PILLAR FOUR: POLICY BASED FISCAL STRATEGY AND BUDGETING
This pillar is about whether the fiscal strategy and the budget are prepared with due regard to government fiscal policies, strategic plans, and adequate macroeconomic and fiscal projections.
Policy-based fiscal strategy and budgeting processes enable the government to plan the mobilization and use of resources in line with its fiscal policy and strategy.
Macroeconomic forecasts and fiscal policies are vital components of aggregate fiscal discipline. They provide the foundation for decisions on the level and composition of revenue and expenditure needed to achieve the government’s fiscal objectives, and are the first step in making choices about how the required revenues should be obtained and how expenditure priorities can be managed within the limits that are imposed by fiscal constraints and responsible management. Strategic planning and fiscal projections provide a valuable mechanism for determining the most effective composition of revenue and expenditure for maximizing the achievement of complex and often conflicting sets of policy objectives.
Pillar IV has four indicators:
- PI-14. Macroeconomic and fiscal forecasting
- PI-15. Fiscal strategy
- PI-16. Medium term perspective in expenditure budgeting
- PI-17. Budget preparation process
- PI-18. Legislative scrutiny of budgets
Pillar Four: Policy Based Fiscal Strategy and Budgeting