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PUBLIC SECTOR

Overview of Budget Process and Budget


Formulation

Central Government
Ministries and Departments under the Central
government
Provincial Government
Provincial Councils

Local Government
Municipal Councils, Urban Councils and Pradeshiya
Sabas
State owned Enterprises
Statutory Boards, Commercial Corporations,
Government Owned Companies

W.A.Samantha Upananda
Msc(IT), Bsc (Bad.), PG Dip. in Mgt., PG Dip. in IT, DPFM, Dip. in E-Gov
ACMA, MCPM,FPFA, DISSCA

upanandaw@gmail.com
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Budget Cycle

National Budget

Planning and setting


objectives
What will be done, by
whom and when?

National budget is a document plan of public revenue


and expenditure for a year.
That is often approved by the legislative and presented
by the Finance Minister.
The budget is also known as the Annual Financial
Statement of the country
This document estimates the anticipated government
revenues and government expenditure for the ensuring
(current) financial year
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GOALES

OBJECTIVES

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Identifying resource
needs
what resources are
needed to carry out the
plans and cost?

Monitoring and
Reweaving.
WH are the
deviations/corrective
actions.

Implementation of plans
Actions are taken by the
responsible authorities
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Strategic Component

VITION

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Goals/Objectives

ACTIVITES

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Budget Call
qThe preparation of estimates of Revenue and Expenditure
originates from the Chief Accounting Officers, Accounting Officers
/Revenue Accounting Officers.
qThe annual Budget Call by the department of National Budget sets
the Budget cycle in motion.
qThe Budget process starts in March and ends in November when
the Annual Budget is presented in Parliament.

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Treasury

Consultation Process

Treasury is organized under following departments.


- National Planning
- External Resources
- National Budget
- Management Services
- State Accounts
- Public Finance
- Fiscal Policy and Economic Affairs
- Development Finance
- Trade Tariff & Investment policy
- Legal Affairs
- Public Enterprises
- Treasury Operations
- Management Audit
- Foreign Aid & Budget Monitoring
- National Operation Room
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The national Budget making process involves wider consultations within Government
ministries and agencies as well as with other stake holders. Such as;

Peoples Representatives
Private Sector
Trade Unions
Interest Groups
Development Partners
Lending Agencies
Rating Agencies
Individuals and Community groups
Professional Associations
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Issuance of the Budget call

Political and Approval Process


Parallel to the consultation process with the civil society, the
Cabinet of Ministers sets the process in motion, by approving the
initial Cabinet Paper on the Annual Budget.

That indicates the macro Fiscal Framework the overall revenue


and expenditure position.
The Ministry of Finance begins with the budget assessment under
the mandate received from the cabinet of ministers, as also
envisaged in government financial Regulations.
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After the initial cabinet approval, Department of National Budget issues


Budget Call to Secretaries of line Ministries, Chief Secretaries of Provincial
Councils and Heads of Departments.
This includes
Guidelines and directions for preparation of the Annual Budget.
Tentative Budget Calendar
Macroeconomic Perspectives
Fiscal Policy and Budget Management consideration

Secretaries, as Chief Accounting Officers, in consultation with respective


Ministers, propose self assessments.
The Treasury also provides broad assessments, on line ministry expenditure.
The budget speech is finalized with the minister in charge of the subject of
Finance and the Cabinet of Ministers.
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Budget Estimates
The following are the key financial regulations deals with budget
Estimates.
Preparation of Draft Estimates ( FR 50)
- It is the responsibility of the Accounting Officer to see that Draft Estimates relating to his
department are prepared in conformity of Financial Regulations.

Treasury Decisions of Draft Estimates (FR 57)


-The Treasury, after considering Draft Estimates, is expected to forward its decision to them
as appropriate and proceed to incorporate them in Draft Estimates.
- Once the Draft Estimates are so finalized, the treasury will not entertain any requests, since
by then, the overall Budget position has been determined and any additional funds would
necessitate a reassessment of the position.
- The final Draft Estimates are then presented to the Cabinet of Ministers for approval.

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Cabinet Approval and Parliamentary Approval for the


Appropriation Bill
The Appropriation Bill is drafted by the Legal Draftsman, based
on initial approval granted by the Cabinet Ministries.
It is then cleared by the Attorney General in relation to
constitutionality, in term of Article 77 of the constitution.
The Appropriation Bill is then submitted to the Cabinet of
Ministers, Seeking approval to be presented in parliament.
The submission in parliament is done in compliance with the
requirements in the Constitution and the Standing Orders of
Parliament.
As per the Article 78 of the constitution, a Bill is required to be
published in the Gazette for at least seven days before it is placed
in the order Paper of Parliament.
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Budget Estimates
Submission of Estimates to Parliament, Committee Stage and
Appropriation Act (FR 58)

After obtaining Cabinet approval, the Draft Estimates are


required to send to the Government Printer.
The Printed Draft Estimates are treated as confidential until they
are presented in parliament by the minister of finance.
Such Draft Estimates will thereafter, to the extent to which such
expenditure has not been previously authorized by law, be
deemed to be embodied in the Appropriation Bill.
The process relating to the submission of appropriation Bill and
of committee stage amendments, if any, are also dealt with in
this FR.
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First Reading of the Appropriation Bill


