The emergence of the Parliamentary Budget Office (PBO) concept in recent times has seen more Parliaments from developing countries playing a more active role in the budgeting process of their countries.

This observation emerged during a discussion about “PBO challenges and experiences in support for fiscal oversight” on the second day of the 2016 African Parliamentary Budget Office Conference in Cape Town.

Mr Ayuba Silas, the Deputy Director of Nigeria’s National Assembly Budget and Research Office, told the conference that legislatures worldwide were becoming more assertive, tending towards a transformative legislature with “the result that they are reclaiming their power of the purse and are playing a more active role in the budget process”.

“This is as a result of the fact that in many developing and transitional countries, parliaments are moving in the direction of greater budget activism occasioned by democratisation and constitutional reforms, thereby creating opportunities for legislatures to redefine contribution to public budgeting.

“However, since national budgets often tend to be large, complex and difficult to understand by parliamentarians, given their apparent lack of budgetary expertise, the need therefore to build budget expertise within the Parliament cannot be overemphasised. It was therefore against this background that some parliaments deemed it fit and proper to establish their own Budget Offices to assist them, among other things, in fiscal oversight of the executive,” he said.

Mr Silas said PBOs are specialised units within the legislative branch that are supposed to produce objective budgetary, fiscal and programmatic information for the legislators.

The case for a non-partisan Budget Office rests on the assumption that legislatures need a source of information and analysis independent from the executive, to effectively execute its legislative and oversight functions.

“Also, there is a significant potential for these units (PBOs) to assist Members of Parliament in understanding the budget process, the broad fiscal challenges facing government and expenditure control and budgetary trade-offs that affect present and future spending,” said Mr Silas.

Dr Mostafa Askari, the Assistant Parliamentary Budget Officer in Canada, said there has been a significant growth in the number of PBOs in the past eight to nine years. PBOs provide objective analysis directly to Parliament about the state of the nation’s finances and trends in the national economy 
Mr Jomo Nyambi, the National Council of Provinces’ House Chairperson for Committees and Oversight, said the role of the PBOs in the operations of Parliament had to be clearly defined.

“We need to clearly define the role and purpose of these important institutions, there are misconceptions that PBOs duplicate the work of the Treasury or Finance departments and such will lead to confusion and serious challenges,” said Mr Nyambi.

Parliamentary Budget Offices (PBOs) from seven African countries as well as those from the United Kingdom, Australia and Canada are meeting to share best practices and experiences on how to strengthen oversight on good governance and financial management.

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PBOs in developing countries ‘should help in addressing economic inequality’

The Parliamentary Budget Office’s (PBO’s) International Conference was addressed by Mr Phil Bowen from the Australian Parliamentary Budget Office on Capacity Requirements for Parliamentary Budget Offices.

He started off by explaining the mandate of their PBO. “Our mandate is to inform Parliament by providing independent and non-partisan analysis of the budget cycle, fiscal policy and the financial implications of policies.”

And most of all, they always maintain its independent statutory role as a means to uphold its mandate of leveling the playing fields by ensuring that there’s equitable sharing of budget information and budget transparency.

“Our role is to provide a more level playing field for non-governmental parties and independent parliamentarians – and to improve election costings, transparency of budget information and fiscal policy setting.”

According to him, there is now a more level playing field in the budget space and transparency than has been the case before. “The playing field is more level for all parliamentarians than before. There is also a strong demand for Parliamentary Budget Office’s costings and budget analysis. And election costings are more accurate and parties have confidence to release costed election platforms prior to polling day. As a result, budget transparency has been improved.”

In his presentation Dr Seeraj Mohamed from the South African Parliamentary Budget Office, gave perspectives on the multifaceted demands on PBOs in developing countries that ultimately influence the type of capacity required. This demand, according to him, juxtaposes the fiscal policy of developing countries in relation to the New Economic Consensus (NEC). And he asked what can fiscal policy do? And what has changed with regard to how we see fiscal policy?

He stated: “If the NEC accepts fiscal policy, and can accept employment and output, then it must accept that it affects monetary policy too. So, fiscal and monetary policies have to be closely coordinated. The idea, based on the Ricardian Equivalent Theory that income effects due to fiscal policy will not cause changes in behaviour, has been discounted. Fiscal policy is no longer viewed as ineffective.”

He said in developing countries the issues of fiscal policy in the context of a developmental role of the state add a further question: have PBOs departed from the conventional approaches to fiscal policy? According to him, the role of PBOs in this context “would be to work within current frameworks to support frugal approaches to spending and fiscal discipline. With the interpretation of that role, many PBOs are required to be considerate of inequality and poverty, including race, ethnic, gender and other related concerns”.

