Question 18

Does the Executive’s Budget Proposal or any supporting budget documentation present information for at least the budget year that shows how new policy proposals, as distinct from existing policies, affect revenues?
 * a. Yes, estimates that show how all new policy proposals affect revenues are presented, along with a narrative discussion.
 * b. Yes, estimates that show how all new policy proposals affect revenues are presented, but a narrative discussion is not included.
 * c. Yes, information that shows how some but not all new policy proposals affect revenues are presented.
 * d. No, information that shows how new policy proposals affect revenues is not presented.
 * e. Not applicable/other (please comment).

Guidelines
Questions 17 and 18 ask about new policy proposals in the budget. In any given year, most of the expenditures and revenues in the budget reflect the continuation of existing policies. However, much of the attention during the budget debate is focused on new proposals — whether they call for eliminating an existing program, introducing a new one, or changing an existing program at the margins. Typically, these new proposals are accompanied by an increase, a decrease, or a shift in expenditures or revenues. Because these changes may have different impacts on people’s lives, the budget proposal should present sufficient detail about new policies and their budgetary impact.

Question 17 asks about new expenditure policies, and Question 18 asks about new revenue policies. To answer “a,” the Executive’s Budget Proposal or supporting documentation must present both estimates of how all new policy proposals affect expenditures (for Question 17) or revenues (for Question 18) and a narrative discussion of the impact of these new policies. To answer “b” for either question, the Executive’s Budget Proposal or supporting documentation must present estimates that show the impact of all new policy proposals, but no narrative discussion is included. A “c” response applies if the presentation includes only a narrative discussion, or if it includes estimates that show the impact of only some, but not all, policy proposals (regardless of whether it also includes a narrative discussion). Answer “d” applies if no information is presented on the impact of new policy proposals.

Prior-year information constitutes an important benchmark for assessing the proposals for the upcoming budget year. Estimates of prior years should be presented in the same formats (in terms of classification) as the budget year to ensure that year-to-year comparisons are meaningful. For example, if the budget proposes shifting responsibility for a particular program from one administrative unit to another — such as shifting responsibility for the training of nurses from the health department to the education department — the prior-year figures must be adjusted before year-to-year comparisons of administrative budgets can be made.

Typically, when the budget proposal is submitted, the year prior to the budget year (BY-1), also known as the current year, has not ended, so the executive will provide estimates of the anticipated outcome for BY-1. The soundness of these estimates is directly related to the degree to which they have been updated to reflect actual expenditures to date, legislative changes that have occurred, and anticipated changes in macroeconomic, caseload, and other relevant factors for the remainder of the year.

The first year that can reflect actual outcomes, therefore, is generally two years before the budget year (BY-2). Thus the OECD recommends that data covering at least two years before the budget year (along with two years of projections beyond the budget year) are provided in order to assess fully the trends in the budget.

1) Can a country NOT have new policies for a given budget year? [therefore answer “e ”]
If there are no new policies presented in the EBP, answer choice “d” should be selected.

It would be very hard to believe that there are no new policies or programs in any budget year except those when a new administration takes office. Does it mean that all of the things a new administration wants to do it does in its first year in office, and then sits and waits for the rest of its term? The links between budgets and broad policy statements covered in questions 47-48 may apply to cases when policy goals are set every few years, but new policies and programs (Q.17-18) certainly exist every year.

2) How do we score a response that includes some new policies AND a narrative?
If there is information on some new policies and there is a narrative, should we score this “b”?

No, since there are key elements missing, we cannot score this any higher than a “c”, even though it has a narrative.

3) If a Budget Speech gives figures on new policy proposals using a narrative form, does this qualify for a "c" response?
The team discussed Lesotho’s Budget Speech in OBS 2019, which we thought could justify a "c" answer for Q17 and Q18. The narrative states a new endeavor and then gives a figure. Here are some examples:

For Q17, on page 12, paragraph 39:

“Government will undertake feasibility studies to catalyse private sector investment to support construction of poultry and piggery abattoirs, upgrading of national abattoir to meet international standards as well construction of 50 feedlots throughout the country (5 per district). Government will continue to support improvement of wool and mohair and the associated value chain. M277.8 million has been set aside to pursue this livestock economy investment. A further M100 million is proposed for the Ministry of Development Planning to support feasibility studies and designs.” For Q17, on page 18, paragraph 66:

“As part of Government policy to eliminate obstacles endured by small businesses, the Ministry of Small Business Development, Cooperatives and Marketing will establish market centres in Tsikoane, Leribe, Tikoe, Maseru, and Mohale’s Hoek. The Ministry will also facilitate the construction of two slaughter houses to enable safe handling of meat and access to larger markets. M22.1 million is proposed to fund this initiative.” For Q18, on page 5, paragraph 15:

“The [Lesotho Revenue Authority] will also enhance tax administration measures, targeting improved compliance by major tax contributors. This is expected to yield an additional M350 million.”

We agreed to score this question a "c". Ideally, however, you should also be able to see some of these items (mainly the spending ones) reflected in the budget figures for specific programs.