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THE UNITED REPUBLIC OF TANZANIA MINISTRY OF FINANCE AND PLANNING
TRAINING MANUAL ON THE BUDGET ACT NO. 11 OF 2015
GOVERNMENT BUDGET DIVISION
SEPTEMBER 2016
THE UNITED REPUBLIC OF TANZANIA MINISTRY OF FINANCE AND PLANNING
TRAINING MANUAL ON THE BUDGET ACT NO. 11 OF 2015
Ministry of Finance and Planning
P.O.Box 9111
DAR ES SALAAM, TANZANIA
Office Tel: 022 2111174-6
Fax: 022 2110326
Website- http://www.mof.go.tz
Ministry of Finance and Planning
P.O. Box 9111,
Dar es Salaam
TANZANIA
© Ministry of Finance and Planning, 2016
ISBN 978-9987-829-01-6
First Edition, 2016
All rights reserved. No part of this publication may be reproduced,
stored in any retrieval system or transmitted in any form or by any
means, electronic, mechanical, photocopying, recording, or otherwise,
without the prior written permission of The Ministry of Finance and
Planning.
iii
TABLE OF CONTENTS
LIST OF APPENDICES ................................................................................................ viii
GUIDANCE ON EFFECTIVE USE OF THE MANUAL ........................................... ix
ACRONYMS ........................................................................................................................ x
FOREWORD ...................................................................................................................... xi
ACKNOWLEDGEMENT ................................................................................................ xii
KEY CONCEPTS AND TERMINOLOGIES ............................................................. xiii
CHAPTER ONE .................................................................................................................. 1
INTRODUCTION AND BACKGROUND INFORMATION TO THE MANUAL. 1
1.0 BRIEF OVERVIEW OF THE BUDGET ACT ................................................ 1
1.1 Need for the Training Manual ...................................................................... 2
1.2 Target Beneficiaries ......................................................................................... 2
1.3 Objectives of the Manual ................................................................................ 2
1.4 Coverage of the Manual .................................................................................. 3
1.5 The Need for Budget Act ................................................................................ 3
CHAPTER TWO ................................................................................................................ 8
MACRO –ECONOMIC AND FISCAL FRAMEWORK .............................................. 8
2.0 INTRODUCTION ................................................................................................ 8
2.1 Principles of Fiscal Responsibility ............................................................. 9
2.2 Fiscal policy objective .................................................................................. 10
2.3 Macroeconomic and Fiscal forecast ........................................................ 10
2.4 Coordination with National Development Plan ................................. 12
iv
CHAPTER THREE ......................................................................................................... 14
MANAGEMENT OF THE BUDGET PROCESS ...................................................... 14
3.0 INTRODUCTION ............................................................................................. 14
3.1 Responsibilities of the National Assembly ........................................... 14
3.2 Parliamentary Budget Committee ........................................................... 15
3.3 Powers and Functions of the Minister ................................................... 15
3.4 Responsibilities of the Minister Responsible for Planning ............ 16
3.5 Powers and Functions of the Permanent Secretary and Pay
Master General ................................................................................................ 17
3.6 Powers and Functions of the Planning Commission ........................ 17
3.7 Responsibility of the Commissioner for Budget ................................ 19
3.8 Powers, Functions and Responsibilities of the National Plan and
Budget Guidelines Committee .................................................................. 20
3.9 Responsibilities of the Commissioner for Policy Analysis ............. 21
3.10 Powers and Functions of Treasury Registrar ..................................... 21
3.11 Powers and Functions of Accounting Officers .................................... 22
CHAPTER FOUR ............................................................................................................ 24
BUDGET PREPARATION AND APPROVAL PROCESS ..................................... 24
4.0 INTRODUCTION ............................................................................................. 24
4.1 Stages in the Budget Process ..................................................................... 25
4.2 The National Development Plan .............................................................. 27
4.3 The Plan and Budget Guideline ................................................................ 27
4.4 Budget of Public Entities ............................................................................. 29
v
4.5 Submission of Budget Estimates and Related Document for
Approval ............................................................................................................ 30
4.6 Approval of National Budget by National Assembly ........................ 31
4.7 Expenditure Appropriation ....................................................................... 32
4.8 Where Appropriation Act is not yet in Force ...................................... 32
4.9 Appropriation to Lapse at the end of Financial Year ...................... 33
4.10 Duration of Appropriations and Warrants .......................................... 33
4.11 Submission of Budget Policy Highlights ............................................... 33
4.12 Submission of the Finance Bill .................................................................. 34
4.13 Withholding of Approval ............................................................................ 34
4.14 Government Deviation from Financial Objectives ............................ 35
4.15 Sources of Contingency Fund .................................................................... 36
4.16 Administration of Contingency Fund ..................................................... 36
4.17 Advances from Contingency Fund .......................................................... 37
4.18 Parliamentary Approval for Payments Made from Contingency
Fund .................................................................................................................... 38
4.19 Financial Statements in Respect of Contingency Fund ................... 38
4.20 Accruals and Investments .......................................................................... 39
4.21 Reallocation of Funds ................................................................................... 39
4.22 Excess Revenue .............................................................................................. 41
4.23 Submission of Supplementary Budget ................................................. 41
CHAPTER FIVE .............................................................................................................. 42
BUDGET EXECUTION, MONITORING, EVALUATION AND REPORTING . 42
vi
5.0 INTRODUCTION ............................................................................................. 42
5.1 Commitment of Approved Budget .......................................................... 42
5.2 Authorities for Expenditure....................................................................... 43
5.3 Grants of Credit............................................................................................... 43
5.4 Withdrawal from the Consolidated Fund ............................................. 43
5.5 Disbursement of Funds to the National Assembly and Judiciary
Fund .................................................................................................................... 43
5.6 ACGEN’s Warrants ......................................................................................... 44
5.7 Assumption of Commitments ................................................................... 44
5.8 Multi Annual Commitments ....................................................................... 44
5.9 Commitment Control System .................................................................... 45
5.10 Report on Expenditure Commitments .................................................. 46
5.11 Development Project Contracts ............................................................... 46
5.12 In Year Reporting ........................................................................................... 46
5.13 Compliance Report ........................................................................................ 47
5.14 Quarterly Statements of the Government ............................................ 49
CHAPTER SIX ................................................................................................................. 50
MANAGEMENT OF REVENUES ............................................................................... 50
6.0 INTRODUCTION ............................................................................................. 50
6.1 Principles for Management of Revenues .............................................. 50
6.2 Responsibility in Revenue Collection and Management ................ 51
CHAPTER SEVEN .......................................................................................................... 53
vii
OVERSIGHT OF PUBLIC ENTITIES AND EXTRA- BUDGETARY AGENCIES
............................................................................................................................................. 53
7.0 INTRODUCTION ............................................................................................. 53
7.1 Budgetary and Financial Management of Local Government
Authority ........................................................................................................... 53
7.2 Financial Management of Extra Budgetary Agencies ...................... 54
CHAPTER EIGHT .......................................................................................................... 55
GENERAL PROVISIONS .............................................................................................. 55
8.0 INTRODUCTION ............................................................................................. 55
8.1 Extension of Time .......................................................................................... 55
8.2 Liability on Failure to Meet Requirements of the Act ...................... 55
8.3 Corrective Measures against Entities included in the Government
and Public Entities ......................................................................................... 56
8.4 Indemnity of Public Officers ...................................................................... 57
8.5 Overriding Effect of the Act........................................................................ 57
8.6 Transitional Provisions ............................................................................... 57
APPENDICES .................................................................................................................. 59
BIBLIOGRAPHY ............................................................................................................. 69
viii
LIST OF APPENDICES
Appendix I: Arrangement of Sections in the Budget Act ........................... 59
Appendix II: Arrangement of Sections in the Regulations of the
Budget Act ........................................................................................... 63
Appendix III: Recommended Training Exercise ............................................. 66
ix
GUIDANCE ON EFFECTIVE USE OF THE MANUAL
This Manual is mainly intended for all relevant stakeholders involved in
the National Budget Management Process. The General Public is strongly
encouraged to read and understand, as the national budget is an
important tool towards attaining National Development.
x
ACRONYMS
ACGEN Accountant General
AO Accounting Officer
BA Budget Act
CAG Controller and Auditor General
CB Commissioner of Budget
CF Contingency Fund
CFS Consolidated Fund Services
CPAD Commissioner of Policy Analysis Department
FPWG Financial Programming Working Group
FY Financial Year
GDP Gross Domestic Product
LGAs Local Government Authorities
MAC Multi Annual Commitment
NAO National Audit Office
NDP National Development Plan
PBC Parliamentary Budget Committee
PBG Plan and Budget Guidelines
PE Personal Emolument
PER Public Expenditure Review
PIM-OM Public Investment and Management - Operation Manual
PMG Paymaster General
PS Permanent Secretary
PST Permanent Secretary Treasury
TR Treasury Registrar
VAT Value Added Tax
xi
FOREWORD
It has always been the concern of the Ministry Of Finance and Planning
to ensure that Government Budget is prepared to the levels that are
acceptable nationally and internationally. In order to achieve this
objective the Ministry has been undertaking capacing
buildingprogrammes to Government Offices to ensure that prepared
budgets are able give results towards attaining National Development.
It is gratifying to note that the National Team of Facilitators on Planning
and Budgeting has been able to come up with this manual to assist in
such training particularly on the Budget Act. This document provides
useful information for training on the Budget Act and it is my hope that
it will significantly contribute towards better understanding of this
important law in the whole aspects of budget management.
On behalf of the Ministry and Planning and on my own behalf, I take this
opportunity to encourage readers to make good use of the manual for
better understanding of the Budget Act. Readers are also encouraged to
read the Budget Act and its Regulations. A separate pulication in Swahili
has been prepared tilted IJUE SHERIA YA BAJETI so that we can all
effectively participate in National Development agendas.
Doto M. James
Permanent Secretary to the Treasury and Paymaster General
September, 2016
xii
ACKNOWLEDGEMENT
This manual is a product of strong teamwork and commitment of the
Ministry of Finance and Planning under Government Budget
Management Division whose Commissioner John M. Cheyo provided
general guidance and focus. The overall preparation and management
was coordinated by Assistant Budget Commissioners Charles A.
Mwamwaja and Pius M. Mponzi. The team members led by Joseph
Kiraiya , Assistant Director, Central Ministries Section Department of
Coordination of Government Business – Prime Minister’s Office,
comprised of the following from the Ministry of Finance and Planning:
Rahel Ntiga, Edwin Ninde, Samwel Kiondo, Adric Adrian, Bahati
Mgongolwa, Frank Mtyama, Prosper Fivawo, Ruduga Ndenza, Boniphace
Kilindimo, Roman Macha, Adam Ndoro, Suzan Kabogo, Prisca Kimario,
Evodius Kanyamyoga, Shadrack Onani, Cosmas Nshenye and Mustapha
Sabuni . The technical team was also assisted by the supporting staff,
namely Regina Ntahondi, Tuly Swai, Benard Lupokela, Athumani
Kimwaki, Farida Hussein and Happy Ndagala. We thank them all for
producing this important document.
xiii
KEY CONCEPTS AND TERMINOLOGIES
Appropriation This is an authorization made by Parliament
under an appropriation Act allowing payment
to be made out of the Consolidated Fund or out
of any other public fund established by any
written law under specific condition or
purpose.
Budget This is the annual estimates of the revenues and
other receipts the expenditures of the
Government, including estimates of the
National Assembly, Judiciary, grants to Local
Government Authorities submitted for approval
of Parliament.
