Posted by Bruno Imbert[1]
The budget department in Senegal underwent recently a major reorganization, having remained broadly unchanged for several decades. The old structure had outlived its useful life and is being replaced by one that is better able to meet the challenges of technological advances in budget preparation and execution, enhanced requirements for transparency, and the implementation of performance-based budgeting and other PFM reforms.
Since the early 1950s, responsibility for both the preparation and execution[2] of the annual budget has been assigned to the Ministry of Finance (MoF), but it took several decades to progressively shape a department of the ministry to take charge of the budget.
The first budget department was created in 1956, but the budget was only one of its several responsibilities, and not the most important one. Only in 1964 was a full budget department created. At that time, the department comprised several units responsible for finance functions such as commitment controls, special accounts, expenditure, revenue, as well as a central division. In those days, the department mainly focused on budget execution and control. Over succeeding years, some incremental changes were made, and new responsibilities were added (e.g., debt management and lending, investment budgeting and programming, and wage bills), but the organization and objectives of the department remained much the same.
The first major reorganization took place in 1995 with the creation of the General Directorate of Finance, which became one of the MoF’s most important departments. This reform coincided with the development of a new financial management information system (SIGFIP), stronger internal control of budget operations, and an updated legal framework for public finances. The new structure comprised nine departments under the supervision of a Director General, including a department for the preparation and execution of the annual budget, two departments responsible for the capital investment budget, and a department for wage bills and pensions.
Key features of the 1995 structure were: (i) a primary focus on budget execution and control; (ii) a separation of the processes related to the recurrent and capital budgets, (iii) relatively little attention to budget planning, which remained a largely mechanistic and incremental process; and (iv) an allocation of resources (human and financial) that left many critical aspects of budgeting inadequately addressed.
Rapid developments of PFM in Senegal over the next 20 years – for example, the establishment of a medium-term budget framework, performance-based budgeting, partial devolution of spending responsibilities to line ministries, and enhanced parliamentary scrutiny of the budget – spurred the MoF to look again at the organization of its budget functions. A new legal framework[3] and an environment increasingly oriented toward performance were major incentives to create a new General Directorate of the Budget in April 2017.
A key feature of this reform was the creation of a department in charge of budget planning and preparation for both recurrent and capital expenditure. A basic objective was to increase the capacity of the budget directorate to undertake analytical work, to monitor line ministries’ spending, and to exert a stronger “challenge” role in the MoF’s budget negotiations with these ministries. The Minister therefore decided to organize the new Directorate around three sectoral themes (social, economic, and core state functions such as defense and internal security), under the supervision of a central policy unit. For instance, the social sector division includes a unit dedicated to education which assesses and discusses budgets and performance with the relevant line ministries and public agencies (e.g., universities). The central division is responsible for gathering and consolidating budgetary data, ensuring that the budget ceilings are fully respected, and preparing the annual budget law.
The reorganization made a complete separation of the functions of budget execution and budget preparation. A revamped department in charge of budget control has been established to monitor budget execution, and supervise a network of budget controllers located in the line ministries and regions. Further changes in the organization of the budget execution function can be expected as authority for spending is progressively devolved to the line ministries and other spending entities.
As many other countries have discovered, the organizational structure of finance ministries and the budget departments within these ministries needs to be kept under continuous review. This ensures that organizations are revitalized to manage new demands and pressures, and to adopt modern instruments of budgetary planning and other PFM innovations, as well as digitization and other IT developments. Such changes are necessary to ensure that fiscal rules and transparency requirements are enforced, and improvements made in the efficiency and effectiveness of public service delivery. The reorganization of the budget functions in Senegal, driven by structural PFM reforms, could be an inspiration for other reform-minded countries in the WAEMU and CEMAC regions[4], and elsewhere in Africa.
[1] Technical Assistance Advisor, Fiscal Affairs Department, IMF.
[2] In Senegal, the budget is executed by the MoF itself. Line ministries do not have any authority to make commitments on their own budget, to make payments, or to manage cash.
[3] An organic law transposing the 2009 regional WAEMU directives on public finance was passed in 2011.
[4] WAEMU = West African Economic and Monetary Union; CEMAC = Central African Economic and Monetary Community.
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