Contents

Contents......................................................................................................................................1
Introduction................................................................................................................................2
Purpose of Budget Call Circulars...............................................................................................3
Discussion of the guidance offered by the BCC Number 2 of 2014..........................................4
Issuing of Instructions/Call Circulars.....................................................................................4
Economic and fiscal outlook..................................................................................................5
A guideline amount which may not be exceeded/budget ceiling...........................................6
Form and content of budget estimates...................................................................................7
A general priority indication for expenditure by the various departments.............................7
Conclusion..................................................................................................................................8
References................................................................................................................................10

Introduction
Call circulars are the official notices that are issued by the Ministry of Finance or similar
agencies towards the commencement of each budget cycle. According to UNIFEMs
guidance series (2007), the purpose of the circular is to instruct government agencies how
they must submit their demands for budgets for the coming year. In some countries the
circular may have another name, such as budget guidelines or Treasury guidelines, but the
purpose is basically the same. The call circular goes to all spending agencies (ministries,
departments, other government-funded institutions). It usually tells each agency what its
budget ceiling for the next year is i.e. how much the Ministry of Finance or Planning
Commission is planning to allocate to that agency. In some cases the call circular describes
government priorities that should be addressed in the coming years allocations.

The budget preparation call circular is triggered by the issuance of the Budget Call Circular
(BCC). According to the 2011 Guidelines for Chief Budget Managers in Rwanda, the BCC
provides the total indicative resource envelope derived from the macro-fiscal framework
consistent with the broad policy objectives. The indicative ceilings are issued at high level at
line ministries, provinces and other high level government institutions. This is to allow
coordination and prioritization of activities at the high level of Government programmes. The
parent institutions (Ministries and other high level institutions) that have been allocated
ceilings are required to proximately undertake consultative processes with all affiliated
agencies to agree on individual agency ceilings that shall be the basis for the detailed budget
estimates to be entered in the budget system.

This paper will evaluate the content of the Treasury Budget Call Circular Number 2 of 2014
(BCC) issued by the Ministry of Finance and Economic Development in Zimbabwe. It will
discuss whether it offered sufficiently clear advice on how line ministries were to propose
their expenditures. A general framework for the purpose of BCCs will be utilised to analyse
the BCC number 2 of 2014.

Purpose of Budget Call Circulars

The Lagos State Budget Manual (2010) defines the purpose of BCCs as the provision, to
government Ministries, Departments and Agencies (MDAs), of guidelines for the preparation
of budgets, instructions for completion of requisite budget forms and a timetable for the
compilation and submission of the budget proposals. An appropriately developed BCC
includes various critical elements which ensure an effective budgetary process. A BCC should
provide an economic and fiscal outlook of the state for the planned budgetary period. This
will situate the budget in the broader economic context.

Furthermore, it should furnish MDAs with spending limits with explicit planning and
contingency reserves. This should include sector spending limits as well as input spending
boundary definitions. MDAs need to know the states priorities therefore this are articulated
in the budget call circular. For administrative ease, the BCC should provide directions on the
process for admitting projects and programmes into the medium-term sector strategies.
Moreover, the form and content of budget estimates.

Discussion of the guidance offered by the BCC Number 2 of 2014

This section will discuss and offer an analysis of the BCC Number 2 of 2014 given the above
identified purpose and criteria of budget call circulars.
Issuing of Instructions/Call Circulars
A BCC should provide a timetable for submission of departmental draft budgets. Ekeocha
(2012) by citing Galston (2012) identifies the capacity to make timely and utilitarian fiscal
choices as one of the guarantees of sound governance. He again referred to Galston (2012)
who explained that timely budget interventions affect public trust and confidence in the
institutions and processes of self-government in democracies. Late budgetary submissions
have negative implications for the functioning of the economy as it interferes with the aspects
of the free market that runs enterprises. Ekeocha wrote that the budget process in Nigeria was
the cause for late submission and poor budget performance.