Budget Act No. 11 of
2015
This refers to a number of legislative measures
enacted to standardize the process by which the
government establishes and manages the
national budget. It covers the whole budget
process and the amendments can be made from
time to time.
Budget Cycle
This is the series of activities and timeframes
involved in the budget process from
preparation, approval, and execution,
monitoring and reporting.
Compliance report
This is one of the several reports submitted to
the National Assembly by the Minister under
xiv
section 56.
Consolidated Fund
According to the Constitution of the United
Republic of Tanzania of 1977 Article 135(1)
Consolidated Fund refers to all revenue derived
from various sources for the use of the
Government of the United Republic except
revenue which has been specified by law to be
used for a specified purpose or to be paid into
another fund for special use.
Constitution Means the constitution of the United Republic
of Tanzania.
Devolving funds to
local Government
This shall include recurrent block grants
composed of specific allocations for Other
Charges, subventions including basket funds
and development grants including local and
foreign.
Domestic Revenues This includes tax revenues and non-tax
revenues.
Domestic
borrowing
This refers to borrowing from domestic sources
including the issuance of government securities.
Extra - Budgetary
Agency
This is the agency which operates outside the
government budget system.
xv
Financial year
This is defined in relation to the government
period of twelve months ending on 30th June of
each year of a public authority or other body,
the period specified by or under relevant law or
instrument relating to that authority or body or
as determined by the competent authority of
that authority or body.
Formula This refers to the criteria for allocation of
resources to local government authorities and
includes but not limited to population, size of
the area, road network, number of villages and
number of poor residents.
Gross Domestic
Product
This is the total value of goods and services
produced by residents of a country to a given
period of time normally in one year.
Government
Refers to ministries, independent departments,
regional secretariat, local government
authorities and public entities.
Macro -Economic
Assumptions
These include stability of the economic
variables such as Gross Domestic Product and
inflation, good weather, peace and harmony of
the country and the neighboring countries.
Minister This refers to the Minister responsible for
finance and planning.
xvi
Money Bills
This is the finance bill, the Appropriation Bill or
any other bill which is providing for financial
matters.
Next financial year
This is the period commencing on the 1st July of
the next calendar year and ending on 30th June
of the next following calendar year.
Non tax revenue
Refers to the recurring income earned by the
government from sources other than taxes such
as fines, penalties and fees.
Paymaster -
General
Refers to an officer who is vested with power to
control the issue of public money to accounting
officers and who, in that capacity and subject to
the directions of the Minister, controls the issue
of public moneys to ministries and departments
of the Government, and perform such other
functions as the minister may by regulations
prescribed.
Permanent
Secretary
Refers to Permanent Secretary to the Treasury.
Plan and Budget
Guidelines
This refers to plan and budget guidelines
referred under the Budget Act.
Principles of fiscal
responsibilities
These are principles of public finance provided
for the Public Finance Act and those referred to
under section 4 of the Act.
xvii
Public Entities
These are the public institutions including
Parastatals, government agencies, local
government authorities and public social
security schemes.
Public Expenditure
Review
This is the consultative process between
government and stakeholders where allocation
and management of public spending is
analyzed.
Public Finance Act
This refers to an Act to repeal the Exchequer
and Audit Ordinance in order to make better
provisions for the more effective control,
management, and regulation of the collection
and use of the finances of the United Republic
and for enhancing Parliamentary control and
supervision of public funds and resources, and
for related matters
Public Investment
and Management
Operation Manual
This refers to the guideline for selection of a
new project that shall be included in the next
financial year budget.
Public moneys
These include: the public revenues of the
United Republic; and any trust or other money
held, whether temporarily or otherwise, by an
officer in his official capacity either alone or
jointly with any other person, whether an
officer or not.
xviii
Regional Economic
Blocks
This include: East African Community, Southern
Africa Development Committee and Common
Market for Eastern and Southern Africa and
such others economic blocks.
Sectors
These include real, fiscal, external and
monetary sectors.
Supplementary
appropriation Act
This refers to any Act, the purpose of which is
to supplement the appropriation already
granted by an appropriation Act.
Tax revenue
Is the income that is gained by the government
through taxation such as corporation tax,
income tax, custom duties, excise taxes, Value
Added Tax and Withholding tax
Treasury Registrar
This has the same meaning ascribed to it in the
Treasury Registrar (Power and Functions) Act.
1
CHAPTER ONE
INTRODUCTION AND BACKGROUND INFORMATION TO THE
MANUAL
1.0 BRIEF OVERVIEW OF THE BUDGET ACT
The Budget Act Bill in Tanzania was first tabled in November, 2014 and
eventually passed in the National Assembly in March 28, 2015. The
implementation of the Act started on 1st July, 2015 and it is applicable
to Mainland Tanzania. The Act comprises of 9 parts with 75 sections.
The Budget Act No. 11 of 2015 has clarified roles and responsibilities of
key stakeholders in the budget process and strengthens collaboration in
the whole process of budget management. It has put in place, recognized
and appreciated into legal text the budget important pillars:-Planning,
Revenue and Expenditure. Plans for the medium and long term as well
as Vision 2025 are recognized by the Budget Act and no projects should
be financed unless listed in approved plans.
Considering this fact, the budget in the current year will be prepared by
considering the Annual Development Plan and investment will be made
in development projects that are approved by Parliament. Specific time
to prepare plan and budget guidelines has been set and is annually
communicated to Accounting Officers in order to facilitate the
preparation of the plan and budget. Other clarifications of the Budget
Act include: recognition of the Budget process throughout its various
stages and stakeholders; establishment and recognition of the
Parliamentary Budget Office, Parliamentary Budget Committee and
Sectoral Committees; recognition of the roles and functions of the
Budget Committee and harmonization of the various existing Laws
related to budget matters.
2
Implementation of the Budget Act No. 11 of 2015 and its Regulations
will provide effectiveness, transparency and oversight of all matters
regarding National budgeting process so as to attain economic growth
and improvement of standard of living of citizens.
1.1 Need for the Training Manual
(i) The training on the Budget Act No.11 of 2015 is very crucial
and it has to be understood by each implementing agent to
ensure efficient and effective management of the budget
process.
(ii) To ensure each relevant actor has the right information in
respect of the implementation of Budget Act No. 11 of 2015
and its Regulations.
(iii) There is high demand of training on Budget Act No. 11 of
2015 and its Regulations from the implementers which
cannot be easily met by conducting formal training alone.
1.2 Target Beneficiaries
The Training Manual is addressed to those responsible for
implementation of the Budget Act No. 11 of 2015 and its Regulation.
These include Ministries, Extra – Budgetary Agencies, Local Government
Authorities, Members of Parliaments and the General Public as a whole.
1.3 Objectives of the Manual
The overall objective of the Manual is to improve efficiency,
professionalism, effectiveness, transparency in all matters regarding
National budgeting process. The specific objectives of the Manual are:
(i) To create awareness to all stakeholders and Public at large on
matters related to National Budget.
3
(ii) To build Capacity to key players on the Budget Act No.11 of 2015
with the aim of attaining effectiveness in the national budget
process for better management of Public resources.
1.4 Coverage of the Manual
The Manual consists of eight chapters and it will be focusing mainly on
eight parts of the Budget Act and its regulations. Chapter one is the
introduction and background to the manual. Chapter two concerns with
Macro-economic and Fiscal Framework, Chapter three is about the
Management of Budget Process, Chapter four deals with the Budget
Preparation and Approval Process, Chapter five clarifies the Budget
Execution, Monitoring, Evaluation and Reporting Chapter Six explain
about Management of Revenue, Chapter seven talks about Oversight of
Public Entities and Extra-Budgetary Agencies and Chapter eight
illustrates about General Provisions.
1.5 The Need for Budget Act
It is always worthy noting that, Government Budget is an important
administrative and accountability tool in ensuring the implementation
of plans and policies, better use of resources, effective management of
tasks and responsibilities of government. The budget provides a guide to
the intentions and attitude of the Government in its endeavors to
implement its obligations in the short, medium and long-term, resource
allocation, priority areas, revenue and expenditure as well as
management of strategies and plans of the Government in general for
development.
Given the importance of the Government Budget it is significantly
important to have the law specifically to manage the entire system,
4
identify key players and their roles, recognizing important issues to
consider in the budget and the measures to be taken if they are not
observed. Some important issues that led to the enactment of the law
include:
(i) Budget cycle is recognized by law: Budget Preparation,
approval, implementation, monitoring of expenditure and
reporting processes are now legally recognized.
(ii)The need to clarifying roles and responsibilities: Budget System
in Tanzania is governed by the Constitution of the United
Republic of Tanzania as well as various other laws. The laws
include the Public Finance Act, Cap 348, the Local Government
Finance Act, Cap 290, and the annual Appropriation Act. These
laws and others govern various aspects about finances in general
and remaining silence on the areas of planning, revenue and
expenditure that are essential in the budget process. The roles
and responsibilities of different key actors have now been
harmonized in the BA.
Historically the budget process was governed by the National
Committee for the preparation of the Plan and Budget Guidelines
which prepared guidelines and thereafter approved by the
Cabinet. Votes prepared budget in line with those guidelines
discussed by the Parliamentary Sectoral Committees and finally
submitted to Parliament which discussed and approved ready to
be implemented. However, this whole task lacked legal backing.
(iii) Improvement of the Budget Credibility: Low credibility of the
Budget caused by the presence of the not clearly regulated
5
reallocations of funds. The aspect also needed to be tackled,
misuse of funds, accumulation of arrears, insufficient revenue
compared to available opportunities. In addition, Private Sector
involvement had to be considered in the financing and
implementation of large-scale development projects and
therefore reducing reliance on Government and Development
Partners to finance those projects.
In terms of Parliament, Parliamentary Sectoral Committees
discuss, analyze and give recommendations on budget estimates
presented. In addition to those Sectoral Committees, the
Parliament had introduced the Parliamentary Budget Committee.
This committee was involved in various aspects of the budget in
accordance with the Standing Orders as well as to discuss and
review the Government's budget and make recommendations to
Parliament, discuss and make recommendations on the budgets
of various votes, provide guidelines to Parliament and direction
of the budget to Parliament Committees, to assess and provide
advice on sources of income as well as other issues pertaining to
the Budget. BA now recognizes these important functions of the
committee.
(iv) Putting in place specific legislation on budget matters: The
Constitution of the United Republic of Tanzania of 1977, in Article
137 (1) laid the foundation which governs budget process. The
Constitution provides that:
''The President shall give directives to persons concerned to
prepare and submit to the National Assembly in each
Government financial year estimates of the revenue and
6
expenditure of the Government of the United Republic for the
next financial year."In addition, the Constitution also continued to
direct and to lay the foundation for approval of the Government
through the use of Article 137 (2).
In Article 99 (1) of the Constitution establishes a mechanism to
legislate on matters of finances and laid the foundation of
separating the responsibilities of Government and Parliament to
redirect that:
“The National Assembly shall not deal with any of the matters to
which this Article relates except if the President has proposed
that the matter be dealt with by the National Assembly and the
proposal has been submitted to the National Assembly by a
Minister”The details on the effective implementation of this
article are now found in the BA.
(v) Emphasizing the link between planning, revenue and
expenditure: Likewise, the budget execution focused on the
expenditure side and less focus in planning and revenue. The BA
has now addressed the aforesaid challenge by linking the three
pillars.
