The budget layout for central government departments in 2004 has
been launched. According to the Ministry of Finance, central
government departments are drafting budgets for subordinate
second-grade departments and also its departmental annual
budget.
The ministry expects only a minor increase of central financial
revenue in 2004 and the imbalance of revenue and expenditure
remains an acute problem. Thus, the budget authority has been
committed to a "strict and prudent" principle in drafting budgets
for central government departments.
The Ministry of Finance hopes that not any new project will be
funded in principle except the projects already set by the State
Council, China's cabinet. The ministry will also select some
prominent funding projects to "follow up and assess
cost-efficiency" in a bid to establish a budget project
cost-efficiency assessment index system.
The year 2004 will hopefully be a watershed to China's central
budgeting. The ministry will work to change the pattern of
"highlighting distribution but ignoring management", improve basic
expenditure budget for fixed number of personnel and fixed amounts
and gradually cover government property management in budget
management.
More stand-by funds likely
In the budget plan for central government departments in 2004,
what deserves attention is the high probability of a 2 percent
increase of stand-by funds for the departments so as to offset
possible temporary adjustment in the budget implementation
process.
According to the established rules on departmental stand-by
funds, the pilot units with a fixed number of personnel and a fixed
amount of budgets can set their stand-by funds at a ceiling of 3
percent of public funds. Starting in 2004, such funds can be
arranged. Meanwhile, stand-by funds set according to classes,
grades and rules should be singled out and explained in the
replying document.
According to financing officials, the reason to raise stand-by
funds is to "offer more flexibility in departmental budgets" so as
to cover sporadic, temporary expenditure. Thus, the ratio of
readjusting departmental budgets could be effectively lowered and
the department could function better.
"During the peak SARS period, we received a large sum of
applications to purchase respiratory machines. And each case was so
urgent that we had no time to review it before granting. I was
wondering then that why we had no idea of the use and effectiveness
of the substantial funds earmarked for medical devices
procurement," said one official of the Ministry of Finance. "We
must address the problem of 'highlighting allocation but ignoring
management."
Follow up budget projects and assess
cost-effectiveness
Sources form the Ministry of Finance said that the ministry
would scan its "project database" in 2004 and redefine projects of
common departments and institutes. Some basic expenditure projects
unqualified as project budget expenditure will be excluded in the
database. The ministry will review with a unified standard all key
state projects, and special operation projects listed in
departmental budgets. Some projects that are bound to be carried on
to the next year will also be reviewed after consulting with the
department.
Traditionally, the number of projects and the sum of capital
listed in budget draft applications to the Ministry of Finance are
"too much to be fed up with current financial resources", according
to financing officials.
As a result, the ministry requires that all departments should
select, research, preview and list in a rational sequence their
application projects in terms of urgency and priority. The ministry
will first fund those urgent, feasible projects in line with the
year's financial situation. Special operation projects and those
over-year projects will then be arranged while other common
projects of central government departments follow suit according to
the "project sequences".
Additionally, departments are also required to attach a
cost-efficiency report from 2003-2004 over-year long budget
projects as an important reference to apply for the 2004 budget.
The ministry will also select some prominent funding projects to
"follow up and assess cost-efficiency" in a bid to establish a
budget project cost-efficiency assessment index system.
(China.org.cn by Alex Xu, September 17, 2003)