President Mohamed Nasheed on Friday announced the transition from line-item to programme budgeting in 2011, a process that began in 2006 under the previous government.
In his weekly radio address, President Nasheed explained that the new budget will be based on the Strategic Action Plan formulated in 2009.
The purpose of a programme budget is to determine and identify means of achieving targets of government offices and institutions.
“After identifying the target, objective or the aim, what offices have to do is determine the work that will be needed to achieve it,” he said. “And then they have to determine the expenditure required for it such as machinery, services, people. That is what we consider the budget. But what is important are the programmes.”
Following the valuation of the estimated cost of government’s projects for 2011, said Nasheed, the provisional budget will be submitted to the People’s Majlis.
As next year’s budget will include projected revenue from newly introduced taxation, he continued, it will be “a budget with a completely new form.”
An IMF Public Financial Management Performance Report, made public in May 2010, meanwhile recommends an almost complete overhaul of the existing public finance management system in the Maldives.
The assessment found that budget credibility was weak as revenue fell well below estimates in each year except 2006, while budget documents for 2005-2008 showed “no clear linkages between budget figures and underlying policies.”
In 2007, actual primary expenditure deviated from budget estimates by -13.7 percent, while domestic revenue collections were below 92 percent of budgeted estimates in the same year.
Moreover, as funds for discretionary spending was released on an ad hoc basis, “there are critical weaknesses in the management of government cash, debt and guarantees.”
Among its other findings, the report states that “efficient service delivery has not been prominent priority for public financial management in the Maldives” as the emphasis has been on inputs as opposed to output or results.
While strategies and goals had been identified in national development plans, it had not been costed and “linkages to the budget have been unclear.”