(vi) Putting in place mechanism for efficient management of
fund: CAG reports have been demonstrating the existence of
inefficient utilization of funds in various votes. There had been a
major challenge for some public offices to have a poor utilization
of funds, failure to report expenditure accurately, failure to
maintain proper records of the public assets and money received
lack of proper information on debt and many other shortcomings.
7
Basically, those factors significantly affected the implementation
of the objectives of the Government through its various offices.
These facts are now the focus of the BA.
8
CHAPTER TWO
MACRO –ECONOMIC AND FISCAL FRAMEWORK
2.0 INTRODUCTION
In this area short and medium term macro – economic and fiscal
framework are prepared. In preparing this, the main concern is on the
macro economic development and outlook in that particular period of
time. As regard to this, analysis is made on GDP growth rate and sectors
contributed to that growth, assessment of performance of key
productive sectors (agriculture, tourism, manufacturing building and
construction and infrastructure), price movements (inflation, exchange
rate and interest rate).
Other analysis is made on the followings: labor market, fiscal
performance such as revenue to GDP ratio, domestic resource
mobilization against expenditure, budget credibility, procurement
procedures against financial regulations and funding for priority
investment, external sector performance ( ratio of export to GDP, trade
balance, costs of trading, value chain) and financing issues such as debt
sustainability analysis, national debt stock, debt services and
comparative analysis on level of Tanzania debt against other countries.
Preparation of Macro–economic and fiscal Framework has been
recognized by the Budget Act No. 11 of 2015 as it has been elaborated in
this chapter. The chapter consists of four parts. Part one is about
Principles of fiscal policies and management; part two concerns Fiscal
policy objectives; part three is Macro economic and fiscal forecast and
the last part concerns Coordination with National Development Plan.
9
2.1 Principles of Fiscal Responsibility
Section 4 Sub section (1and 2) of the Budget Act No. 11 of 2015 clarifies
that, during preparation of policy objectives, the Government and Public
entities shall adhere to the following principles of fiscal responsibilities:
(i) Borrowing policy which ensures that public debt is sustainable.
That is borrowing conforms to the National Debt Management
Policy, Medium Term Debt Management Strategy and the Loans,
Guarantees and Grant Act. [Regulation 3 (2) (a)].
(ii) Fiscal policy that conforms to Plan and Budget Guidelines and
Five Year Development Plan. It means that we need fiscal policies
which promote investments and growth [(Regulaton3 (2) (b)].
(iii) Minimization of fiscal risk in respect of guaranteed loans, pension
obligations and pending bills. That is guaranteed loans, pension
obligations and pending bills conform to the National Debt
Management Policy, Medium Term Debt Management Strategy
and Loans, Guarantees and Grants Act, 1974 (as revised on 2004).
[Regulation 3 (2) (c)].
(iv) A wage policy that is sustainable and attractive. Wage bill shall be
covered in the recurrent expenditure and financed by domestic
revenues. [Regulation 3 (2) (d)].
(v) A national budget and budgetary process that promotes
transparency, accountability and effective management of the
economy and public sector. The budget preparation and
execution process shall be participatory involving key
stakeholders with the aim of increasing transparency and
accountability. [Regulation 3 (2) (e)].
(vi) Policies that ensure a reasonable degree of future predictability
about the level and stability in tax rates.
10
(vii) Prioritization of productive expenditures rather than
consumption expenditures.
(viii) Observance of the doctrine of separation of powers by ensuring
that National Assembly only gets involved in the management of
public resources in the instances that set out by the Constitution
and any other written laws.
2.2 Fiscal policy objective
Section 5 of the Budget Act No. 11 of 2015 describes that the Plan and
Budget Guidelines shall set out fiscal objectives based on the following
criteria:
(i) Promote sustainable macroeconomic stability and non-
inflationary and inclusive economic growth;
(ii) Establish and maintain sustainable and low risk debt budget
financing mechanism;
(iii) Maintaining a ceiling on fiscal deficit including grants;
(iv) Maintain sufficient level of gross official reserves to cover for
imports of goods and services; and
(v) Sustain monetary and financial stability.
2.3 Macroeconomic and Fiscal forecast
Section 6 of the Budget Act No. 11 of 2015 and regulation 5 of the Act
enlightens that, the National Financial Programming Working Group
shall be responsible for financial programming and macroeconomic
modeling used quarterly as an input for preparation of the
macroeconomic framework, Plan and Budget Guideline shall involve:
(i) Assessing the world economic dynamics and its impact on the
national economy;
11
(ii) Preparing macroeconomic assumptions and outlook for the
coming fiscal year;
(iii) Preparing medium term macroeconomic framework that is used
for preparation of PBG;
(iv) Preparing requirements relating to the macroeconomic and fiscal
forecasts underlying the PBG and national budget documents;
and
(v) Specifying Minister’s responsibility to produce macroeconomic
and fiscal forecasts over a medium term time horizon.
Regulation 5(1 and 2) elaborates that the Minister shall form the
National Financial Programming Working Group which shall be
responsible for financial programming and macroeconomic modeling.
The National Financial Programming Working Group shall comprise of
representative from: the Ministry of Finance and Planning who shall be
the Chairman; the Bank of Tanzania; the Tanzania Revenue Authority;
and National Bureau of Statistics. The Minister may co-opt any person
who may be of assistance during deliberations of the National Financial
Programming Working Group.
Furthermore, regulation 4(1 to 3) describes that the Minister may
deviate from principles of prudent fiscal management where events of
force majeure occur and when cannot be funded from the Contingency
Fund or other funding mechanism provided for under the Act.
Event constituting force majeure shall include: world economic slump;
unfavorable climatic conditions; state of emergency, including war;
natural calamities such as earth quake and outbreak of diseases. The
Minister shall publish a report on any deviation and present to the next
session of the National Assembly.
12
2.4 Coordination with National Development Plan
For purpose of having proper coordination with the National
Development the Act provides the followings:
(i) Section 7 subsection (1) of the Budget Act No. 11 of 2015
requires the Government and public entities to prepare annual
budget based on the approved medium and long term plan;
(ii) Section 7 subsection (2 and 3) of the Budget Act No. 11 of 2015,
Budget estimates of development projects should include only
projects listed in the National Development Plan.
(iii) Section 7 subsection (4)(a-k) of the Budget Act No. 11 of 2015,
the Government and public entities shall ensure that:-
(a) Financial resources are consistent with ceilings set in PBG.
(b) Development projects implemented in the order of
priority.
(c) Development Projects should be approved by Ministry of
Finance and Planning before being included in the budget.
(d) Involvement of private sector in financing major
development projects through PPPs.
(e) Grading of LGAs is made for Planning and allocation of
resources.
In addition, Regulation 6 (1) to (7) describes that, coordination of the
national development plan shall be as stipulated under section 7 of
the Act on assumption that the operation of development and
recurrent budgets are based on the following criteria: commitments
for expenditures and payment are made as per approved budget;
disbursements of public moneys for development and recurrent
budget depends on monthly revenue collection. Furthermore,
regulations insists the submission of quarterly expenditure
performance reports to the Ministry responsible for finance and
13
planning by 15th day of every next month which shall be a basis for
disbursement of funds for next quarter; payment of personnel
emoluments is made directly to employee’s bank accounts;
procurement of goods and services comply with the National
Procurement Policy and the Public Procurement Act to ensure
quality and value for money.
The regulation expounds further that: Ministry of Finance and
Planning shall scrutinize, analyze and approve new development
projects prior to their inclusion in the budget and the criteria for
new projects shall be: aligned to the national plan’s priorities as
stipulated in the PIMOM; strategic outcomes of the project based on
specific strategic goals such as equity and regional development,
skills and technological gains.
Additionally, the private sector shall be involved in financing and
implementing major development projects through PPP as stipulated
under the PPP Policy and PPP Act; allocation of funds to the Local
Government Authorities shall be based on the followings: approved
LGAs Strategic Plan; formula based allocation criteria for other
charges and development budget and annual performance
assessment of local government including reports from the
Controller and Auditor – General; all LGAs shall be graded for
purpose of planning and allocation of resources; and Priority for
allocating public moneys for investing in the development projects
shall base on the following criteria and strategic nature of the
project: ongoing projects and sector wise approach and basket funds
received from Development Partners.
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CHAPTER THREE
MANAGEMENT OF THE BUDGET PROCESS
3.0 INTRODUCTION
This chapter covers part three of the Budget Act No.11 of 2015. The
chapter summarizes responsibilities, functions and powers of the key
actors who are responsible for the management of the Budget process.
The chapter covers the following sections of the Budget Act No. 11 of
2015: Section 8 which explains about the responsibilities of theNational
Assembly; Section 9 clarifies functions of Parliamentary Budget
Committee; Section 10 describe Powers and Functions of the Minister;
Section 11 explains responsibilities of the Minister responsible for
planning; Section 12 expounds powers and functions of the PST and
PMG; Section 13 clarifies powers and functions of Planning Commission;
Section 14 describes responsibilities of the Commissioner for Budget;
Section 15 explains Powers, Functions and Responsibilities of the
National Plan and Budget Guideline Committee; Section 16 is about the
responsibilities of the Commissioner for Policy Analysis; Section 17
describes powers and functions of Treasury Registrar and Section 18 is
about the powers and functions of Accounting Officers.
3.1 Responsibilities of the National Assembly
Section 8 of the BA clarifies that the National Assembly will be
responsible on the following issues:
(i) To consider the budget estimates, macro economic planand
programs;
(ii) Discuss and review thePBG and budget estimates;
15
(iii) To monitor all budgetary matters within their competence under
this Act; and
(iv) To examine and make recommendations on financial statements,
money bills and fiscal prudence on budgetary matters.
3.2 Parliamentary Budget Committee
Section 9 of the BA elaborates that the Parliamentary Budget Committee
will be responsible on the following issues:
(i) To discuss and review the PBG,Budget estimates and make
recommendations to theNational Assembly;
(ii) Scrutinize the budget estimates of NAO, Judiciary and the
NationalAssembly;
(iii) To provide general direction to the National Assembly and
Parliamentary Standing Committees on budgetary matters;
(iv) To examine financial statements and other documents and make
recommendations for improving the management and
accountability of public finance;
(v) To conduct periodical study on the performance trend of the
budget; and
(vi) To monitor adherence by the Government to the principles of the
public finance set out constitution and the other laws in force.
3.3 Powers and Functions of the Minister
Section 10 of the BA explains powers and functions of the Minister to be:- (i) To prepare revenue and expenditure estimates and financing
requirements for Government;
(ii) To control and supervise the preparation, execution and
monitoring of the budget including any adjustments;
16
(iii) To ensure that all stakeholders are able to participate and are
informed on the decision taken on the budget. This has been
elaborated further by regulation 7 (1 to 2) which clarifies that:
first, the Minister shall ensure that members of public participate
in the national budget process through the following fora: the
Public Expenditure and Task Force Tax Reforms. Second, the
objective of the Public Expenditure Review forum shall be to
analyze the extent to which policy priorities are practically
implemented through budget allocation in order to increase the
effectiveness and efficiency of public spending.
(iv) To publish the progress of budget execution on quarterly basis;
(v) To manage and control Government financial resources, assets
and liabilities;and
(vi) To promote and enforce transparency and sound management in
respect of revenue, expenditure, assets and liabilities of the
Government.
3.4 Responsibilities of the Minister Responsible for Planning
Section 11 of the BA clarifies that the Minister responsible for planning
will be responsible on the following issues:-
(i) To prepare and submit the National Development Plan to the
cabinet for approval.
(ii) To submit the approved NDP for approval to the National
Assembly.
(iii) To coordinate the implementation of the NDP.
