State Budget definition and steps

"The state budget fiscal program, which reflects the government's

policies different, frame which includes making multiple selection
policies and objectives which the government wants to achieve, as well
as the choice of means, and programs that lead to achieving these
goals; therefore close the budget provides information on decisions
taken by the government for the distribution of resources among
competing uses to satisfy the needs of the public.
The standard steps of the budgetary process is made up mainly 4
steps
A. Formulation: by the executive authority through adding up all budget
estimates from underlying departments, units and agencies, and the
ministry of treasury plays the role of reviewing, modifying and adding
up these separate budgets into big budget project. The government is
the party implementing the programs accordingly they should be
responsible for making financial estimates .The head of government
passes the final general draft to the parliament for adoption and
enactment providing the project with the power of law
B. Enactment and adoption: the parliament has the duty of reviewing the
proposed budget, each subcommittee under the umbrella of one
committee reviews part of the budget, listen to governmental
justification of the budget items. The authority can reject the whole
project, modify it or approves the appropriation bill using its legislative

power in changing the budget project into executable matter .Its also
important to state that this isnt only the role of the parliament, it also
carries out final step in the budgetary process which is auditing the
execution carried out by the government.
C. Implementation :Each unit that participated in preparing the budget
draft is now responsible to turn the budget into reality and execute the
items of expenditures and revenues collections listed within the
approved appropriation bill
D. Audit and Control Made by the legislative authority to make sure
governmental bodies had made the expenditures according to the
appropriation bill

The Egyptian Budget preparation

The following describes the budgeting process, from estimating
revenues to the passage of annual budget legislation.
Functions of government institutions, government authorities begin
their analyses to develop the budget for the following year. At the
same time, the Finance Ministry evaluates the results of programs
included in the prior years budget and analyzes the performance of
the public institutions involved. This information is used to define an
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initial budgetary framework that includes expenses that are required

by law or by contract, and the continued financing of programs that
have been evaluated as successful.

Once priorities have been determined, the different public institutions

design and submit their plans to expand successful programs or to
create new programs to the Finance Ministry. The proposals must
compete for financing from a common biddable fund. After the
ministry have conducted a comprehensive process of technical analysis
and discussion the finance Ministry concludes preparation of the
budget proposal, which is then sent by the prime minister sent to
council of people.
After the finance ministers address on the state of fiscal budget,
Council of people begins to analyze the budget proposals of the
executive for the different public institutions. To accomplish this, a
special mixed budget commission is formed. The commission is divided
into sub-committees, each of which analyzes the budget proposals of a
different ministry.
During passage of the legislation, Council of people may effect
modifications to the original bill through amendments or votes.
However, Congress only has the power to decrease expenditures for
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the items proposed by the executive in the budget bill. After that, the
president of the republic signs the budget into law.
On July 1 of the following year the budget law goes into effect, and
activities related to carrying out the approved budget projects begins.
The council of people is the authority that audits the implementation of
the government according to the appropriation bill

Egyptian Budget from 2009 to 2014

The Egyptian budget is an itemized budget (traditional) and had

showed deficit within the years 2009-2014 ,deficit is absorbed using
borrowing as shown below

Egypt's state Budget figures in details

2009

Expenses
Wages and Compensation of

86134.6

employees
Purchases of Goods and Services
Interests
Social Benefits
Other Expenditures
Purchase of Non-Financial Assets

27099.1
71065.8
73386.9
28058.2
33392.6

Investments)
Acquisition of Domestic and

3561.7

Foreign Financial Assets

Domestic and Foreign Loans

2832.1

repayment
Total expenses
Revenues
Taxes
Grants
Other Revenues
Total Revenues
Deficit

319137.2
230565809000
9479986000
88642109000
339906732000
94880.3

2010

Expenses
Wages and Compensation of
employees
Purchases of Goods and
Services
Interests
Social Benefits
Other Expenditures
Purchase of Non-Financial
Assets Investments)
Acquisition of Domestic and
Foreign Financial Assets
Domestic and Foreign Loans
repayment
Total expenses
Revenues
Taxes
Grants
Other Revenues
Lending proceeds and Sales
of Financial Assets and other
Total Revenues
Deficit

56682
16349
105949
153229
30405
25298
4249
98521
490684
230565
9479
88642
11218
339906
150777

2011/2012
Expenses
Wages and Compensation of
employees
Purchases of Goods and
Services
Interests
Social Benefits
Other Expenditures
Purchase of Non-Financial
Assets Investments)
Acquisition of Domestic and
Foreign Financial Assets
Total expenses
Revenues
Taxes
Grants
Other Revenues
Total Revenues
Deficit

