INVESTMENT AND OPERATION BUDGETING SYSTEM

DEVLOPMENT AND IMPLEMENTATION OF INVESTMENT AND OPERATION BUDGET SYSTEMS

Budget preparation, and budgeting in general, allows for the development of a spending plan based on the provincial funds (either on hand or estimated), and ensures there will be enough funds available to support provincial expenses (either planned or actual). The budget process requires a prioritization of needs and a balancing of income to expenditures.

Since 2006, when the Accelerated Reconstruction Development Plan (ARDP) fund first launched, there have been many challenges facing the Investment Budget process in the provinces. GSP/Taqadum identified several of these challenges, among them: 1) a lack of coordination between the financial and technical planning processes; 2) no clear policy to drive the investment budget process in the provinces; and 3) a lack of integration between the different projects mentioned in the Investment Budget. The decentralization process has provided the provincial governments with opportunities to address these challenges, as well as plan and manage their budgets in an integrated manner.

To this end, GSP/Taqadum proposed a 20-step process to formulate a well-designed, integrated, and applicable Investment Budget, as well as a clear mechanism for identifying the roles and responsibilities of all entities that participate in the budgeting process. Taken as a whole, the 20 steps end with a monitoring and evaluation process that feeds or cycles back into the next fiscal year’s Investment Budget preparation process.

Al Karkh Youth and Sport Director, Mr. Raheem al-Sudani (l), reviewing the budget preparation steps with GSP/Taqadum Provincial Coordinator and Budgeting Specialist, Dr. Saad Hussein (r)

INVESTMENT BUDGET SYSTEM

  • Building on our earlier GSP/Taqadum experience establishing: 1) Provincial Planning and Development Councils (PPDCs) to assist Governors in formulating Capital Budget Plans; 2) Essential Service Delivery Oversight (ESDO) Units to determine service improvement needs; and 3) Citizen Service Desks (CSDs) to determine trends of citizen needs; GSP/Taqadum has progressed in its work with the provinces to develop and integrate Capital Budget processes into local budget development
  • The Capital Budgeting process will be institutionalized through a PC mandate that will allow citizen input into the decision-making process and hold the provincial government responsible for Operational and Capital Budgets

ACHIEVEMENTS

  • Diyala and Muthanna adopted the GSP/Taqadum-developed 20-step Investment Budget process bringing the total number of provinces to do so to 12 (joining Babil, Baghdad, Basrah, Dhi Qar, Diwaniyah, Karbala, Kirkuk, Maysan, Najaf, and Wasit)

  • Provincial projects that will be transferred from the 2016 Local Investment Budget to the 2017 Local Investment Budget were identified in 12 provinces (all except Anbar, Ninawa, and Salah ad Din

  • Financial staff in 12 of the targeted directorates in 12 provinces (except Anbar, Ninawa, and Salad ad Din) completed training in the Investment Budget Preparation Process

ONGOING NEXT STEPS

  • Train the newly added directorates on the 20-step Investment Budget Preparation process

  • Assist the newly added directorates to identify projects to be transferred from 2016 Investment Budget to 2017 Investment Budget

  • Assist the newly added directorates to identify and implement monitoring and evaluation procedures

  • Work with PPDCs to coordinate and integrate the provincial directorate Investment Budgets

OPERATIONAL (AND MAINTENANCE) BUDGET SYSTEM (NEWLY ADDED ACTIVITY)

  • The Operational and Maintenance (O&M) Budget is one of the main elements of any Financial Management System. It represents the backbone of the day-to-day work in any given directorate and allows that directorate to perform its duties related to the delivery of essential citizen-centered services, such as maintenance of water pumps, providing food and clothing for patients in hospitals, etc.

  • Formulation of an O&M Budget requires the following of a set of procedures, and a flow of information between a directorate’s Financial and Technical Sections.

  • GSP/Taqadum had identified several weaknesses in the current O&M Budget formulation process that adversely affects service delivery to citizens. To alleviate these weaknesses, GSP/Taqadum will develop and propose a series of actions and procedures to enhance the O&M Budget’s formulation in targeted directorates (both the directorates we have been working with and the newly added ones). These actions and procedures will include, but will not be limited to, estimation of: 1) different maintenance expenses; 2) different goods requirements; and 3) service requirements.

NEXT STEPS

  • Develop and propose an O&M Budget Formulation process

  • Train Directorates on the proposed O&M Budget Formulation process

  • Train Directorates on how to estimate different types of O&M Budget expenses

  • Develop an O&M Budget Manual