OBB), and progressively change the format of the yellow book in line with thechanging aspirations of society.

Expand the accountability of Controlling Officers to include the achievement ofplan/programme outputs to be produced through the introduction of performancecontracts.

Strengthen capacity to undertake ex-ante appraisal of capital projects beforetheyre included in the plans and they are allocated in the annual budget and requirethat such appraisals guide the allocation of public resources earmarked forinfrastructure development.

Integrate results from planning and budget reviews and evaluation processes into the

preparation of Medium Term Expenditure Framework and annual budget andsubsequent development plans at all levels of Government.

The above measures will be coordinated and supervised by the ministry responsible forfinance in close collaboration with cabinet office.

8. Integrated National Planning and Budgeting ProcessNational Planning ProcessIn the run up to general elections every five years, each Province and District will update itseconomic and social assessment in readiness for the next development planning cycle2. Afterelections, Provinces and Districts will be informed of the functions they will be responsible forduring the new administrations term of office, together with indicative ceilings, policy

guidelines and minimum service delivery standards for these functions.

In the first quarter of each year each district will submit its draft District Development Plan, tothe its Province and each Province will submit its draft Provincial Development Plan to theMinistry of Finance, incorporating the draft district development plans submitted to it. Duringthe same period, Ministerial Permanent Secretaries, after consulting relevant stakeholders, willsubmit to the Ministry of Finance, a draft Development Plan for functions that remain theirresponsibility.

In the second quarter, a draft National Development Plan, in the form of a green paper, willbe tabled before the National Assembly. This will be a five year policy and strategydocument, with costed sector action plans that incorporate the plans of districts and provincesfor functions that are devolved /deconcentrated to them and drafted in the context of theresource ceilings, policy frameworks and service standards provided by Central Government.The programmes to be used in subsequent Medium Term Expenditure Frameworks and Annual

2These updated assessments may also be used by district councils to reassess/renew their spatial plans/IDPs.


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type of grant, showing the basis upon which these allocations have been made across DistrictCouncils.

Revenue proposed in the Green Paper to be raised through domestic or external borrowingwill not exceed the total expenditure provided for investment4.The Green Paper will contain

information about the total indebtedness of the State (including information about theperformance of past loans and how they relate to Development Plan targets and objectives);contingent liabilities, tax expenditures, the performance of Extra Budgetary Funds, theutilization of the Contingency Fund. Progressively, the Green Paper will contain information onthe net financial position of the parastatal sector, local Governments, and Grant AidedInstitutions. Further, the total financial obligation arising as a result of court judgments andarbitral awards successfully brought against the State by non-state actors will be reported.

Approval of the Budget

After the Minister responsible for Finance has presented the Budget, the estimates of revenueand expenditure and their respective Ministerial Policy Statements, will be sent to the Budget

(Estimates) Committee. In addition, each Sessional Committee will receive that part of theestimates of revenue and expenditure and the respective Ministerial Policy Statements thatfall within its jurisdiction. Each Sessional Committee will scrutinize the estimates submitted to itand send recommendations for any amendments to the Budget (Estimates) Committee in thelast quarter of the year. The Budget (Estimates) Committee will then review these reports andsend recommendations on the full estimates of revenue and expenditure to the Speaker.

After receiving the report from the Budget (Estimates) Committee, the National Assembly willdebate the complete estimates of revenue and expenditure and may amend them. However,when making such amendments, the National Assembly must compensate any increase in theallocation to a particular Head by either a reduction in the allocation given to another Head

or by a fully costed proposal to raise additional revenue, or by a combination of these twomeasures. Further, the National Assembly may not increase the level of public borrowing tofinance the proposed expenditure, although it may specify where reductions in expenditurescan be made (or where additional revenues can be generated) if the House proposes areduction in public borrowing. Further, when amending the proposed budget estimates for aparticular Head, the National Assembly may, after receiving advice from the ControllingOfficer responsible for that Head on the practical implications of doing so, including theimplications for achieving NDP output targets, reallocate resources within a Head from oneprogramme to another or from one project to another on a quid pro quo basis.

The National Assembly shall approve the estimates of revenue, financing and expenditure forthe forthcoming financial year, with the expenditure estimates approved by Head andDepartment. In an election year, when the estimates of revenue and expenditure for thefollowing financial year are presented to the National Assembly as stipulated by theConstitution, the National Assembly will carry out the steps outlined above by the end of thefirst quarter of the financial year to which it relates.

By the end of each year, following the approval of the Budget and the enactment of anAppropriation Act, a White Paper will be tabled before the National Assembly, setting outthe final Medium Term Expenditure and Budget Plan for the next three years.

4Public borrowing will also be also restricted by observing the rule that total public sector indebtedness does

not exceed 30 percent of Gross National Product, unless prior approval of the National Assembly is obtained.


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9. Implementation Framework for the National Budget and Development Planning PolicyThe institutional arrangements, legal framework, resource mobilization and monitoring andevaluation modalities for implementing this National Budget and Development Planning Policyare set out below:

[A] Institutional Arrangements

The ministry responsible for finance will implement the National Planning and Budgeting policyand will facilitate the putting in place of enabling legislation for smooth implementation of thepolicy. This will be achieved in part by legal recognition of coordinating and advisorycommittees at the various levels of government to facilitate the structured participation of non-state actors in the development planning and budgeting processes. The institutional frameworkthat governs the legislatures scrutiny of the executives budget proposals will be reviewed toenhance the oversight function of the National Assembly and allow it to more effectivelyundertake independent fiscal policy and budget analysis.

The development of this National Planning and Budgeting policy is based on a moredecentralized governance architecture as envisaged under the National DecentralizationPolicy.

[B] Legal Framework

The policy will be implemented through the enactment of Budget and Development Planninglegislation in accordance with Article 118A of the Constitution. As the implementation of thesesecond generation budget and development planning reforms will require significant processre-engineering, the establishment of new institutions and coordinating structures and capacitydevelopment at various levels of Government, the commencement of the legislation after its

enactment will be phased. Consequential amendments to the Public Finance Act of 2004, theLocal Government Act (as amended) and other relevant legislation will be undertaken toensure that there are no statutory inconsistencies.

[C] Resource Mobilization and Financing

Government will mobilize resources through the annual budget to progressively effect theprocess re-engineering, institutional establishment and capacity development activities that willbe required to be undertaken to effect the National Budget and Development Planning Policyin time for the formulation for the subsequent Development Plans, MTEFs and budgets.

[D] Monitoring and Evaluation

Cabinet Office will monitor the achievement of the overall Policy, while the Ministryresponsible for Finance will monitor the Implementation of the Policy. The Monitoring andEvaluation system which includes the Government Wide (G-Wide) Monitoring and EvaluationFramework approach articulated in the National Plan, emphasizes management usingdevelopment results (or Results Based Management).

The G-Wide M&E approach articulates the structures, tools, strategies and indicators that arerequired to effectively monitor and evaluate national programmes and projects in order toimprove public management and accountability and facilitate internal learning.

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