Project description

Title: Target-oriented management of public expenditure
Commissioned by: Bundesministerium für wirtschaftliche und Entwicklung (BMZ)
Country: Jordan
Lead executing agency: Ministry of Finance
Overall term: July 2000 to June 2009

Context

Improved budget planning and the target-oriented management of public expenditure are key elements of Jordan’s reform strategy. Reforms – whether they are in the education, water or health sectors – can only be systematically implemented if funds are used efficiently and transparently. Although Jordan has set expenditure limits in recent years and significantly improved budget planning, the Ministry of Finance still lacks the required capacities to manage public spending in line with national priorities. Due to a lack of budget classifications and shortfalls in accounting plans, information on the use of public funds cannot be adequately recorded and evaluated.

Objective

The project aims to further improve budget planning and make the management of public spending more efficient. The use of public funds is to be geared to a greater degree towards national development priorities and specific sectoral strategies. This will allow these strategies to be more easily implemented and monitored.

Approach

The project advises and trains professionals and managers at Jordan’s Ministry of Finance and will target this staff in specific sectoral ministries at a later stage. It helps modify budget classifications and accounting plans to allow the use of public funds to be planned and implemented in a target-oriented manner. To this end, the project implements new financial control information systems, helps clarify responsibilities, and supports the introduction of reliable methods for transferring data between the Ministry of Finance and other selected sectoral ministries.

Results achieved so far

The project builds on the experience of the preceding project in Jordan (Financial Management Reform) which achieved the following results:

• A new procedure has been drawn up for budget preparation. The key elements have been discussed and agreed with the budget division and the Prime Minister’s office, but it has not yet been formally adopted.
• Tax revenue estimates have been continually improved and the relevant estimation process is being mainstreamed.
• Binding expenditure limits for the overall budget, the ministries, and autonomous divisions were officially recorded in the 2004 and 2005 budget directives and were distributed. This step represents a qualitative improvement in Jordan’s fiscal policy and a move away from procedures practised over decades.

A baseline study is currently being conducted to supplement the information available on investment expenditure, and will be formally handed over to the partner side. This will allow more realistic expenditure limits to be identified.

Further information

• Ministry of Finance
  www.mof.gov.jo
• General Budget Department
  http://www.gbd.gov.jo
• United Nations Development Programme
  http://www.undp.org
• International Monetary Fund
  http://www.imf.org