(iv) To submit the statement of the state of the economy to the
National Assembly.
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3.5 Powers and Functions of the Permanent Secretary and Pay
Master General
Section 12 of the BA expounds powers and functions of the Minister to
be:
(i) PST and PMG shall be responsible to the Minister.
(ii) To ensure timely and effective preparation of estimates of revenue
and expenditure;
(iii) To ensure effective use of Government resources;
(iv) To control the issue of public funds Government and Public
Entities.
(v) To request for information that is necessary for preparing any
report under this Act from any Public Entities.
(vi) Any public officer who fails to provide information requested,
commits a disciplinary offense and is liable to disciplinary penalty;
(vii) To Conduct periodic review of revenue and expenditure
ofpublicentities; and
(viii) In the cause o f periodic review PST and PMG may order any
amount of funds to be included in the General National Budget.
3.6 Powers and Functions of the Planning Commission
Section 13 of the BA illustrates powers and functions of the Minister to
be:-
(i) To assess thestate of national resources for development and
advise efficient utilization;
(ii) To Monitor the implementation of Government decisions on
planning and management of the economy;
(iii) To analyze the projects for inclusion in the development budget
and;
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(iv) To issue guidelines for formulation of the NDP and monitor the
preparation process of Long Term Plan, Medium Term Plan and
Annual Plan. These Powers and functions are elaborated further
in Regulation 14 [(1)(a-h)] as follows: the Planning Commission
shall assess the state of national resources for development and
advise the Government on the efficient utilization of those
resources by: conducting research and analyze countries’
resources potentials in order to spend up the provision of the
basic conditions of broad based economic growth and poverty
reduction.
The regulation elaborate further that the Planning Commission
shall prepare Medium and Long Term Development plans; annual
development plan focusing on advising the Government to
strategic investment for unleashing growth in infrastructure
development, agriculture, industry, human resources
development; tourism, trade and financial services; advising the
Government in investing and improving social services which
include provision of clean and safe water, improvement of health
services and provision of quality education at all levels; advising
on efficient measures of improving resource mobilization and
collection strategies.
Additionally, the regulations expounds that Planning Commission
has to advise on the measures of scaling up the role and
participation of private Sector in economic growth by improving
business environment; preparing annual national economic
survey report for analyzing socio – economic achievements and
challenges of economic status of a country and toconduct
19
monitoring and evaluation on implementation of the National
Development Plan regularly in collaboration with Ministry of
Finance, implementing sectors and submit a report semiannually
to the Cabinet for approval.
3.7 Responsibility of the Commissioner for Budget
Section 14 of the BA clarifies that the Commissioner for Budget will be
responsible on the following issues:
(i) There shall be the Commissioner for Budget;
(ii) CB under the direction of PS shall be responsible for the
preparation, execution, monitoring, evaluation and reporting of
the budget;
(iii) Review budgetary policies and provide guidelines;
(iv) Analyze votes estimates during the process of budget
scrutinization;
(v) Oversee and manage the implementation of the governmentand
publicentities budget;
(vi) Prepare reallocation to the budget;
(vii) Consolidate and manage cash flow plan and performance based
disbursement; and
(viii) Advise on budgetary commitments of the governmentand
financialobligations.
These Powers and functions are elaborated in Regulation15 [(1)(a-c)] as
follows: The commissioner for Budget shall first, monitor the
implementation of the Budget through scrutiny of progress reports
submitted by Government and public entities and take necessary
measures to address any abnormalities; second undertake periodic
public expenditure tracking and projects inspection activities and third,
20
advice the PMG on budgetary commitments of the Government and
decisions having financial obligations in respect of Other Charges, PE
and development budget of the Government for consideration in the
budget management process.
3.8 Powers, Functions and Responsibilities of the National Plan
and Budget Guidelines Committee
Section 14 of the BA clarifies that the National Plan and Budget
Guidelines Committee will be responsible on the following issues:
(i) To advise the government in the preparation of
the National budget;
(ii) To prepare the Plan andBudget Guidelines; and
(iii) To request for information from Government or Public entities for
purposes of preparing PBG. Composition of PBG is elaborated in
Regulation 16 [(1)(a-q)] and it is composed of: Deputy Executive
Secretary of the Planning Commission; the Commissioner for
Budget; the Commissioner for Policy Analysis; the Commissioner
for External Finance, the Commissioner for Public Private
Partnership; Assistant Commissioners for Policy Analysis;
Assistant Commissioners for Budget; Other Deputy Executive
Secretaries Planning Commission; Coordinator from Reforms
Coordinating Unit, President’s Office, state House; the Director for
Coordination of Government Business from Prime Minister’s
Office; the Director of Policy and Planning from Prime Minister’s
Office, Regional Administration and Local Governments; the
Director of Policy Development from President’s Office, Public
Services Management; the Accountant General; the Treasury
Registrar; a representative from Bank of Tanzania;
arepresentative from Tanzania Revenue Authority; and any other
21
members to be co-opted from time to time by Permanent
Secretary as and when necessary.
3.9 Responsibilities of the Commissioner for Policy Analysis
Section 16 of the BA explains that the Commissioner for Policy Analysis
will be responsible on the following issues:
(i) To provide expertise in Policy issues concerning fiscal matters
including revenue mobilization, expenditu reallocation and
sources of financing and regional and international economic
cooperation; and
(ii) To provide expertise on macroeconomic issues regarding to policy
formulation, implementation, data base management and
periodical reporting.
3.10 Powers and Functions of Treasury Registrar
Section 17 of the BA illustrates powers and functions of the Treasury
Registrar to be:
(i) To review, approve strategies, annual plans and budgets of
public entities which are under the supervision of TR and
incorporate into the NDP;
(ii) To supervise public entities investment funds;
(iii) To ensure that surplus, contributions and dividends from
public entities are paid when due;
(iv) To director approve the adoption, application or amendment of
financial regulation to ensure proper accounting of the income
and expenditure of public entities;
(v) To monitor capital grants, subsidies, capital reserves or retained
earnings, earned by a corporation and other public investments;
and
22
(vi) To examine and approve organization structure, salary structure,
scheme of service in publicentities;
(vii) To manage and control privatization funds received from
divesture process of public entities assets and shares;and
(viii) To ensure review and signing of every public corporation
performance contract geared towards revenue improvement.
3.11 Powers and Functions of Accounting Officers
Section 18 of the BA explains powers and functions of the Accounting
Officers to be:
(i) To ensure budget of votes and public entities are prepared as per
PBG;
(ii) To ensure public funds and resource are properly managed and
safeguarded; and
(iii) To ensure arrangements for collection of revenue from the public
are conducive to its collection; and
(iv) AO of respective ministries and public entities shall establish a
budget committee. These have been elaborated further in
regulation 17[(1),(2)(a-e)] as follows: AO shall each establish
budget committee; whereby, the composition of the budget
committee shall be as follows: At Ministerial level, Permanent
Secretary shall be the chair, Director of Planning and Policy shall
be the secretary and Heads of departments, sections and unit
shall be members. At the independent department level: Head
of Independent Department shall be the chair; head of Planning
shall be the secretary and Heads of department, sections and
units shall be members. At Regional Secretariats level:
Regional Administrative Secretary shall be the chairman; Head of
Planning and Coordination department shall be the secretary and
23
Heads of department, section and unit shall be members. At local
government level: Local Government Authority’s Director shall
be the chairman; Local Government Authority’s head of Planning
shall be the secretary and Heads of department, section, and unit
shall be members. In respect of other public entities: Chief
Executive Officers shall be the chairman; Head of Planning as
secretary and Heads of Department, section and unit shall be
members.
(v) The functions of budgetcommittee areelaboratedinRegulation 17
[(3)(a-d)] as follows: The functions of the budget committees
shall be to review revenues collection measures; allocate
resources based on strategic plan and national priorities without
exceeding the ceiling provided by the PMG; evaluate budget
performance and perform other functions as described in the
PBG, Treasury Registrars’ circular and directives.
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CHAPTER FOUR
BUDGET PREPARATION AND APPROVAL PROCESS
4.0 INTRODUCTION
The chapter presents key issues and the actors responsible for the
Budget preparation and approval process. It covers the following
sections of the BA: section 19 describes Stages in the Budget Process;
section 20 is about National Development Plan; section 21 explains Plan
and Budget Guidelines; section 22 describes Budget of Public Entities;
section 23 expounds submission of budget estimates and related
documents for Approval; section 24 explains submission of Other
Documents to the National Assembly; section 25 describes National
Assembly to consider budget estimates and section 26 is about approval
of the National Budget by the National Assembly.
Other sections include section 27 which explains expenditure
appropriation; Section 28 describes where Appropriation Act is Not Yet
in Force; section 29 explains appropriation to lapse at the end of
Financial Year; section 30 expounds duration of appropriations and
Warrants; section 31 explains submission of Budget Policy Highlights;
section 32 describes submission of Finance Bill; Section 33 is about
Withholding of Approval; Section 34 clarifies Government Deviation
from Financial Objectives.
Other sections are Section 35 which describes Sources of Contingency
Fund; Section 36 explains Minister to Administer Contingency Fund;
section 37 clarifies on Advances from the Contingency Fund; Section 38
is about Parliamentary Approval for Payments made from contingency
fund; section 39 deals with Financial Statements in Respect of
25
Contingency Fund; Section 40 concerns with Accruals and Investment;
section 41 is about Reallocation of Funds; Section 42 deals with Excess
Revenues and section 43 clarifies on submission of Supplementary
Budget.
4.1 Stages in the Budget Process
The budget process is comprised of various stages, which feed into one
another in a circular process. The various phases of the budget process
are interrelated. At any given point in the year, there may be multiple
phases of the budget process occurring the PBG highlights these stages
and has put in place a budget calendar to be observed in budget
management process.
Section 19(1) of BA clarifies thatthe budget process in any financial year
shall comprise of the following stages:
(i) Integrated development planning process which shall include long
term and medium term planning;
(ii) Planning and determining financial and economic policies and
priorities at national level over the medium term;
(iii) Approval of Plan and Budget Guidelines by Cabinet;
(iv) Adoption of Plan and Budget Guidelines by National Assembly as a
basis for future deliberations;
(v) Approval of the revenue measures by Cabinet;
(vi) Preparing budget estimates of the government for the approval by
the Cabinet;
(vii) Submitting budget estimates to the National Assembly for
approval;
(viii) preparing the Appropriation Bill, the Finance Bill and subsidiary
legislation required to implement Government’s budgetary
proposals; and
26
(ix) Enacting the Appropriation Act and the Finance Act.
Section 19(2) is the legally recognition of the advisory committee to the
Minister on revenue measures for the respective financial year and
section 19(3) speaks about the composition of the advisory committee
which has been clarified in regulation 18(2) of the BA as follows: There
shall be an Advisory Committee on tax measures comprised of the
following members: the Minister; the Minister responsible for Finance
from Revolutionary Government of Zanzibar; Deputy Ministers
responsible for Finance, the Permanent Secretary; the Chief
Parliamentary Draftsman; the Principal Secretary Ministry responsible
for Finance from Zanzibar; Deputy Permanent Secretaries responsible
for Treasury; the executive Secretary responsible, Planning Commission;
the Governor Bank of Tanzania; the Commissioner General of Tanzania
Revenue Authority; the Executive Director of Tanzania Investment
Centre; the Executive Director of Tanzania Chamber of Commerce,
Industries and Agriculture. Others include the Head of Department of
Economics from the University of Dar es Salaam; the Director General of
the Tanzania Communication Regulatory Authority; the Executive
Director of the Tanzania Private Sector Foundation; the Executive
Director of the Research on Poverty Alleviation; the Executive Director
of the Economic and Social Research Foundation; the Executive Director
of the National Board of Accountant and Auditors; the Chief Executive
Officer of the Confederation of Tanzania Industries and the Principal of
the Institute of Finance Management.
