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What is transparent, comprehensive and effective budget classification
from the perspective of the Government and of the Parliament? –
Focus on Public Entities
Country: Malta
Presenter: Noel Bezzina
Ministry of Finance, the Economy and Investment
Financial Estimates 2011
Ministries and respective
departments
Income and Expenditure
Personal Emoluments
Operational and Maintenance
Expenses
Programmes and Incentives
Contributions to Government Entities
Independent Bodies
Ex: National Audit Office
Personal Emoluments
Includes Wage Bill of Ministry and respective departments
Operational and Maintenance Expenses
Includes other running costs. Examples include:
• Utilities
• Material and Supplies
• Transport
• Training
• Rent
Programmes and Initiatives
Includes other specific programmes. Examples include:
• Census of Housing and Population
• Training in Entrepreneurship
• Quality Improvement Programme
• Breast Screening exercise
Contributions to Government
Entities
Includes Subvention
given to entities in respect of:
(a) Recurrent expenditure; and
(b) Capital expenditure
Contributions to Government Entities
0.00%
5.00%
10.00%
15.00%
20.00%
25.00%
30.00%
Subvention as a % of Total Recurrent Expenditure for Ministry
Subvention as a % of Total Recurrent Expenditure for Ministry
Contributions to Government Entities
Qualities of data for transparent, comprehensive and effective budget
classification:
Consistency
Level of Aggregation
Uniformity
Consistency
Budgeting
Use of financial plans where entities are requested to
provide their projections for the following year.
Monitoring
Use of FDRS (Financial Data Reporting System) where entities are requested to
provide their actual results on a monthly/quarterly
basis.
Level of Aggregation
Disaggregation
• Focus on unnecessary detail
• Difficult to be followed up
• Usually leads to lack of uniformity in reporting between an entity and another
Over Aggregation
• Much harder to identify red lights
• Deterioration of transparency
Uniformity
Ministries Entities
DAS FDRS
Consolidation
Delimitation of the General Government Sector – ESA 95
PUBLIC SECTOR
GENERAL GOVERNMENT PUBLIC CORPORATIONS
Central
Government
Public Financial
Corporations
(Including
Central Bank)
Public
Non-Financial
Corporations
Local
Government
Budgetary Central Government
Extra Budgetary Units 68 Local Councils
Delimitation of the General Government Sector – ESA 95
• The General Government sector consists of all institutional units which are other non-market producers whose output is intended for individual and collective consumption and are controlled and mainly financed by Government through a subvention.
The sub-sectors consists of :
– Central Government
– Local Government
– (In Malta we do not have ‘State Government’ and ‘Social Security Funds’ sub-sectors)
Delimitation of the General Government Sector – ESA 95
Central Government
• Ministries and Government Departments
(Budgetary Central Government)
• Extra Budgetary Units (EBUs) which have been classified as falling within this sub-sector.
Examples:
EBU Non-EBU
Delimitation of the General Government Sector – ESA 95
• ESA Manual on Government Deficit and Debt sets clear guidelines on the classification of EBUs
• Most important considerations are:
– Is the entity an institutional unit? - A unit must be entitled to own goods or assets in its own right, be able to incur liabilities on its own behalf and keep a complete set of accounts.
– Is the public institutional unit market or non-market? - Non-market producers provide all or most of their output to others free of charge or at prices that are not economically significant.
– Are more than 50% of production costs covered by sales? - For the market / non-market test, production costs are the sum of the intermediate consumption, compensation of employees and consumption of fixed capital. Sales are mainly the sales of goods and services.
Government enterprises are classified inside general government when the market / non-market ratio is less than 50%
Thank you for your attention
Contact Details of Presenter -:
Email: [email protected]
Tel. No. : +35625998434