The BCC number 2 of 2014 had a timeline which is shown below. A critic writing in the
newspaper, The Independent argued that the 2015 budget statement announced by Finance
minister Patrick Chinamasa last week was disappointing. The budget reflects the lack of
engagement and consultation with key stakeholders as it failed to address some of the key
challenges facing the economy. The argument was that it failed to inspire confidence and
provide much-needed support to kick-start the economy.

This inadequate consultation may have been due to limited timeframe (one month) for
consultations. Given the current poor economic performance of Zimbabwe and poor
implementation of the 2014 budget, one would have thought that more time would be spend

on consultations with the various stakeholders. While the timeframe is provided, it is not
sufficient to tackle the current challenges which require capital investments. The World Bank
in its Budgeting and Budgetary Institutions publication advises that in African developing
countries, seven or eight months is a more appropriate budget preparation period, from issue
of the budget circular to legislative approval.

1
2

Activity
Issuance of Call Circular
Submission of Expenditure Proposal

Due Date
17 October 2014
31 October 2014

by Line Ministries
Budget Consultations with

20 October-21 November 2014

4
5

stakeholders
Budget Hearings with Line Ministries
Presentation of the 2015 Budget to

3-19 November 2014

27 November 2014

Parliament
Source: Treasury Budget Call Circular Number 2 of 2014
Economic and fiscal outlook
The BCC projected an economic growth of 3.2% with key drivers being agriculture (7%);
mining (3.5%) and construction (2.9%). This is a downgrade below the Zim Asset target of
6% and sub-Saharan Africa growth of 5.8%. An opinion writer in the Independent argued that
this is unsatisfactory especially when considering the potential for growth for Zimbabwe.
While it is debatable, given the macro-economic framework prevailing, that the 3.2% is
achievable the opinion writer thinks the government has to make the necessary policy
adjustments to realise even more growth. The BCC assumes policy clarity and a predictable
investment climate which are not supported by politicians. The Newsday, a daily newspaper
in Zimbabwe, reported that one of the vice presidents was threatening the white community
with intensified land grabs in January 2015.

A guideline amount which may not be exceeded/budget ceiling

Section 5.17 gives a Capital Budget ceiling of US$340 million while Section 6.1 caps the
expenditure proposals for line ministries at US$5 770 000. There is no scope for redirecting
any amount from one expenditure head to another. Furthermore, priority was to be accorded
to programmes and projects for which contractual obligations already existed. While the BCC
provided a ceiling for the expenditure proposals for each of the line ministries, it is difficult
to follow on this from merely reading the budget. The budget was presented rather in cluster
format in line with the ZIMASSET which is the Zimbabwe Agenda for Sustainable SocioEconomic Transformation.

While evaluating the proposed budget for 2015 in the National Assembly, chairperson for the
parliamentary committee on Health, Ruth Labode, challenged Chinamasa to defend why his
budget fell short of the Southern African Development Committee 15% specified
apportionment to the health sector, as it was only allocated 6,8% of the national budget. The
budget falls short of the Abuja declaration which this state agreed to and as committee we
feel that the ministry of Health has been downgraded from being among the top three to
number five, we dont know why, considering its importance, The Zim Mail quotes her as
having said. This evidence results in inconsistencies between the spoken policy priorities of
the government and its policy implementation.

Form and content of budget estimates

Accounting officers administering funds in terms of the Public Finance Management Act are
required to submit their budgets to Treasury for approval. Annex 1 of the BCC provides the
format of presentation for the expenditure proposals. It clearly stipulates that section A of the
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expenditure proposals should summarise the Vote overview, key result areas and priorities in
alignment with ZIMASSET. It further advises that part B should encompass a summary of
revised estimates for 2014, proposed estimates for 2015 and indicative estimates for 2016-17,
the format for which is provided in schedule VI. For capital expenditure, a standardised
proposal submission form was given on Schedule III. This should suffice though this is a line
budgeting method.