Section 18(3 – 5) explains that: the Minister may co-opt any person who
may be of assistance to the committee; the Commissioner for Policy
Analysis shall be a Secretary to the Advisory Committee; and the
27
functions of the Advisory Committee shall be to deliberate on tax policy
implementation and revenue measures as submitted by the Task Force
on Tax Reforms.
4.2 The National Development Plan
Section 20 of the BA clarifies that; the Minister responsible for Planning
Commission shall prepare and lay before the National Assembly the
National Development Plan, which shall be the basis for the preparation
of the National Budget.
4.3 The Plan and Budget Guideline
Section 21(1) of BA expounds thatthe Minister shall prepare and lay
before the National Assembly Plan and Budget Guidelines.
Section 21(2) of BA explains that, the Plan and Budget Guidelines shall
be laid before the National Assembly by February each year or, in the
event that the National Assembly is not in session by February, within
the first week upon the convergence of the National Assembly.
Section 21 (3) of the BA clarifies that the Plan and Budget Guidelines
shall state the broad strategic macroeconomic issues, which shall be the
basis of the budget of the succeeding financial year and the medium
term and shall include-
(i) An assessment of the current financial year and the projected state
of the economy for the succeeding three financial years;
(ii) The macroeconomic and fiscal policies for the period specified
under paragraph (a);
28
(iii) Targets for overall revenues, total aggregate expenditure, domestic
and external borrowing for the succeeding financial year and the
medium term;
(iv) The total resources to be allocated to individual programmes
within a sector or Ministry for the period identified under
paragraph (a) indicating the outputs expected from each such
programme during that period;
(v) The criteria used to allocate or apportion the available public
resources among the various programmes;
(vi) The estimates of interest and debt servicing charges and loan
repayments for the financial year to which the budget relates and
the two succeeding financial years;
(vii) Proposal for financing any deficits for the financial year;
(viii) Indication of the intention regarding borrowing and actions that
may increase public debt for the financial year;
(ix) Budgeted and actual revenue levels for the two preceding financial
years;
(x) Budgeted and actual expenditure for the two preceding financial
years by vote and main divisions;
(xi) Forecast financial position for the financial year to which the
budget relates and the two succeeding financial years; and
(xii) The policy objectives that guide the Government’s budget
decisions during the financial year and the policy areas that the
Government focuses on during the financial year.
Section 21(4) and (5) of BA expounds that, the Parliamentary Budget
Committee shall, within seven days after the Plan and Budget Guidelines
has been submitted, table a report containing its recommendations. The
National Assembly shall discuss and pass a resolution to adopt the
29
report. It further explains that the Minister shall publicize the Plan and
Budget Guideline not later than 15 days after submission to National
Assembly.
4.4 Budget of Public Entities
Section 22(1) of BA expounds that;Public entities shall prepare budget
estimates and submit to the Permanent Secretary for Scrutiny and
Approval in accordance with this Act.
Section 22(2) of the BA explains that, the Permanent Secretary may:
(i) Approve budget with or without variations.
(ii) Reject the budget estimates and give reasons for the rejection.
Section 22(3) of the BA explains that, the Permanent Secretary may
make variation or reject budget estimates on the ground that matters
specified in line items:
(i) Do not fall within principal functions of the public entity
concerned;
(ii) Are over-budgeted expenditure or are not commensurate within
supply or service obtaining in the market; or
(iii) Do not correspond to austerity measures outlined in the national
development plan.
Section 22(4) of the BA clarifies that, the Permanent Secretary may
order revenues collected by a public entity in excess of budget estimates
to be remitted to the Consolidated Fund.
30
4.5 Submission of Budget Estimates and Related Document for
Approval
Section 23(1) of the BA explains that, the Minister shall, within a period
allowing time to meet Budget Act deadlines specified in this section,
submit to Cabinet for its approval, the budget estimates and other
documents supporting the budget estimates. Section 23 (2) of the BA
where the Cabinet has approved the budget estimates all Ministers shall
be collectively responsible to:-
(i) Observe, support and advocate the budget estimates; and
(ii) Supervise the implementation of the budget estimates.
Section 23 (3) of BA expounds that, the Minister shall, by the 30th April
in each year, submit to the National Assembly the following documents-
(i) The budget estimates; and
(ii) Documents supporting the submitted estimates required to
implement the budget.
Section 23 (4) and (5) of the BA explain that: the Government and the
National Assembly shall ensure that the budget process is conducted in a
manner and within budget cycle that permits various participants in the
process to comply with the requirements of this Act and the Minister
shall, after the budget estimates and other documents have been
submitted to the National Assembly cause the documents to be
published in the Gazette and publicize the documents and lastly the
Minister shall, on approval of budget estimates by the National
Assembly, prepare and submit an Appropriation Bill of the approved
estimates to the National Assembly.
Section 24(1)(a-f) and (2) of the BA describes that: Minister shall submit
to the National Assembly budget document for each financial year which
31
includes: a summary of budget policies that is policies on revenue,
expenditure, debt and deficit financing; an explanation of how the
budget relates to the fiscal responsibility principles and to the financial
objectives; and a memorandum by the Minister explaining how the
resolution adopted by the National Assembly on the Plan and Budget
Guidelines have been taken into account. Furthermore, budget
documents should include information regarding loans made by the
Government and the information regarding any payments to be made
and liabilities to be incurred by the Government. However, the Minister
shall prescribe nature of information that is to be presented in the
budget estimates and the form of presentation.
Section 25(1) and (2) of the BA expounds that: before the National
Assembly debate the budget estimates, the Parliamentary Budget
Committee shall discuss the estimates and make recommendations to
the Minister and the Public as submitted before the cut-off date
prescribed in the regulations. However the National Assembly may
amend budget estimates of the Government in accordance with
resolution adopted with regards to the Plan and Budget Guidelines by
ensuring that: an increase in expenditure in a proposed appropriation is
balanced by a reduction in expenditure in another proposed
appropriation; and a proposed reduction in expenditure is used to
reduce the deficit.
4.6 Approval of National Budget by National Assembly
Section 26(1) and (2) of the BA clarifies that, the National Assembly
shall on or before 30th June each year and after debate approve the
Annual National Budget.Italso shall debate and pass the Appropriation
32
Bill, the Finance Bill and any other legislative instruments necessary to
implement the annual budget.
4.7 Expenditure Appropriation
Section 27(1) to (6) of the BA clarifies that Minister shall ensure that the
expenditure appropriation and the budget estimates in an
Appropriation Bill are presented in a way that is accurate, precise,
informative and pertinent to budget issues and clearly identifies the
appropriations by vote and programme. Besides, the appropriation to
the National Assembly shall consist of recurrent expenditure of each
programme and development expenditure of each development project,
broken down by expenditure items.
However, the Minister shall, within thirty days after the National
Assembly has approved the budget estimates, consolidated, publish and
publicise the budget estimates. Furthermore, where budget estimates of
expenditure are approved by the National Assembly public money shall
be deemed to have been appropriated for the service of the Government
and public entities. Despite of that, the Minister shall take all reasonably
steps to ensure that the approved budget estimates are prepared and
published in a form that is clear and easily understood by and readily
accessible to members of the public.
4.8 Where Appropriation Act is not yet in Force
Section 28(1) of the BA expounds that,where the Appropriation Act has
not come into force at the commencement of any FY, the President may,
by warrant signed by the President addressed to the Minister, authorize
a withdrawal from the Consolidated Fund for the purpose of meeting the
expenditure until 31st of October of the relevant financial year.
33
Section 28(2) of the BA explains that, any sum so authorized shall not
exceed the sum specified for such service or one-third of the sums
provided in the Appropriation Act.
4.9 Appropriation to Lapse at the end of Financial Year
Section 29(1) and (2) of the BA clarifies that, an appropriation that has
not been spent at the end of the year for which it was appropriated shall
lapse immediately at the end of that financial year. It further stipulates
that subject to any other written laws the Government or public entity is
holding appropriated money but has not been spent it shall repay the
unspent money into the consolidated fund, prepare and submit a
statement of the same to the commissioner for budget.
4.10 Duration of Appropriations and Warrants
Section 30 Sub Section 1 and 2 of the BA explains that every
appropriation by the National Assembly of public moneys for the service
of a financial year and every warrant or other authority issued under
this Act in respect of such financial year, shall lapse and cease to have
any effect at the close of that financial year. Hence, unexpected balance
of any moneys withdrawn from the Consolidated Fund shall be repaid to
the Consolidated Fund.
4.11 Submission of Budget Policy Highlights
Section 31 Sub Section 1 and 2 of the BA describes that the Minister shall
in each financial and with the approval of Cabinet make Public
pronouncement of the budget policy highlights and revenue raising
measures for the Government. Besides, the Minister shall, in making the
pronouncement take into account any regional or international
34
agreement that the United Republic has ratified including the Treaty for
the Establishment of the East African Community.
4.12 Submission of the Finance Bill
Section 32 (1) and (2) of the BA requires the Minister to prepare and
submit to the National Assembly the Finance Bill setting out measures
for raising revenue for the govt. Thereafter, the National Assembly shall
present its recommendations on the Finance Bill. The recommendations
shall adhere to the principles of management of revenue.
4.13 Withholding of Approval
Section 33 (1) of BA explain that where the National Assembly is
satisfied that there has been material failure to implement previous
audit recommendations made by the National Assembly, the National
Assembly may withhold the withdrawal of specific line items on a vote
on account, from the Consolidated Fund such moneys, as it may
determine for the purpose of meeting any expenditure of such vote.
Section 33(2) expounds that where a vote has willfully and persistently
failed to implement or respond to audit questions and
recommendations, the National Assembly may, subject to such
conditions as it thinks expedient, withhold such amounts from the vote
for the year as are commensurate to the amounts in the audit queries
regarding that vote.
Section 33(3) of BA clarifies that where the National Assembly is
satisfied that a vote has willfully and persistently failed to:
(i) Practice the principles of prudence and sound fiscal management;
(ii) Adhere to proper accounting and financial management practices;
or
35
(iii) meet fiscal objectives and goals, it may, subject to such conditions
as it considers expedient, withhold any one or more of the line
items in votes for the several services under that vote.
Section 33(4) of BA explain that Where the willful and persistent failure
of a department have been shown to be caused by persistent misconduct
of any public officer, the National Assembly may, by a simple majority
vote, and subject to such conditions as it may impose, withhold any of
the emoluments and benefits of such officer for such period as it deems
fit.
Section 33 (5) clarifies that where the vote lays a report before the
National Assembly showing that it has subsequently implemented the
audit recommendations, the National Assembly may, if the
Appropriation Act has not come into force authorize such withdrawals
on a vote on account by that vote as it may determine.
Section 33(6) of BA clarifies that The Controller and Auditor-General
may, in a report to the National Assembly, recommend for the
withholding of any line item in accordance with this section.
4.14 Government Deviation from Financial Objectives
Section 34(1) to (4) of BA explains that Government may, with the
approval of National Assembly, deviate from the financial objectives in a
Plan and Budget Guidelines on a temporary basis where such deviation
is necessitated by a major natural disaster or other significant
unforeseen event as stipulated under section 37. Besides, where there is
a change of the Government, the new Government may, with the
approval of the National Assembly, deviate from the financial objectives
36
in a plan and Budget Guidelines but shall not deviate from the fiscal
responsibility principles.
