workshop cash and budget “cash is king!”
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Workshop Cash and Budget “Cash is King!”. Helmer Vossers Ministry of Finance The Netherlands 17 February 2006. Budget process:summing up. Questions:. Is the budget the instrument for implementing government policies? - PowerPoint PPT PresentationTRANSCRIPT
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Workshop Cash and Budget
“Cash is King!”
Helmer VossersMinistry of Finance The Netherlands17 February 2006
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Budget process:summing up
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Questions: Is the budget the instrument for implementing
government policies? Do you report on a regular basis on the budget-
outcomes during the execution? Can you relate your cash information to budget-
lines? Do you analyze every year the budget outcome
and the budget forecasts? Is this review done for every line-item?
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Budget paradox
Trend: we see reforms towards performance based budgeting and management
But cash info still remains very important why?1. fiscal aggregates (EMU-deficit) is based on
cash (sub-national parts!)2. allocation, authorisation accounting is on cash3. input info needed for benchmarking:
number of personel, it and housing-costs
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The rules of the game, part 1!
Dealing with windfalls and overspendings…. The rules of budgetary discipline Status rules: part of coalition agreement, no
law Main rule: Compensate within your own
budget! An unwritten law but even used in parliament Surplus windfalls are for minister of Finance,
but Carry-over principle ( 2 % of total budget)
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The rules of the game, part 2!
….. But can only be maintained when budget is reliable
Monthly report of budget-execution Monthly meeting inspectorate and spending
department Under- and overspending review for 4-5 years Strong link between realization and multi-year
forecast To be supported by IT-system
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The rules of the game, part 2 !….. But can only be maintained when budget is reliable
Multi layer financial responsibility: flexibility Bottom-up approach: estimates based on
assumptions from line ministries Estimations in unchanged prices Assumption of unchanged policy (demographic
development included) Check by ministry of Finance
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Bookkeepers budget analysts!
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How does it really work?
Example of budget preparations and budget execution in relation to
overruns and compensation
Underspending for us! But also carry-over principle: service not
delivered
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Multi annual budgeting
year t t+1* t+2* t+3* t+4*
100
110 120 130 140
15 15 10 5 0
15 10 5 0
110 120 130 140
Exec
Comp
115Total
Appr.
budget
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Conduction of central administration
Spending department can decide on the number of banking-accounts
No ex-ante checks on payments Discussion on cash forecasts by spending units All government units included! Working processes supported by IT-systems Complex process
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Government
Offices
Commercial bank
Ministry of Finance
Central Bank
Customer/person
a
b
1
2
c
d
e
Information flow
Real money transfer
Information flow; but zero balancing
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To wrap up….
No money on bank accounts: zero balancing Using infrastructure of commercial banks Current account administration with MoF Many checks and balances Spending ministers are responsible
themselves!
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Information exchange supported by IT-systems
Budgetary system RIS/IBOS forecasts versus realization explanation of mutations insight in liabilities (intended and realized) on a multi annual basis
linked with cash information through banking accounts
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Check your position on the web
16Animatie door Daan Vossers
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To summarise All mentioned features and agreements of Dutch
Budget policy are covered in our IT-systems Systems comply with division of responsibilities Conditions: Information shoud be in time, complete
and correct: but also sharing of information Rules, rules, rules Teach the line-ministeries System works with multi annual figures Cash info essential for reliability