PI-3. Revenue outturn
Description
This indicator measures the change in revenue between the original approved budget and end-of-year outturn. It contains two dimensions and uses the M2 (AV) method for aggregating dimension scores.
Dimensions and scoring
| Score | Minimum requirements for scores |
|---|---|
3.1. Aggregate revenue outturn |
|
| A | Actual revenue was between 97% and 106% of budgeted revenue in at least two of the last three years. |
| B | Actual revenue was between 94% and 112% of budgeted revenue in at least two of the last three years. |
| C | Actual revenue was between 92% and 116% of budgeted revenue in at least two of the last three years. |
| D | Performance is less than required for a C score. |
3.2. Revenue composition outturn |
|
| A | Variance in revenue composition was less than 5% in two of the last three years. |
| B | Variance in revenue composition was less than 10% in two of the last three years. |
| C | Variance in revenue composition was less than 15% in two of the last three years. |
| D | Performance is less than required for a C score. |
Coverage
BCG.
Time period
Last three completed fiscal years.
Measurement guidance
Accurate revenue forecasts are a key input to the preparation of a credible budget. Revenues allow the government to finance expenditures and deliver services to its citizens. Overly optimistic revenue forecasts can lead to unjustifiably large expenditure allocations that will eventually require either a potentially disruptive in-year reduction in spending or an unplanned increase in borrowing to sustain the spending level. On the other hand, undue pessimism in the forecast can result in the proceeds of an overrealization of revenue being used for spending that has not been subjected to the scrutiny of the budget process. As the consequences of revenue underrealization may be more severe, especially in the short term, the criteria used to score this indicator allow comparatively more flexibility when assessing an overrealization
The indicator focuses on both domestic and external revenue, which comprises taxes, social contributions, grants, and other revenues including those from natural resources, which may include transfers from a revenue stabilization fund or a sovereign wealth fund where these are included in the budget. External financing through borrowing is not included in the assessment of this indicator. This means that grants from development partners will be included in the revenue data used for the indicator rating, but borrowing on concessionary terms from development partners will not.
Revenue outturn can deviate from the originally approved budget for reasons unrelated to the accuracy of forecasts, such as a major macroeconomic shock. For this reason, the scoring calibration allows for one outlier year to be excluded. The focus is on significant deviations from the forecast that occur in two or more of the three years covered by the assessment.
