Anambra and the path to budget reforms

As part of ongoing public financial management reform in the country, states are of necessity required to adopt a medium-term budget system process that is informed by rolling medium-term budgetary/expenditure framework as well as medium-term sector strategies. The budget reform process, among other things, is intended to encourage sub-nationals to move from yearly to medium-term budgets so as to have long term views – thereby allowing governments to use budget as an instrument to achieve developmental goals.

The medium term budget system (usually 3-year plan) is a well-documented policy framework in the form of a State Development/Strategy Plan that is amenable to regular updates. It has an impact on three levels of public sector outcomes, including aggregate fiscal discipline, resource allocation and use based on strategies priorities, and efficiency and effectiveness of programmes. Hitherto, states majorly formulate and execute yearly budgets – an annual activity that enables governments to implement with a view to achieving its goals stated in the policy documents for a particular fiscal year.

In this context, Anambra has since taken the bold step to align itself with the mandate; and even more so that the State under the administration of His Excellency, Chief Willie Obiano, has demonstrated resolve in promoting accountability and transparency in the utilization of public financial and human resources. It had in April 2017 engaged leading audit and assurance services firm, PricewaterhouseCoopers (PwC), under the auspices of the World Bank-assisted State and Local Governance Reform (ANSLOGOR) Project with a terms of reference that seeks to provide assistance to the State in supporting systems that will improve its fiscal policy objectives.

The scope of work covers tasks that include the formulation and implementation of a Medium Term Budgeting/Expenditure Framework (MTEF) and Multi-Year Budgeting Framework (MYBF) in ten focus ministries in the State. Upon completion of budget reforms for the selected Ministries, Departments and Agencies (MDAs), the firm will further carry out an assessment of skills gap in budgeting, development of sector strategies and economic management generally in other four MDAs, including the Ministry of Economic Planning, Budget and Development Partners; the Ministry of Finance; the Office of the Accountant General; and the Anambra State Internal Revenue Service.

Last week, the State Ministry of Economic Planning, Budget and Development Partners, held a 2-day training programme on budget review and public financial management reforms for Commissioners, Permanent Secretaries and other stakeholders in these focus ministries. The workshop facilitated by PwC was aimed at providing participants with an overview and introduction to the World Bank-assisted State and Local Governance Reform (ANSLOGOR) Budget Reform project, while serving as a veritable pedestal to present the implementation method of the project for discussions and comments.

Suffice it to say that the ongoing initiatives targeted at reforming the Anambra State public financial management system are premised on creating a coherent and transparent budget framework focused on channeling resources to fund the state’s developmental needs in an efficient and transparent manner, without compromising macroeconomic stability.

The Medium-Term Expenditure Framework (MTEF) approach to planning government expenditure will play a pivotal role in ensuring the successful implementation of the reform process. This framework will link the annual spending of the MDAs with Government’s long-term strategies as articulated under the State Development Plan, including the State Economic Blueprint.

These broad components will be involved – a Medium Term Fiscal Framework that will project likely availability of resources over a 3-year horizon (which is documented in a Fiscal Strategy Paper), a Budget Policy Statement (BPS) which sets out policy goals that will guide the government’s budget decisions and priorities, and a series of Medium Term Sector Strategies (MTSS) that identify goals and objectives for the key sectors of Government and translate these into affordable fully-costed and well-defined set of initiatives over the same period.

The MTSS, a component of the Medium-Term Expenditure Framework represents a crucial link in the process of translating the State long-term sustainable economic growth strategies as articulated in the development plan into the spending reality of the annual budget. Heretofore, in order to ensure the effective implementation of its aspirations with respect to the Agricultural sector plans, the State’s Development Plan (Y2014-2018) was aligned with the Medium Term Sector Strategies (MTSS) in November 2014.

The Y2015-2017 MTSS document articulated the interventions and strategies planned for the MTSS period viz a viz the Ministry’s budgetary allocations and other financing sources. These in congruence with clear agriculture plans and high-level policy directions, informed the development of feasible agricultural programmes and projects experienced in the State. Going forward, the ongoing budget reform process will establish frameworks and basic infrastructure for the introduction of MTSS/MTEF in the other MDAs.

It is noteworthy that the sustained commitment of the state government to the budget reforms will enhance fiscal performance, and indeed assist in the realization of the State’s goals geared towards the attainment of excellence in service delivery to the citizenry.

Mark Okoye II

Mark Okoye II is Anambra State Commissioner for Economic Planning, Budget and Development Partners.