A general priority indication for expenditure by the various departments

Furthermore, priority was to be accorded to programmes and projects for which contractual
obligations already existed. Efficiency is called for in the collection and retention of income
and its subsequent deployment. An estimated 81% (poised to reach 92%) of the US$4,1bn
budget is allocated to recurrent expenditure meaning very little for capital expenditure. In
fact, the budget was revised downwards to US$3.5 bn. This is very worrying since it is
inconsistent with the four cluster of ZIMASSET which rely on growth. Sustainable growth
can only come through long-term capital investments.

Government needs to drastically curtail consumptive expenditure such as wages and divert
funds to capital development. There have been reports of ghost workers and duplication of
duties within the civil service. Capital expenditure will boost economic activity and create
more jobs. It is sad noting that capital spending to the end of October 2014 was US$268
million against a budget of US$401m as reported by The Source website.

Conclusion
Call circulars are official notices issued by Ministry of Finance near beginning of each budget
cycle. They are meant to instruct government ministries, departments and agencies on how to
submit demands for the coming financial year. BCCs typically specify to each agency a
budget ceiling and provide other instructions for the construct and format the draft budget.
In addition, BCCs advise on how to present motivations for the expenditure proposals.

This inadequate consultation may have been due to limited timeframe (one month) for
consultations. Given the current poor economic performance of Zimbabwe and poor
implementation of the 2014 budget, one would have thought that more time would be spend
on consultations with the various stakeholders. While the timeframe is provided, it is not
sufficient to tackle the current challenges which require capital investments. This evidence
results in inconsistencies between the spoken policy priorities of the government and its
policy implementation.

Government needs to drastically curtail consumptive expenditure such as wages and divert
funds to capital development. There have been reports of ghost workers and duplication of
duties within the civil service. Capital expenditure will boost economic activity and create
more jobs. The absence of a firm expenditure restraint at the start of the budget process,
which forces early decisions, will invariably result in dysfunctional practices in budgeting.
This restrictive stance to line ministries from the start of budget preparation favours a shift
from a wishes mentality to an availability mentality. This is what Mr Biti, the former
Finance minister referred to when he said that the government should eat what it kills.

Moreover, to translate strategic choices and policies into programs, line ministries require
clear indications of available resources. Forecasting of revenues therefore has to be realistic.
It saps confidence away when a budget has to be revised downwards a few weeks after its
presentation as happened in this case. Finally, a budget ceiling increases the de facto authority
and autonomy of the line ministries, weakening the prerogative of the ministry of finance to a
role in defining the internal configuration of the line ministries budgets.

Overall, the Budget Call Circular Number 2 of 2014 gave a very tight timeline which
rendered consultation ineffective, the expenditure ceilings it offered were not in congruency
with the stated priorities of development while the revenue forecasts were too ambitious and
erroneous requiring a downwards variation. It is only the administrative guidelines which are
not really of material consequence to policy success that are commendable in this BCC. The
budgetary process in Zimbabwe should focus less on political bargaining and more on
economic effectiveness.

References
Ekeocha, Patterson Chukwuemeka (2012) An Analysis of the Federal Budgeting Process in
Nigeria: Implications for Institutional Reforms for Achieving Timeliness. Developing
Country Studies, Vol 2, No.6, 2012
Gender Responsive Budgeting Program: Guidance sheet series - No. 1 January 2007
http://www.theindependent.co.zw/2014/12/05/zimbabwe-stuck-holding-pattern/ Accessed 02
March 2015
http://www.thezimmail.co.zw/2014/12/17/parly-tears-into-2015-national-budget/ Accessed 02
March 2015
https://www.newsday.co.zw/2015/01/19/land-grab-intensify-mnangagwa/ Accessed 02 March
2015
Lagos State Government Budget Manual, 2010. Ministry of Economic Planning and Budget
Ministry of Finance and Economic Planning (MINECOFIN), Government of Rwanda
Simplified Public Financial guidelines for Chief Budget Managers July 2011
Shar A. (2007). (Editor) Budgeting and Budgetary Institutions: Public Sector Governance and
Accountability Series. The International Bank for Reconstruction and Development /
The World Bank
www.source.co.zw/2014/11/2015-budget-highlights/ Accessed 02 March 2015

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