The Minister shall provide a report to the National Assembly regarding
the deviation and shall include in the report: the reasons for and the
implications of the deviation; proposals to address the deviation; the
period the deviation is estimated to last; and the status of development
projects initiated by the Government and if any project has been
stopped the reason for doing so. Furthermore, the Minister shall, within
thirty days after submission to the National Assembly, publish and
publicize a report.
4.15 Sources of Contingency Fund
Section 35 (1) to (3) of BA explain that; the Contingency Fund
established shall consist of funds appropriated from the Consolidated
Fund by an Appropriation Act in any financial year. In addition, the
Contingency Fund shall form part of the annual budget and the National
Assembly may appropriate such other moneys as it may deem necessary
to replenish the contingency fund. Moreover, the Contingency Fund shall
form part of the annual budget and the National Assembly shall
appropriate additional moneys as it may deem necessary.
Section 35(4) of BA requires the Controller and Auditor-General, in
accordance with the Public Audit Act, to make a report to the National
Assembly on the accounts of the Contingency Fund.
4.16 Administration of Contingency Fund
Section 36 of BA establishes that the Contingency Fund shall be
administered by the Minister. It further elaborates that the permanent
capital of the CF shall not exceed the total amount approved by the
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National Assembly and shall be kept in separate account at the Bank of
Tanzania. Regulation 22 specifies that contingency fund shall be one
percent of the total budget set aside at the commencement of each
financial year. Regulation 23 provides that the Contingency Fund will be
administered and managed within the Treasury Management
Framework and thus the Pay Master General shall appoint the
Accounting Officer of the Treasury Fund. It further clarifies that the
Minister shall be responsible to the National assembly on all policies,
decisions and actions on the use of Contingency Fund. Regulation 24
requires establishment of the Contingency Fund Committee and outlines
members of the committee.
4.17 Advances from Contingency Fund
Section 37(1) of BA guides advances from Contingency Fund where by
Minister may make advances from CF on the basis of criteria, process
and operational guidelines prescribed in regulations and related laws.
Section 37(2) of BA clarifies that Minister shall by regulation make
guidelines on advanced payment onmatters which shall to be considered
to be Unforeseen and cannot be delayed until a later FY and an event
that was unforeseen.
Section 37(3) of BA qualifies unforeseen events include:
(i) Threatens serious damage to human life or welfare.
(ii) Threatens serious damage to the environment.
(iii) Is meant to alleviate the damage, loss, hardship or suffering caused
by the event.
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Section 37(4) of BA provide for circumstances under which an event is
considered to be threat to human life or welfare. The event shall involve:
(i) Loss of life, human illness or injury;
(ii) Homeless or damage to property; and
(iii) Disruption of food, water or shelter.
Section 37(5) of BA explains that money in the contingency fund can
also be used to evacuate citizen of the United Republic of Tanzania
affected by natural disaster that occurs outside the United Republic of
Tanzania.
Section 37(6) requires financial donation to a vote towards natural
disaster to be declared to Minister within 30 days of receipt.
4.18 Parliamentary Approval for Payments Made from Contingency
Fund
The provisions regarding Parliamentary Approval for Payments Made
from Contingency Fund are contained in section 38 of Budget Act.
Section 38 (1) and (2) provides obligation to the Minister to submit to
the National Assembly a detailed report within 2 months after a
payment from CF or not later than 14 days of the sitting of the next
National Assembly.Section 38(3) of BA requires Appropriation bill to
replenish the fund to be introduced to the National Assembly.
4.19 Financial Statements in Respect of Contingency Fund
Section 39(1) and (2) of BA sets the limit of three months after the end
of FY Financial statements including detailed expenditure information of
CF to be submitted to CAG.
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4.20 Accruals and Investments
Section 40 of BA sets conditions for accruals and Investment. It
stipulates that Moneys shall not accrue to the CF other than moneys
appropriated by an enactment of Parliament. It further clarifies that
other accruals which might be received by CF shall be paid into the
consolidated fund.
4.21 Reallocation of Funds
Section 41 of BA provides for procedures, conditions and requirements
for reallocation of funds between and within votes.
Section 41 (1) of BA requiresaccounting officer to obtain approval of the
Minister to reallocate funds from the authorized expenditure.
Section 41(2) of BA gives circumstances under which Accounting officer
shall not reallocate funds which are:
(i) Ring fenced expenditure;
(ii) Transfer to another government entity or person;
(iii) Funds are appropriated for capital expenditure except to defray
other capital expenditure;
(iv) Wages to non wages expenditure; and
(v) Transfer of funds may result in contravention of fiscal
responsibility principles.
Section 41(3) of BA presents circumstances which Accounting officers
may reallocate funds between programs or sub votes, in the financial
year:
(i) There are provisions in the budget of a program or sub vote which
are unlikely to be utilized.
40
(ii) A request for the reallocation has been made to the treasury and
approved.
(iii) Total sum of all reallocations not exceed total expenditure
approved.
Section 41(4) of BA requires Minister to approve reallocation within and
across votes basing on the regulation.
Section 41(5) of BA sets limits on the powers of the Minister where
Powers of Minister shall not be exercised:
(i) In the amount of line items between different votes; and
(ii) From capital expenditure to recurrent expenditure.
Section 41(6) of BA explains thatAccounting officer may reallocate
amount (not exceeding the percent prescribed in the regulation) of line
items within the same vote without authorization of the Minister.
Section 41(7) of BARequires all reallocation of funds to be made in
consultation to all affected government Ministries and entities and to
submit to the National Assembly a quarterly report.
In addition, regulation 27(1) to (3) describes the limits for reallocation
with votes as follows: an Accounting Officer may reallocate funds within
a vote up to seven percent of the total budget allocation for respective
vote; any reallocation exceeding seven percent shall require approval of
the Minister; and reallocation within vote shall not exceed ten percent
of the total budget allocation for the respective vote.
Regulation 28 (1) and (2) clarifies the procedure and limit of
reallocation between votes. All reallocation between votes shall require
41
approval of the Minister and reallocation between votes shall not exceed
nine percent of the total government budget
4.22 Excess Revenue
Section 42 of BA requires excess revenue to be remitted to consolidate
fund. In case of excess expenditure, the causes of excess expenditure and
measures to prevent re-occurrence shall be explained by the accounting
officers.
4.23 Submission of Supplementary Budget
Section 43 expounds thatSupplementary budget in support of excess of
the approved budget or to meet unplanned expenditures need be
submitted to the National Assembly for approval.Supplementary budget
shall be required for:
(i) Increasing or decreasing, change in its purpose or creating a new
appropriation
(ii) Increasing or decreasing the amount of a line item under the
estimates if it cannot be achieved through virements or change of
its purpose.
(iii) Indicating the manner in which contingency fund was used.
Section 43(3) and (4) of BA explains that where the National Assembly
has approved the spending, an appropriation bill shall be introduced for
the appropriation of the moneys spent.The supplementary budget shall
include a statement of additional expenditure and revenues relating to
the fiscal responsibility and financial objectives.
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CHAPTER FIVE
BUDGET EXECUTION, MONITORING, EVALUATION AND REPORTING
5.0 INTRODUCTION
This chapter covers part five of the Budget Act No. 11 of 2015, it
elaborate how the annual budget that has been approved follows the
rules and regulation needed during its implementation. The Chapters
covers the following sections of the Budget Act No. 11 of 2015; Section
44 explains the commitment of Approved Budget; section 45 describes
the authorities for expenditure; section 46 clarifies grants of credit;
section 47 explains withdrawal from the Consolidated Fund; section 48
describes the disbursement of Funds to the National Assembly and
Judiciary Fund; section 49 expounds about the ACGEN’s Warrants;
section 50 explains assumption of commitments while section 57 tell us
about the quarterly statements of the Government.
5.1 Commitment of Approved Budget
According to the Budget Act No. 11 of 2015, Section 49 subsection 5
explains the word Commitment as a contract, agreement or any other
agreement providing for a payment. Section 44 (1) to (3) of the BA
explains that the Minister of the Finance and Planning required by the
Act to issue annual cash flow plan based on work, procurements and
recruitment plans and that annual cash flow shall be the basis for
release of funds from the Consolidated Fund. This section clarifies that
the Accounting Officers shall commit the budget in accordance with the
annual cash flow plan. Section 44 Sub section 4 of BA explains that a
vote or special fund shall not take any credit for services or goods from
any person unless it has capacity to pay for the expenditure.
43
5.2 Authorities for Expenditure
Section 45 of the BA explains that where the Government and a public
entity have expenditures that are charged on the Consolidated Fund
under enactment of Parliament:-
(i) An accounting officer has the authority to spend the money in
accordance with the purposes specified in the legislation.
(ii) Funds disbursement to votes shall be based on performance,
approved budget and funds availability.
5.3 Grants of Credit
Section 46 of the BA explains that the CAG shall issue grants of credit on
the Consolidated Fund to the Minister for:
(i) The amounts becoming payable during ensuing three months for
statutory expenditure.
(ii) The amounts becoming payable for the service of a financial year
under the authority of an Appropriation Act.
5.4 Withdrawal from the Consolidated Fund
Section 47(1) of the BA describes that the payment shall not be made:
(i) Out of the consolidated fund except in the manner provided for by
enactment of Parliament.
(ii) In excess of the amount granted under an appropriation for any
services.
5.5 Disbursement of Funds to the National Assembly and
Judiciary Fund
Section 48 of the BA expounds that the Treasury shall within every
quarter of each financial year pay out of the Consolidated Fund into the
National Assembly Fund and the Judiciary Fund.
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5.6 ACGEN’s Warrants
Section 49(1) to (4) of the BA explains that the ACGEN shall authorize
accounting officers to incur expenditures up to limits and for the
purposes and subject to the conditions set in the warrant. Besides, the
warrant shall not be issued by the Accountant General unless the sum
and purpose have been clearly stated in a Warrant by the Paymaster
General.
However, an accounting officer may not make any payment or accept
any charge in his accounts or incur any commitment or expenditure
unless and until authorized by warrant. Every warrant issued by the
ACGEN shall be subject to such limits and conditions as the Minister may
determine. Section 49(5) of BA, elaborates a word Commitment as a
contract, agreement or other arrangement providing for a payment.
5.7 Assumption of Commitments
Section 50 of the BA clarifies that a public entity shall make
commitments on the following conditions:-
(i) An amount to be paid under the commitment to be equal to or less
than the available appropriation;
(ii) The legality of expenditure to be made under the commitment
have been verified; and
(iii) The commitment is in accordance with a quarterly budget release.
5.8 Multi Annual Commitments
Section 51 (1) and (2) of the BA clarifies about Multi Annual
Commitments as the project or commitment that will be done more than
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one year. Any multi annual commitments shall require prior approval of
the Minister for ensuring:
(i) The commitments do not cause any multiannual expenditure
ceiling under the plan and budget guidelines;
(ii) The amount to be paid under the commitment within the present
financial year be equal to or less than the available appropriations;
(iii) The legality of expenditure to be made under the commitment
have been verified; and
(iv) The portion of the commitment to be paid from the present year’s
budget is in accordance with a quarterly budget release if any.
5.9 Commitment Control System
Section 52 (1) of the BA expounds that the government or public entity
shall be required to:
(i) Maintain a commitment control system into which all assumed
commitments are entered.