To me, the change now faced by PBOs in developing countries is to balance the imperatives of fiscal policy, on the one hand, and economic development, on the other. “There are many developmental pressures on government spending that could lead to growing budget deficits and increased public debt to GDP (gross domestic product) ratios. There is a possibility that this spending may have supply side and demand side impacts on employment and output growth. Therefore, these concerns may affect costing and other analyses PBOs make over a medium-term budget cycle and for longer periods.”

The work that PBOs do in developing countries should reflect the work of legislatures deeply concerned with economic development and the need to address inequality, he said. “These requirements are related to the conventionally conceived role of PBOs as institutions that support fiscal discipline. However, they should also acknowledge the changing views on fiscal policy development in the NEC and the day-to-day work of PBOs in analysing, costing and assessing the gamut of existing and proposed spending related to economic development.”

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Closing Remarks by the Chairperson of the NCOP, Hon. T R Modise, at the Parliamentary Budget Office Conference, 18 August 2016

We have reached the end of the First Parliamentary Budget Office Conference under the theme – “the role of African Parliaments Fiscal oversight: contribution to the African development agenda”. My task is simple as I have been requested to provide some closing remarks. We have had over the past two days lively and stimulating debates.

Our day to day operations will be guided by the will to ensure that our development in Africa is driven by the people and relies on its people, especially its women and youth, and caring for children. We further aspire towards a continent with a strong cultural identity, common heritage, shared values and ethics. Together, based on the ideals of Pan-Africanism and the vision of Africa’s Renaissance we will turn our continent into a strong, united and influential global player and partner.

This is first conference of African PBOs, and amongst the first good example of institutions and cooperation. We are building for transparency and accountability to promote good governance and economic development. It is not enough to call for a strong legislative sector in South Africa or in the continent without addressing the reason for this need; it is not enough to identify a need – it is important to understand how the need must be addressed and how to sustain and improve whatever mechanism we may develop to address this need. It is good to talk about the reduction of poverty and inequality; it is even better when we build institutions that can secure the future.

We in the legislature supported the creation of parliamentary budget offices to provide us with independent, objective and professional advice and analysis on fiscal matters, particularly national budgets and government spending.

We must not be able to hold the executive to account but fail to self- assess our own fiscal and general administrative and policy decisions. When we say to our citizen “we hold the purse-strings” we must be also be trusted to spend wisely.

Our expectations of the capacity and support of the PBO’s go well beyond the testing of the validity of the GDP and the revenue predictions and fiscal spending implications. We require support with reading budgets. We want information and advice on how fiscal decisions relate building democracy and economic development in Africa and all its countries.

South Africa has a national plan for the first time in her history. The NDP is an attempt to look at development uniformly across the provinces. The plan identifies the challenges of education, health, shelter, safety, decent work and inclusive growth path. It sets goals for infrastructure development, rural development and land reform. It call for reform and improvement in local government. The NDP is alive to issues of gender equality, racial disparities and environmentally sustainable development.

We have asked our PBO to help assess the progress with regard to NDP outcomes and how well government is planning/or expending. Early as it is, the patterns are interesting and can be used to guide future spending.

South Africa started off by trying the welfare of the majority through the provision of shelter, water, electricity, sanitation, education, primary health and social grants. This has made an important impact, the impact of global recession and the slow recovery have had serious and negative impact on our country – reversing the gender, racial and the urban/rural divides. This is why we take agenda 20163 seriously – it talks to our vision of a people driven, inclusive growth and sustainable development towards an integrated African continent built on our shared values, common heritage and strong cultural identity.

Our job as public representatives is to balance the great needs in our society with the available resources. These resources include the revenue as governments can raise and the debts that can be incurred. There are many different views on the balance. As public representatives we may be called upon to make a judgement based on our specific circumstances.

The important thing is that as nations we must agree on the “balances” and we work to ensure that we are accountable for every cent and that we stretch every cent as for as we can go in the interest of the people.

The task of the PBO is to help us with the process of prioritising and monitoring and evaluating. We must therefore establish and resource PBO’s to ensure that structures and processes are permanent and entrenched.

To our colleagues in Africa and across the world. We say we are together tied together building strong institutions for stability, peace and democracy threaded together by good governances.

We fully support the development of a network for African PBO’s to learn from one another and to support one another. The African PBO network will hold its next meeting before the end of 2016.

Brothers and sisters thank you very much your active participation in this conference.

I thank you.