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Using budgets for CSO advocacy Cape Town, 6 August, 2003 IDASA Budget Information Service Provincial Fiscal Analysis Unit
Alex Vennekens-Poane
After this module participants are expected to be able to apply basic calculations to budget information and interpret the results
Contents
1. Recap: What are again those figures and why do budget analysis? 2. Priority: percentage share of the budget 3. Growth in the budget (nominal): progress 4. Adjusting for inflation: real budget figures
1.1 How does budget analysis fit in the monitoring and advocacy role of CSOs?
Policy Budget Structures and institutions for implementation Service Delivery Impact of programme or policy
Incremental Budgeting: taking a previous years budgeted amount and add an additional amount to each budget item / programme (often the same % for each item).
- Advantages: simple & fast - Disadvantages: budgets do not reflect political prioritisation, neither do they reflect the present costs of providing a particular service (no accountability & efficiency).
Zero-based Budgeting: costing each activity => programme => vote from scratch every year.
- Advantages: budgets reflect priorities, accountability & efficiency, good for setting baselines - Disadvantages: too time-consuming, requires lots of information, and it is not always necessary to cost each programme from zero every year for ongoing programmes.
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Programme-based budgeting: After initial zero-based budget has been drawn up, programme budgets are reviewed and adjusted each year in the light of policy changes & priorities, and changes in activity levels and input costs.
- Advantages: Enables monitoring whether programmes are in line with priorities, inputs are costed and efficiency reviewed every year, budgets are realistic, improving accountability. - Disadvantages: Lots of information required
Performance budgeting: Based on programme budgeting, but uses performance criteria as the basis for budget allocations.
- Advantages: Same as programme-based, and allocations are based on the outputs that a department wants to achieve. - Disadvantage: lots of information required.
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2. Priority: How does the budget for this purpose compare to resources spent in other areas? To determine what governments priorities are as stated in budget To ask if stated policy priorities match priorities in budget To determine if government is keeping its promises (policy commitments) 3. Progress: Is governments response on this issue improving? To monitor government commitment
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5. Efficiency: Is the money spent? And is it spent on the right inputs & programmes?
Allocated vs. actual expenditure Comparing funding channels or mechanisms Is the right mix of inputs & services used to deliver the outputs in the most efficient way?
6. Effectiveness: Is the money being spent on the right outputs in order to achieve the desired outcomes?
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Are the interventions which are funded the most appropriate (i.e. do they lead to the desired outcome) and cost effective?
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Furthermore, inflation reduces purchasing power of a rand over time, I.e. 1 rand last year buys you less than 1 rand this year, because everything has become more expensive. This makes straight comparison of amounts between different years invalid. We convert nominal amounts into real amounts to adjust for inflation.
Idasa Budget Information Service
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Activity: Calculate the nominal growth rates for the amounts given in the table below
Total Provincial Expenditure Nominal amount (R'000) Nominal growth rate (%) 2000/01 Actual 2001/02 Actual 2002/03 Est. Act. 2003/04 Voted 2004/05 MTEF 2005/06 MTEF
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Calculate the nominal growth rates for the amounts given in the table below
Total Provincial Expenditure Nominal amount (R'000) Nominal growth rate (%) 2000/01 Actual 2001/02 Actual 2002/03 Est. Act. 2003/04 Voted 2004/05 MTEF 2005/06 MTEF
8.77
18.37
10.78
7.36
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7.67
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4.1b Adjusting for inflation: Converting an allocation from nominal to real terms
Nominal: amount given Real: adjusted for inflation to reflect purchasing power of money at a particular time 1. We want to convert everything to 2002/03 rands, so we make 2002/03 the base year. 2. Divide each nominal allocation by the deflator for that year Activity: calculate the real amounts based on the figures in the table below. Compare the real amounts to the nominal amounts.
Total Provincial Nominal amount Deflator Real amount 2000/01 2001/02 2002/03 2003/04 2004/05 2005/06 Actual Actual Est. Act Voted MTEF MTEF R'000 R'000 R'000 R'000 R'000 R'000 11497824 12506446 14804149 16399986 17607492 18957172 0.846 0.902 1.000 1.061 1.115 1.172 Idasa Budget Information Service 16 13592659 13869649 14804149 15457103 15789901 16175315
2004/05 MTEF
2005/06 MTEF
Nominal
Idasa Budget Information Service
Nominal amount 11497824 12506446 14804149 16399986 17607492 18957172 Deflator 0.846 0.902 1.000 1.061 1.115 1.172 Real amount 13592659 13869649 14804149 15457103 15789901 16175315 Real growth rate Idasa Budget Information Service 18 (%)
Nominal amount 11497824 12506446 14804149 16399986 17607492 18957172 Deflator 0.846 0.902 1.000 1.061 1.115 1.172 Real amount 13592659 13869649 14804149 15457103 15789901 16175315 Real growth rate Idasa Budget Information Service 19 (%) 2.04 6.74 4.41 2.15 2.44
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3.00
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Activity: Calculate the WC per capita provincial budgets based on the budget and population figures in the table below
2000/01 2001/02 2002/03 2003/04 2004/05 2005/06 Total Provincial Unit Actual Actual Est. Act Voted MTEF MTEF Nominal amount R'000 11497824 12506446 14804149 16399986 17607492 18957172 Population WC 000 4271 4354 4421 4482 4539 4594 Per capita (nominal) R
Idasa Budget Information Service
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Activity: Calculate the WC per capita provincial budgets based on the budget and population figures in the table below.
2000/01 2001/02 2002/03 2003/04 2004/05 2005/06 Total Provincial Unit Actual Actual Est. Act Voted MTEF MTEF Nominal amount R'000 11497824 12506446 14804149 16399986 17607492 18957172 Population WC 000 4271 4354 4421 4482 4539 4594 Per capita (nominal) R 2692 2872 3349 3659 3879 4127
Idasa Budget Information Service
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Total Provincial Unit Nominal amount R'000 Deflator Real amount R'000 Population WC 000 Per capita (real) R Real per capita growth rate %
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Total Provincial Unit Nominal amount R'000 Deflator Real amount R'000 Population WC 000 Per capita (real) R Real per capita growth rate %
However: one needs to take into account efficiencies of scale and scope: fixed costs may remain stable to some extent when activity levels are increased, or certain costs can be shared across programmes. Furthermore, costs are not always the Idasa 27 same in different settings. Budget Information Service Method requires lots of information.
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If the province has 4 citizens AND If it costs on average R 10 to immunise 1 citizen (incl. personnel, syringe, admin, facility, vaccine, etc.), How much should the 2003/04 budget for programme Z be?
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Consolidated national and provincial budgets and expenditure Any provincial or national departments budgets Programme and sub-programme budgets Input item budgets (personnel, equipment, etc.) Geographic, District, Local Government, Service Provider etc. budgets
ANY BUDGET OR EXPENDITURE FIGURES!!!!!
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Lunch
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