(ii) Prohibit payment from the budget without the underlying
commitment being recorded in the commitment control system
and the commitment number being issued by the system.
Section 52(2) of BA explains that all outstanding commitments shall be
included in the annual estimates showing:
(i) Sufficient amount of the line item to cover the outstanding multi
annual commitments to be paid under the line item.
(ii) Expenditure ceilings and fiscal forecast under the plans and budget
guidelines adequately reflect the outstanding multi annual
commitments.
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5.10 Report on Expenditure Commitments
Section 53 (1) and (2) of the BA point out that the Accounting Officer
shall prepare a quarterly expenditure report and submit to the PST and
also the Minister of Finance and Planning shall, with due regard to a
report submitted and within 30 days after the end of every quarter
submit a consolidated report to the National Assembly.
5.11 Development Project Contracts
Section 54 (1) and (2) of the BA explains that a public entity shall, before
concluding any contract that has financial implication, obtain the
approval of the Minister of Finance and Planning. The Minister may,
within 30 days, provide the financial approval on the conditions that the
contract satisfies the criteria on assumption of multi annual
commitments and the project is affordable.
5.12 In Year Reporting
Section 55 (1) to (4) of the BA describes that the ACGEN shall, within the
time prescribed in the regulations, submit to the PST information of
every government and public entities on actual revenue and expenditure
for the preceding month and the amounts anticipated to be collected or
expended for that month by the Government. Also the Public entities,
special funds and social security funds shall report to the Paymaster-
General the actual revenues and expenditure on a quarterly basis. The
CB and CPAD shall, within the time prescribed in the regulations issue
and publish quarterly a report on budget execution. An accounting
officer shall, within the time prescribed in the regulation submit
quarterly progress report to the PST.
47
In addition, Regulation 29 (1) to (5) clarifies that: the Accountant
General shall submit to the Paymaster General information in respect of
the every government and Public Entities on actual revenues and
expenditures of the previous month; Public Entities, Special Funds and
Public Social Security Funds shall submit reports to the Paymaster
General on actual revenue and expenditures on quarterly basis.
Additionally, the report or information referred to under Sub regulation
(1) and (2) shall be submitted within thirty days after the end of the
respective quarter; the Commissioner for Budget shall, in collaboration
with the Commissioner for Policy Analysis issue and publish the
quarterly budget execution report within thirty days after the end of the
respective quarter; and the Accounting Officer shall submit quarterly
progress reports to the Paymaster General within thirty days after the
end of the respective quarter.
5.13 Compliance Report
Section 56(1) and (2) of the BA explains that the Minister shall, within
three months after the laying of the budget before the National
Assembly and in every quarter thereafter, lay before the National
Assembly, sequentially and cumulatively, a compliance report. However,
where the National Assembly is not in session on the date specified
under subsection (1) the compliance report shall be laid before the
National Assembly on the second day immediately after the reconvening
of the National Assembly.
Section 56(3) of the BA explains that the compliance report shall be
debated in the National Assembly. A compliance report shall:
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(i) Indicate the period under review, the extent to which the
objectives and targets in the Plan and Budget Guidelines were met;
and
(ii) Specify the following amounts and compare them with the
corresponding targets for the period under review.
(a) Actual revenue for the relevant period and a comparison of
the expected;
(b) The actual expenditure per vote, distinguishing between
capital and current expenditure for that period and for the
financial year up to the end of that period; and
(c) Actual borrowing for that period, and for the financial year
up to the end of the financial year.
Section 56(4) of BA explains that where objectives and targets are not
met, the compliance report shall state:
(i) Reasons why such objectives and targets were not met;
(ii) Remedial measures undertaken to ensure that objectives and
targets which were not met shall be met in the next quarter;and
(iii) Any proposed Government policy decisions that may materially
affect the objectives and targets in the budget statement of intent
or the country’s overall fiscal and economic performance.
Section 56(5) and (6) of the BA expounds that the ACGEN shall prepare
monthly statements of the consolidated funds which include the actual
revenue and exchequer releases and submit to Permanent Secretary for
use in the preparation of various reports. Also the Minister shall, within
six months after the approval of the annual national budget by the
49
National Assembly and at the end of every financial year, lay before the
National Assembly a compliance report to be debated by the National
Assembly.
5.14 Quarterly Statements of the Government
Section 57 Sub section (1 and 2) of BA explains that the ACGEN shall
prepare the aggregate actual revenue and expenditure of the
Government and public entities and forward to the Minister who shall
submit the same to the National Assembly one month after the end of
each quarter. Each Accounting Officer shall prepare and submit to the
Paymaster – General statement of reallocation made within his
respective votes.
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CHAPTER SIX
MANAGEMENT OF REVENUES
6.0 INTRODUCTION
This chapter is divided into two parts. Part one is about Principles for
management of revenues while part two concerns with responsibility in
revenue collection and management.
Administration of tax revenues is governed by the various tax laws such
as Income Tax Act 2004, Tax Administration Act 2015, the excise
(Management and tariff) Act as revised in 2008 and VAT Act 2014. The
administration of the non-tax revenues is overseen by the Public
Finance Act, Cap 348 and the Local Government Finance Act, Cap 290
and Treasury Registrar (power and functions) Act CAP. 370 of 2002 as
amended in 2010.
6.1 Principles for Management of Revenues
Section 58 of Budget Act No. 11 of 2015 identified that; the revenue part
of the budget shall be based on the following principles-
(i) All revenues of the Government from domestic and foreign sources
are deposited to the Consolidated Fund;
(ii) Any person who is vested with authority for the collection of
public revenue is accountable for efficient collection, accounting
and reporting based on the applicable law and taking precautions
to prevent mismanagement of revenues; and
(iii) All revenues of the Government is appropriated in the
Appropriation Act.
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6.2 Responsibility in Revenue Collection and Management
Section 59 (1) of Budget Act No. 11 of 2015 clarifies that the Minister
shall work on procedure by which proposals and recommendation on
the budget estimates for the next financial year of the National Assembly
shall be submitted or channeled to the Minister not later than
15thFebruary.
Section 59 (2) clarifies responsibilities of the Permanent Secretary in
relation to revenue collection and management to be:
(i) Manage and set principles for planning and researching existing
and potential sources of revenues;
(ii) Establish a mechanism and cut off points in receiving proposals for
revenue measures. This has been elaborated further by regulation
30 (1) which explains that: the procedure for receiving revenue
proposals from stakeholders on taxes and non-tax revenues to be
considered for reforms for the next fiscal year shall be published
by early December each year; and the publication shall call upon
members of the general public, Members of Parliament, academic
institutions, non-governmental organizations, faith based
organizations and others to submit proposals and
recommendations to the Paymaster General between months of
January and February for each financial year.
Moreover, the proposals and recommendations received shall be
submitted to the Task Force on Tax Reforms by end of February
of each financial year; the Task Force on Tax Reforms shall
effectively discuss proposals and recommendations received from
March to April each and make recommendations to the Minister by
early May of each financial year; the Minister shall submit the
52
recommendation of the Task Force on Tax Reforms to the Advisory
Committee soon upon receiving such recommendations.
In addition, aforesaid regulation expounds that: the Advisory
Committee shall advice the Minister on the new revenue measures
by May of each financial year; and there shall be pre- budget
meeting of sectoral Council of Ministers of Finance for East Africa
Community by early April of each financial year; and there shall be
meeting of Sectoral Council of Ministers of Finance and Trade for
East Africa Community by early June of each financial year.
(iii) Develop revenue measures for Government Budget;
(iv) Mobilize resources including assistance from Development
Partners and integrate the funds into planning, budgeting,
reporting and accountability processes as prescribed by this Act;
and
(v) Promote and enforce transparency, efficiency and affective
management of revenues.
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CHAPTER SEVEN
OVERSIGHT OF PUBLIC ENTITIES AND EXTRA- BUDGETARY
AGENCIES
7.0 INTRODUCTION
Part VII of the BA acknowledges the power of the Minister in managing
budgetary process of Local Government, Authorities Public Entities and
Extra Budgetary agencies such as budgets estimates as well as
borrowing of aforesaid above. The part and its regulation govern the
procedure at which Budget of Local Government Authorities, Public
Entities and Extra Budgetary Agency is prepared and approved. It gives
power to the Ministry of Finance and Planning to scrutize, approve,
amend or reject the budget estimates of Local Government authorities,
Public Entities and Extra Budgetary government agencies.
Part VII of the BA covers the following major sections: Section 60 talks
about Budgetary and Financial Management of Local Government
Authority, Section 61 explains the Powers of the Minister to waive tax,
fees or charges and Section 62 describes Budgetary and Financial
Management of extra-budgetary agencies.
7.1 Budgetary and Financial Management of Local Government
Authority
Section 60 (1) and (2) of BA explains that the Minister shall oversee the
budgetary and financial management of local government authorities. In
doing so, both draft and approved budgets of local government
authorities shall be submitted to the Minister and to the Minister
responsible for local government authorities on specific deadlines.
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Section 60 (3) and (4) of BA illustrates the establishment and
management of extra-budgetary and special funds of local government
authorities shall require approval by the Minister upon consultation
with the Minister responsible for the Local Government Authorities. It
further clarifies that without affecting the provision of the Local
Government Finance Act, borrowing by local government shall be
approved by the Minister.
Section 61 of BA gives powers to the Minister to waive tax, fees or
charges provided that he maintain record of each waiver together with
reasons for the waiver and report on each waiver quarterly to the
National Assembly.
7.2 Financial Management of Extra Budgetary Agencies
With regard to budgetary and financial management of extra budgetary
agencies, the Ministers responsible for the respective agencies have
been given power to oversee the budgetary and financial management of
extra budgetary agencies and special funds included in the central
government and social security funds as clarified in Section 62 (1) of BA.
Section 62 (2)(a) and (b) of BA highlights that in fulfilling this
responsibility both draft and approved budgets of extra-budgetary
agencies and funds shall be required to be submitted to the Minister and
respective portfolio Minister by specific deadlines as prescribed in the
regulations. Furthermore, borrowing by extra budgetary agencies and
funds shall require prior approval of the Minister where such extra
budgetary agencies have such legal capacity.
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CHAPTER EIGHT
GENERAL PROVISIONS
8.0 INTRODUCTION
This chapter covers part eighty of the BA, it describes the regulations,
instructions and direction needed to be followed. This chapter covers
the following sections of the budget Act No. 11 of 2015: Section 64,
which is about the extension of time; Section 65 explains liability on
failure to meet requirement of the Act; Section 66 talks about the
corrective measures against entities included in the Government and
public entities; Section 67 is about the Indemnity of public officers;
Section 68 clarifies about overriding effect of the Act and Section 69 is
about the transitional provisions.
8.1 Extension of Time
Section 64 of the BA explains that theNational Assembly may, by
resolutions, extend the time limit for submitting a statement or other
documents required to be submitted to the National Assembly under
this Act other than the time limits set under the Constitution.
8.2 Liability on Failure to Meet Requirements of the Act
Section 65(1) to (3) of the BA expounds that where the Government and
public entities fail to meet any requirement under this Act, the National
Assembly may compel the relevant Minister to appear before it and give
explanation on the circumstance leading to the failure. However, where
it is evident that a public officer intentionally or through negligence led
to the failure of the government or public entities to meet any
requirement under this act, that public officer shall commit a
disciplinary offence and shall be held personally liable for disciplinary
56
penalty. Besides the Minister shall take corrective actions against a
public entity where it causes financial non-compliance or significant
over spending or unbudgeted expenditure.