2012/2013
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110,497
29,255
100,800
154,454
35,662
45,661
6.633
476,290
232,232
9,974
107,441
349,647
126,643

Expenses
Wages and Compensation of
employees
Purchases of Goods and
Services
Interests
Social Benefits
Other Expenditures
Purchase of Non-Financial
Assets Investments)
Net Acquisition of Domestic
and Foreign Financial Assets
Total expenses
Revenues
Taxes
Grants
Other Revenues
Total Revenues
Deficit

136,627
28,675
133,612
145,838
33,325
55,618
5313
533,784
266,905
9021
117,549
393,475
134,995

2013

Expenses
Wages and Compensation of
employees
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189.6

Purchases of Goods and

Services
Interests
Social Benefits
Other Expenditures
Purchase of Non-Financial
Assets Investments)
Net Acquisition of Domestic
and Foreign Financial Assets
Total expenses
Revenues
Taxes
Grants
Other Revenues
Total Revenues
Deficit

35
199
198.2
40
68.2
1.3
533,784
386.3
2.1
144.4
532.8
198.5

Different Types of budget systems

A. TBS (Traditional Budgeting System)

Traditional budgeting is one the first budgeting systems created.
Traditional budgeting system is still commonly used in many
organizations today. The reasons why governments still using
traditional budget, this is due to framework of control. The role of the
budget is to give focus to an organization, and help the coordination of
activities and enable control. Traditional budgeting consumes too much
time and too many management resources. A major criticism of the
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traditional budget system is that it does not deal with key Issues of
government objectives, their links to the budget, the services to be
delivered by the government; the search for the most efficient
combination of inputs to deliver services. associated with an "inputoriented" budget preparation
Program Budgeting
In program, the budget shows the purposes of the expenditure, the
costs of the programs proposed for those purposes, and
measurements and results under each program. Therefore, such type
of budgeting includes the following features: Government activities are
divided into broad functions, programs, activities, and cost elements. A
function corresponds to a broad objective of the government The
operational aims of each program and activities are identified for each
budget year
Planning Program budgeting systems (PPBS)
Performance-Based Budgeting (PBB) is an effort to turn funding into
results, by outlining a general chain of cause-and-effect. It is a way to
allocate resources to achieve specific objectives based on program
goals and measured results.
Performance-Based Budgets use statements of missions, goals and
objectives to explain why money is being spent by focusing on
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expected outcomes relative to the amounts to be expended, and then

subsequently comparing the actual outcomes to those expectations, it
is hoped that budgetary discipline can be imposed by the legislature
and the executive branch.
Zero Based Budgeting ZBB
The zero base budget assumes that budget for the next period will be
zero. It first analysis the need of the various department and then
budget is allocated to them. Here are some of the advantages and
disadvantages of zero based budgeting
It helps in forming the budget more rationally than traditional budget.
Since resources are allocated from lower priority area to higher priority
area it reduces the surplus expenditure. Enables the top management
to better evaluate the performance of various department heads.
It leads to better cost control among the various departments which in
turn increases the efficiency of the whole organization as a whole. Zero
based budgeting increases the overall communication and coordination
within the organization and thus create a better environment in the
organization. It requires more paper work and more personnel is
needed which in turn increases the cost for setting up zero based
budgeting system. It is more time consuming than traditional

budgeting system and therefore it is resisted by various department

heads.
Time to change the budgeting system In Egypt
Its time that the budgetary process in Egypt should change from the
traditional system that is input oriented and doesnt link inputs to
outputs even though its costly and time consuming, it does not deal
with key Issues of government objectives, their links to the budget,
the services to be delivered by the government; the search for the
most efficient combination of inputs to deliver services. Associated
with an "input-oriented" budget preparation.

We have 2 alternatives that are output oriented the PPBS and the
ZBB.The PPBS This budget aims to link between funds and between
the achievement of planned targets and is seen as a way to make
decisions concerning the differentiation between alternative programs
and competing to achieve certain goals ,ZBB focuses on how to
achieve the goals and provide the means to assess the levels of
funding raised, but ZBB is much more time consuming and costly than
both traditional and PPBS,so we recommend depending on PPBS

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References
http://www1.worldbank.org/publicsector/pe/PEAMCourse04/Dorotinsk
yBackCh3.pdf
Younes A.ElBatrik, Public finance, Selected Topics, 4th edition, 2010.
http://www.howfoundation.org/documents/10157/61910/Budget+April
+2013.pdf
Kabelo Moeti, Titos Khalo, J. Mafunisa ,Public Finance
Fundamentals,2007

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