Study of issues of stabilization and reliability of the public finance management system; development of the mechanisms of responsibility of the subjects of budgetary planning for the eventual results of the federal funds expenditures

The project was completed in September 2006. Please find the abstract of the report on the project’s results here

The goal of this research is to analyze issues related to the establishment of stable and reliable system of management of expenditures of public funds, in particular under the conditions of reforming of intergovernmental fiscal relations. The project deliverables include: (i) workable mechanism of monitoring, analysis and audit of the activity of the subjects of budgetary planning (SBP). This mechanism will create prerequisites for increased responsibility of SBP for the use of public funds, and (ii) recommendations on improvement of draft federal law “On federal budget for 2007” in respect to intergovernmental fiscal relations.

The fiscal reform gradually brings about elements that allow managing public funds of the Russian Federation more effectively and efficiently. It concerns in particularly introduction of principles of performance budgeting in budget process. However these principles are currently used only in the process of drafting budget, and such important parts of the budget process as budget execution and reporting on budget execution are left out of the fiscal reform. In this situation none can guarantee that SBP will realize their responsibility for the output and outcomes of the expenditures of the federal budget. This, in turn, questions balanced and reliability of the system of public finance management per se, and especially in the framework of intergovernmental fiscal relations reform.

The project will contribute to solution of these issues with the following deliverables:

Analysis of other counties’ experience in monitoring, analysis and audit of the results of activity of managerial bodies of the economic sectors,

Analysis of the intergovernmental fiscal reform and of the issue of balanced consolidated budgets of the subjects of the Russian Federation under conditions of delineation of responsibilities,

Analysis of the evolution of intergovernmental fiscal relations and balanced consolidated budgets of the regions in 2006,

Mechanisms of calculation of the results of activity of SBP in the framework of budget process, encouragements and sanctions to the managers of SBP according to these results.

Suggestions on using these mechanisms in the draft federal budget-2007