The Bill is then published in the Order Paper of Parliament and moved for the
First Reading of the Budget.
Standing Order 50(1) requires that a Bill other than urgent Bills (Article 122)
can be set down for the second reading on a date earlier than a week from the
day on which it is presented in parliament.
Within a one week of the Bill being placed on the order paper of the
parliament, citizen could field a petition against in writing by addressing to
the supreme court with a copy of the same delivered to the speaker.
No proceedings can be had in parliament in relation to such Bill, until the
determination of supreme court is made, or the expiration of three weeks from
the date of such petition, whichever occurs first.
The Supreme Court is required to make and communicate its decision to the
president and the Speaker within three weeks of the filling of the petition.
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Second and Third Reading of the Appropriation


Bill
This is the detailed presentation of governments proposals to raise revenue
for its programmes in relation to the following financial year.
Standing order 70 (4) states that not more than seven days can be allotted to
the Second Reading of the Bill.
Budget proposals which are traditionally well guarded are announced with
the reading of the Budget Speech, generally by the Minister of Finance.
First part of the budget speech is a general overview of the state of the
economy .
Second part involves the announcement of proposals for the collection of
revenue, including tax proposals, and the anticipated income and expenditure
for the coming year.
The presentation of Budget Speech is followed by a maximum of seven days
of debate during which, time is allocated to the Government and the
Opposition.
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Advance Accounts Activities can be classified as follows for Budgetary


Purposes
i) Production Advance Accounts
ii) Development Advance Accounts

Capital Expenditure
Recurrent Expenditure

All govt. Activities are pre determined and set out in


programmes
Programmes are incorporated in Annual estimates of
expenditure for a particular financial year
Programmes are composed of projects

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Estimating for Advance Account Activities

Expenditure Management
Planning of Expenditure

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Human Resource Budget


The staff employed under each head of expenditure
and Advance Account Activities should be identified
in terms of programmes, projects and activities.
The existing personnel should be employed to achieve
optimum productivity.

iii) Trading Advance Accounts


iv) Stores Advance Accounts
v) Advances to Public Corporations
vi) Advances to Public Officers
vii) Miscellaneous Advance Accounts

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The source of financing the expenditure of


the government are:

Following limits are prescribed in the draft estimates.

Appropriation Law Financing Code


(Supply Services)
(11) Consolidated Fund

i) Maximum limits of Expenditure


ii) Minimum limits of Receipts
iii) Maximum limits of Debit Balance
iv) Maximum limits of Liabilities (Stores)

(12) Foreign Aid Loans


(13) Foreign Aid Grants
(14) Reimbursable Foreign Aid Loans
(15) Reimbursable Foreign Aid Grants
(16) Counterpart Funds
(17) Foreign Aid Related Domestic Funds

Special Law
(21) Consolidated Fund
(Special Law Services)
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FUNDS OPERATED BY TREASURY

Variations to Estimates
Virement Procedure (FR 66 Application)
Additional Allocation from Treasury Pool vote
Supplementary Estimates
-

Consolidated Fund.
The consolidated Fund is administered by the Department of Treasury Operation and the
Deputy Secretary to the Treasury is the custodian of this Fund. The consolidated fund .. of
all moneys belongings to the government which are not allocated for specific ..

Contingencies Fund
This fund is created by Parliament under Article 149 of the Constitution to provide for urgent
and unforeseen expenditure.
The Minister of Finance if satisfied that
There is a need for such expenditure
There is no provision that exist

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Warrants
To draw many from consolidated fund or contingencies fund ministry of
Finance should sign following warrants.

Grants authority for charging expenditure on the Consolidated Fund in respect of Supply
Services provided for in Part 1 of the Annual Estimates and the Appropriation Act

Requisition
When the Cabinet decides subsequently to release the money withheld as explained above

Special Warrant
When Parliament passes a resolution authorizing a supplementary estimate the Minister of
Finance will issue a special Warrant for the money required for expenditure provided for
in the Supplementary estimates.

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Special Law Warrants


For the release of monies in respect of Special Law Services provided for in the Annual
Estimates but not included in the Appropriation Act separate warrants will be issued by
the Minister of Finance for the services previously authorized.

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As in Special Law warrants if during the Financial year Parliament passes a special law
services, the Minister of Finance will issue this warrant for the additional money required
under the Special Law services

Advance Warrant
In respect of Advance account activities provided for in Part II of the estimates, the
Minister of Finance will issue this warrant specifying various terms and conditions.

Contingencies Fund Advance Warrant


When an advance is authorized under the Contingencies Fund, the Minister of Finance
will issue this warrant for release of funds for the purpose envisaged.

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Cont.

Imprest Authority
qImprest Authority prepared by the Department of Treasury
Operation based on the actual cash requirements for
inquiring of expenditure authorized by the respective
warrants.
qThese warrants along with the schedule which include the
total cash requirement under each Head of the Department
is submitted for the approval and signature of the Minister
of Finance.
qTo prepare Imprest Authority Statement all Chief
Accounting Officers and Accounting Officers should be
submitted Annual Imprest Application stating their cash
requirements to the Department of Treasury Operation
based on budgetary provision in the annual budget
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Supplementary Special Law Warrant

General Warrant

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TOD issued Imprest


expenditure.

to Ministries/ Departments to meet their

Other receipts also can be used as part of the Imprest by A class


Department.
Imprest balance should be settle to the Treasury by the Ministries and
Department end of the Financial Year.
All Department and Ministries should reconcile the Imprest Accounts
and other monthly accounts with Treasury books

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