Common Practices in Setting Expenditure Ceilings within National Budgets

Developing a national budget has always entailed a complex set of negotiations between national Government priorities, line ministry priorities, and a national funding envelope. This note explains how to introduce a medium term horizon into a gover...

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Bibliographic Details
Main Authors:	Dorotinsky, William, Watkins, Joanna
Format:	Brief
Language:	English en_US
Published:	World Bank, Washington, DC 2016
Subjects:	MONETARY POLICY ECONOMIC GROWTH REFORM PRIORITIES ANALYSIS OF CURRENT OPERATING COSTS POVERTY REDUCTION STRATEGIES ANNUAL BUDGET PROCESS BUDGET ESTIMATES MARGINAL COST STRATEGIC CHOICES BUDGET POLICIES POLITICIANS DEBT MANAGEMENT COST ESTIMATES CENTRAL BUDGET REVENUES FISCAL POLICY BUDGETARY RESOURCES FISCAL FORECASTS ECONOMIC STABILITY DECISION- MAKING PUBLIC FINANCIAL MANAGEMENT PUBLIC FORECASTS BUDGET BILL FISCAL FLEXIBILITY MEDIUM-TERM EXPENDITURE FRAMEWORK BUDGET SUBMISSIONS MANDATORY” SPENDING ANNUAL BUDGET PREPARATION EXPENDITURE FORECAST TOTAL EXPENDITURE FISCAL RULES BUDGET PASSAGE PERFORMANCE INDICATORS RESOURCE CONSTRAINTS SECTOR CEILING ALLOCATIONS ADMINISTRATIVE EXPENSES EXPENDITURE FRAMEWORK BUDGET ALLOCATION BUDGET DOCUMENTS GROSS NATIONAL PRODUCT DEBT FISCAL RISKS PUBLIC FINANCE BUDGET DEFICIT POLICY DECISIONS ECONOMIC FORECASTS BUDGET ENVELOPE BUDGET PLANNING DEBT SERVICE EXPENDITURE ENVELOPE BUDGET CONSTRAINT INTEREST PAYMENTS APPROPRIATIONS TRANSPARENCY MINISTERIAL CEILINGS BUDGET PROCESS PUBLIC EXPENDITURE FISCAL CONDITIONS CAPACITY CONSTRAINTS RUNNING COSTS CENTRAL GOVERNMENT GOVERNMENT EXPENDITURE COST OF EXPANSION OF PROJECTS MEDIUM TERM EXPENDITURE FRAMEWORK BUDGET STRUCTURE ALLOCATION OF FUNDS DISCRETIONARY APPROPRIATIONS FISCAL YEAR PRIVATE SECTOR NATIONAL BUDGET EXPENDITURE CEILINGS DEFICIT POLICY FISCAL STANCE PUBLIC DEBT SECTOR CEILING MACROECONOMIC VARIABLES GOVERNMENT DEBT DECISION- MAKING PROCESS HARD BUDGET CONSTRAINT RESOURCE ALLOCATION DECISIONS BUDGET REQUEST ANNUAL BUDGETS FISCAL MANAGEMENT ALLOCATION PERFORMANCE ASSESSMENT UNCERTAINTY STRATEGIC POLICY MANDATORY SPENDING EXPENDITURE CATEGORIES INVESTMENT EXPENDITURE FISCAL DISCIPLINE ANNUAL BUDGET CYCLE BUDGET PREPARATION BUDGETING PROCESS MEDIUM- TERM FRAMEWORK OUTCOMES BUDGET STRATEGY BUDGET YEAR MEDIUM TERM EXPENDITURE SECTORAL CEILINGS BUDGET RULES DEFICIT AGGREGATE REVENUE BUDGET CYCLE NATIONAL DEVELOPMENT PLAN PUBLIC REVENUES FINANCIAL MANAGEMENT IMPACT OF INFLATION CENTRAL GOVERNMENT SPENDING AGGREGATE SPENDING ANNUAL BUDGETING MEDIUM-TERM EXPENDITURE PUBLIC SECTOR GOVERNMENT SPENDING PROGRAMS RESOURCE ALLOCATION SERVICES BUDGET DECISIONS NATIONAL DEVELOPMENT EXPENDITURE MANAGEMENT SYSTEM BUDGET CHOICES INVESTMENT EXPENDITURES SOCIAL BENEFITS BUDGET DECISION BUDGET FORMULATION INFLATION SECTOR CEILINGS STRUCTURAL REFORM BUDGET AGGREGATES ENTITLEMENT SPENDING BUDGET POVERTY REDUCTION EARLY RETIREMENTS CENTRAL BANK REVENUE FORECAST REVENUE PROJECTIONS EFFICIENCY GAINS APPROPRIATION GOVERNMENT PRIORITIES BUDGET DEVELOPMENT BUDGET POLICY SOCIAL INSURANCE SERVICE CHARGES BUDGET DEPARTMENT EXPENDITURE MANAGEMENT PROGRAM PRIORITIES AGGREGATE SPENDING LIMIT ADMINISTRATIVE COSTS BUDGET PROPOSALS TAXES ENTITLEMENTS EXPENDITURE BUDGET AUTHORITY MINISTRY CEILINGS NATIONAL BUDGETS AGGREGATE CEILINGS BUDGET EXPENDITURE BUDGET REQUESTS FISCAL FRAMEWORK CAPITAL PROJECTS RESOURCE CEILING NATIONAL GOVERNMENT BUDGETS INDICATIVE SECTORAL LIMITS GOVERNMENT REVENUE EXPENDITURES EXPENDITURE POLICY MINISTRY BUDGETS EXPENDITURE CEILING AGGREGATE CEILING SECTORAL LIMITS STRATEGIC ALLOCATION OVERHEAD COSTS PUBLIC RESOURCES FISCAL AFFAIRS SUPPLEMENTAL BUDGETS TRANSFER PAYMENTS ANNUAL BUDGET FORWARD ESTIMATES ANNUAL BUDGET CALL CIRCULAR FISCAL PROJECTIONS PROGRAM ANALYSIS PUBLIC EXPENDITURE MANAGEMENT MINISTRY OF FINANCE DEBT PROJECTIONS PERFORMANCE INDICATOR REVENUE ESTIMATES FISCAL TRANSPARENCY BUDGET FRAMEWORK PRICE INDEX PERFORMANCE MANAGEMENT BUDGET ENFORCEMENT BUDGET FORMULATION PROCESS PROGRAM BUDGETING BUDGET ACCOUNTS TYPES OF EXPENDITURES
Online Access:	http://documents.worldbank.org/curated/en/687071467993187828/Common-practices-in-setting-expenditure-ceilings-within-national-budgets http://hdl.handle.net/10986/25491

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Summary:	Developing a national budget has always entailed a complex set of negotiations between national Government priorities, line ministry priorities, and a national funding envelope. This note explains how to introduce a medium term horizon into a government’s budgeting process, including the key steps involved. It provides guidance on setting aggregate and line ministry ceilings, reviewing experiences from countries with extensive experience of ceilings (for example, Finland, the Netherlands, Sweden, South Korea, Indonesia, Brazil, Australia, and Canada, among others), as well as those that have more recently adopted them. There is no one right way to set expenditure ceilings. Countries tailor expenditure ceilings to meet their specific needs, budget challenges, and capacity constraints. This note presents an iterative approach - starting from annual ceilings and gradually moving toward a medium-term expenditure framework - allowing for procedural, institutional, and organizational learning and adaptation along the way.

Common Practices in Setting Expenditure Ceilings within National Budgets

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