Section 65 (4) of BA describes the corrective actions that should be
taken regarding liability on failure to meet requirement on this Act,
these shall include;
(i) submission and approval of action plan;
(ii) deduction of overspending or unbudgeted expenditure from the
subsequent budget estimates;
(iii) requirement of the Minister’s prior approval for certain
expenditure and
(iv) Suspension of financial management powers of an accounting
officer.
8.3 Corrective Measures against Entities included in the
Government and Public Entities
Section 66 (1) of the BA clarifies that the Minister for Finance and
Planning may take such corrective actions against a Local Government
Authority, Extra-Budgetary Agency and Special Fund included in the
Government and Public Entities where they cause financial non-
compliance or face financial problems.
Section 66(2) describes the corrective actions against entities included
in the Government and Public entities that shall include:
(i) Submission of action plans;
(ii) Requirement of the Minister’s approval for key financial decisions;
(iii) Reduction or suspension of transfer from the Government Budget;
or
57
(iv) Appointment of financial administrators to take over certain
financial decision-making powers.
8.4 Indemnity of Public Officers
Section 67 of the BA explains a public officer in the Government, Public
Entity, Extra Budgetary Agency or Special Fund shall not be personally
liable administratively or criminally for anything done or omitted to be
done in good faith in the execution or purported execution of any duty
imposed or exercising power conferred by this Act.
8.5 Overriding Effect of the Act
Section 68 of the BA describes that this act shall have overriding effect
on any other written law on any matter relating to:
(i) National budget, of public entities local government authorities or
extra budgetary agencies;
(ii) Management of budget process;
(iii) Budget execution, monitoring, evaluation and reporting;
(iv) Management of revenue and expenditure; and
(v) Oversight of public entities and extra budgetary agencies.
8.6 Transitional Provisions
Section 69 (1) and (2) of the BA explains that, upon the coming into
force of this Act, the consideration of the votes on accounts for various
votes that have not been filed in compliance with reports on
implemented audit recommendations shall take place on the day after
the annual estimates are laid before the National Assembly. Besides,
votes shall request such amounts as are needed for the purpose of
meeting the expenditure necessary to provide Government and public
58
entities operations before the coming into force of the Appropriation Act
for the year.
In addition, Regulation 32 (1) to (3) describes that: the Minister shall
submit to the National Assembly a report of votes that have been
receiving consecutively qualified audit report for the past three years;
the votes not complied with any provisions in the Act; the National
Assembly may limit amounts approved to eighty five per cent of their
respective budgets; and the penalty shall not limit other disciplinary
penalty as stipulated in the BA.
Section 68 (3) and (4) of the BA explains that the National Assembly
may limit amounts approved under votes on account to the percent to
be prescribed in the regulations of the total sums in the budget
estimates for the year if the requesting vote has not complied with any
of the provisions of this Act. However, in this section, “Government
operations” means any of the services rendered and activities
undertaken by any vote whether such services are recurrent or not.
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APPENDICES
APPENDIX I: ARRANGEMENT OF SECTIONS IN THE BUDGET ACT
PART I
PRELIMINARY PROVISIONS
1. Short title and commencement
2. Application
3. Interpretation
PART II
MACROECONOMIC AND FISCAL FRAMEWORK
4. Principles of fiscal policies and management
5. Fiscal policy objectives
6. Macroeconomic and fiscal forecast
7. Coordination with National Development Plan
PART III
MANAGEMENT OF BUDGET PROCESS
8. Responsibilities of the National Assembly
9. Parliamentary Budget Committee
10. Powers and functions of the Minister
11. Responsibilities of the Minister responsible for Planning
12. Powers and functions of the Permanent Secretary and
Paymaster-General
13. Powers and functions of the Planning Commission
14. The Commissioner for Budget
15. The National Plan and Budget Guidelines Committee
16. The Commissioner for Policy Analysis
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17. Powers and functions of Treasury Registrar
18. Powers and functions of accounting officers
PART IV
BUDGET PREPARATION AND APPROVAL PROCESS
19. Stages in the budget process
20. National Development Plan
21. Plan and Budget Guidelines
22. Budget of public entities
23. Submission of budget estimates and related documents for
approval
24. Submission of other budget documents to the National Assembly
25. National Assembly to Consider Budget Estimates
26. Approval of the National budget by the National Assembly
27. Expenditure appropriation
28. Where Appropriation Act is not yet in force
29. Appropriations to lapse at the end of financial year
30. Duration of appropriations and warrants
31. Submission of budget policy highlights
32. Submission of the Finance Bill
33. Withholding of approval
34. Government deviation from financial objectives
35. Sources of Contingency Fund
36. Minister to administer the Contingency Fund
37. Advances from the Contingency Fund
38. Parliamentary approval for payments made from Contingency
Fund
39. Financial statements in respect of the Contingency Fund
40. Accruals and investments
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41. Reallocation of funds
42. Excess revenues
43. Submission of supplementary budget
PART V
BUDGET EXECUTION, MONITORING, EVALUATION AND REPORTING
44. Commitment of Approved Budget
45. Authorities for expenditure
46. Grants of credit
47. Withdrawal from the Consolidated Fund
48. Disbursement of Fund to the National Assembly Fund and the
Judiciary Fund
49. Accountant-General’s Warrants
50. Assumption of commitments
51. Multi-annual commitments
52. Commitment control system
53. Report on Expenditure Commitments
54. Development project contracts
55. In-year reporting
56. Compliance report
57. Quarterly statements of the Government
PART VI
MANAGEMENT OF REVENUES
58. Principles for management of revenues
59. Responsibility in revenue collection and management
PART VII
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OVERSIGHT OF PUBLIC ENTITIES AND EXTRA BUDGETARY
AGENCIES
60. Budgetary and financial management of local government
authority
61. Power of the Minister to Waive Tax, Fees or Charges
62. Budgetary and financial management of extra-budgetary
agencies
PART VIII
GENERAL PROVISIONS
63. Regulations, instructions, and directions
64. Extension of time
65. Liability on failure to meet requirements of this Act
66. Corrective measures against entities included in the Government
and public entities.
67. Indemnity of public officers
68. Overriding effect of the Act
69. Transitional provisions
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APPENDIX II: ARRANGEMENT OF SECTIONS IN THE REGULATIONS OF THE BUDGET ACT
PART I
PRELIMINARY PROVISIONS
1. Citation
2. Interpretation
PART II
MACROECONOMIC AND FISCAL FRAMEWORK
3. Principles of Fiscal Responsibility
4. Deviation from the principles of prudent fiscal management
5. Macroeconomic and fiscal forecasts, financial programming and
macroeconomic modeling
6. Coordination with National Development Plan
PART III
MANAGEMENT OF BUDGET PROCESS
7. Public Expenditure Review
8. Functions of Public Expenditure Review forum
9. Composition of Public Expenditure Review forum
10. Objectives of the task Force on Tax Reforms
11. Composition of the Task Force on tax Reforms
12. Powers and functions of the Paymaster General
13. Mechanism for conducting periodic review
14. Functions of the Planning Commission
15. Powers and Functions of Commissioner for Budget
16. Composition of the National Plan and Budget Guidelines
Committee
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17. The powers and Functions of Accounting Officers
PART IV
BUDGET PREPATION AND APPROVAL PROCESS
18. Stages in the budget process
19. Submission of other budget documents
20. Carryover of unspent disbursed funds
21. Submission of carry over
PART V
CONTINGENCY FUND
22. Minister to administer the Contingency Fund
23. Administration of the Contingency Fund
24. Contingency Fund Committee Members
25. Withdrawal money from the Fund
26. Reallocation of funds
27. Reallocation within votes
28. Reallocation between votes
PART VI
BUDGET EXECUTION, MONITORING, EVALUATION AND REPORTING
29. In year reporting
PART VII
MANAGEMENT OF REVENUE
30. Revenue collection proposals
PART VIII
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OVERSIGHT OF PUBLIC ENTITIES AND EXTRA BUDGETARY
AGENCIES
31. Extra- Budgetary Agencies
32. Transitional Provisions
Footnotes:
1. The arrangement of the sections in the Act and Regulations are subject to change depending on any amendments made.
2. Training power point presentations are available in separate CDs.
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APPENDIX III: RECOMMENDED TRAINING EXERCISES
Qn.1. Critically, analyze the circumstances under which the Minister
may deviate from the Principle of fiscal management as per the
Budget Act, No.11 of 2015.
Qn.2. Do you have in place an active Budget committee in your
Institution?
If yes; What is its composition?
If no; Why and how the budget process is conducted in your
Institution?
Qn.3. According to CAG reports, Institution Y has used Tshs 150m set
for construction of female hostel for the construction of
laboratories using the resolution made by Head of Departments.
Advise the possible disciplinary action to be taken by National
Assembly in accordance with the Budget Act, No. 11 of 2015 and
its Regulations.
Qn.4. Institution X is requesting the Minister for the disbursement of
Tshs. 15m approved in the budget of 2013/14 and Tshs. 10m of
2014/15 which was approved for water sector. Advise the
Minister on this situation based on the Budget Act, No.11 of 2015.
Qn.5. Twende Pamoja District Council has been directed by a
Prominent Politician in the Constituency to increase Juhudi High
School enrolment from 5,000 per year to 6,500. The District
Executive Director is now contemplating making an application
to the Treasury to make use of the Contingency Fund as
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education is one of the key sectors in the Country. On the basis of
Budget Act, No.11 of 2015, can they make an application to the
Contingency Fund? Give reasons.
Qn.6. Miembe Saba Ministry of Health is requesting the PST for an
approval for internal reallocation of Tanzania Shillings 2 million
in November. Based on the following information what would
you recommend on addressing this request?
- PE Budget - Tshs.70 million
- OC budget - Tshs. 60 million
- Dev. budget - Local Tshs. 30 million
- Dev. Budget - Foreign 28 million
Qn.7. Analyse the requirements of the Budget Act,No.11 of 2015 on
Management of Multi-annual commitments.
Qn.8. The PST has issued a notice to all public Institutions and Agencies
instructing them to submit their budget for FY 2016/17 to the
Ministry of Finance and Planning for scrutiny. Many Institutions
and Agencies have obeyed the call and submitted the same to the
Ministry. However, there are some Institutions which have
shown stiff resistance that they cannot submit the respective
budget to the Ministry citing the following reasons:-
(a) They are independent institutions and therefore they are
not obliged to submit their budget to MoFP for scrutiny.
(b) The laws establishing their institutions grant them
autonomous status and they report to their parent
ministries and not MoFP.
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(c) They have their Board of Directors as part of corporate
governance structure where their budget proposals are
submitted for approval and not anywhere else.
Qn.9. As a senior expert in Planning and Budgeting, what is your
opinion on the position of these institutions, while taking into
account the requirements of the Budget Act No. 11 of 2015?
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BIBLIOGRAPHY
1. Budget Act No.11 of 2015 and its Regulation
2. Concept paper on proposal for enactment of the Budget Act,
Ministry of Finance, October 2014.
3. Gender Responsive Budgeting Training Manual, Ministry of Finance,
4. Professional Training SeriesNo. 7, Training Manual on Human
Rights Monitoring, United Nations, New York and Geneva; 2001
5. Training Manual on International Environmental Law, United
Nation Environment Programme.
6. Constitution of the United Republic of Tanzania of 1977
7. Public Finance Act, 2001
8. Public Procurement Act, 2011
9. Local Government Finance Act, 1983
10. Local Government Act, 1982
11. Plan and Budget Guidelines, 2016/17