Parliament sidelined in fiscal policy processes
Botswana’s budget not presented to parliament in medium terms Parliament does not have Budget Office, less involved in fiscal policy Policies are not costed and do not form part of Mid- Term budget process
An International Monetary Fund ( IMF)- supported organisation has raised concerns about Botswana’s fiscal policy processes which sideline the legislature from decisionmaking.
These findings follow an assessment commissioned by the Ministry of Finance and Economic Development, in which Public Expenditure and Financial Accountability ( PEPA) was engaged to provide an objective analysis on the present state of the Public Finance Management ( PFM) system in Botswana against the revised PEFA methodology.
Key among the findings of the report is the legislative scrutiny of budgets.
“The Legislature does not have a budget office or committee to consider and analyse the budget documents before the approval of the annual budget.
“The scrutiny is done during the overall budget discussions, that is, in Committee of Supply,” the report stated.
“However, the supplementary budget request is tabled before Parliament for consideration and approval. One of the committees will review the supplementary request prior to approval by Parliament”. The Budget Office in legislative bodies is tasked with producing independent analyses of budgetary and economic issues to support the legislative budget process.
The report indicated that although the legislature scrutinises the annual budget, this scrutiny does not cover review of fiscal policies.
“The Legislature is not provided with medium- term fiscal forecasts and medium- term priorities when the annual budget is submitted; therefore this information is not taken into consideration,” the report indicated.
“The Finance and Estimates Committee of Parliament has been in existence for a long time, but does not review the annual budget before it is presented in the full Chamber of Parliament”.
On the issue of macroeconomic and fiscal forecasting, PEPA said Government, through the MFED, prepares medium- term macroeconomic forecasts with underlying assumptions, but they are not submitted to the Legislature.
“They are prepared for the purpose of informing the fiscal and budget planning processes. The forecast includes estimates of GDP growth, interest rates, and exchange rates,” the report said.
PEPA found that MFED produces annual macroeconomics forecasts and are depicted in the medium terms outlined in the budget strategy paper but the medium- term forecasts are not shared with Parliament.
The report said while the National Development Plan, which guides the annual budget, is submitted to Parliament, the annual budget submissions do not contain any underlying assumptions, and that the budget is not presented in medium terms.
“Government prepares fiscal forecasts which are considered mid to medium- term fiscal forecasts, consisting of the current year plus two outer years.
“However, the forecasts are not submitted to the legislature but are used internally by MFED to prepare the annual budget,” the report showed.
The agency also found that the MFED conducts the critical element of macro- fiscal sensitivity analysis, but the process is done only for MFED’s internal purposes.
“The budget is presented to the Legislature without consideration of the scenarios. The scenarios are not shared or published in any public documents,” the report observed.
The fiscal policy impact of policy proposals also came under the spotlight because policies are not costed and do not form part of the Medium- term Fiscal Framework ( MTEF) budget process.
“Also, outcomes of the proposed policies are not always quantified and linked to budget resources and as result, there is a limitation in detailing the
impact of policy changes as most of the time policies are not fully costed,” PEPA stated.
The agency said that while MFED submits to the legislature, along with the annual budget, a report that describes progress made against the fiscal strategy and provides reasons for any deviation ( at the aggregate level) — the report does not detail variations from the initial objectives as it only outlines projected fiscal targets.
“The medium- term estimates are not presented to Parliament along with the other annual budget documents.
“Medium- term estimates do not correspond to Ministries, Department, and Agencies ( MDAs) strategic plans. There is no evidence that links budget expenditures to strategic plans,” the report found.
PEPA observed that the published budget documents do not present estimates of expenditure for the current budget and the two following years and that the medium- term estimates are only presented to the Cabinet and not to the Legislature.
“Annual estimates are guided by the medium- term objectives and planned programmes under the current NDP 11.
“The limitation is that the budget is not presented in medium- term to Parliament for approval. The mediumterm perspective is approved during the approval of NDP by Parliament,” the report highlighted.
“All ministries prepare mediumterm strategic plans. The expenditure policy proposals in the annual budget are aligned with Vision 2036 and NDP 11 which sets the tone for the MDA’s strategic plans. However, there was no evidence on the estimate of budgeted expenditures that are aligned to the strategic plans”.
The 200- page report was submitted to the previous Minister of Finance, Dr. Thapelo Matsheka, and the assessment was based on three previous financial years of 2015/ 17, 2016/ 17, and 2017/ 18.