Plan to Reform Budget Expenditures and Improve Financial Management Efficiency

Ibrahim Muhammad: Sources close to the matter revealed that the Ministry of Finance is preparing to engage a consulting firm and another specialized entity for system implementation to develop the State’s General Budget Planning and Preparation System. This initiative aims to enhance the efficiency of budget preparation and monitoring, improve financial management in ministries, government agencies, and independent institutions, and pave the way for a gradual transition to a program and performance-based budget.

In its project documents, the Ministry stated that reforms supporting the planning and preparation of public sector budgets constitute a fundamental pillar within the expenditure-side reform plan, as part of its broader financial and economic reform strategy. It noted that the project aims to achieve tangible short-term results by improving budget preparation, monitoring, and reporting, leveraging global best practices and a modern system. The Ministry clarified that the project lays the foundation for a gradual transition toward adopting performance- and program-based budgeting methodologies in the medium term, thereby enhancing the quality and sustainability of public financial management.

The Ministry is working to integrate Oracle Hyperion solutions, which support planning and budget preparation, into the Government Financial Management Information System (GFMIS), based on an enhanced version of budget preparation procedures. The new system will encompass all ministries, government departments, attached entities, and independent institutions. According to the documents, the project aims to begin preparing the 2027/2028 fiscal year budget using the new system in parallel with the current public sector budget system (PSB), before transitioning to preparing the 2028/2029 budget exclusively through the new system. This includes transferring data from the current system to Hyperion, reviewing it by budget staff, while maintaining the accuracy, format, and quality of outputs, achieving higher efficiency with less effort, and fulfilling budget requirements through reports and outputs.

The Ministry has defined two main tracks for implementing the project. The first focuses on the consulting aspect, providing advice and implementing continuous improvements to current budget preparation processes without introducing radical new principles at this stage, while preparing for medium-term budget reforms. These improvements include evaluating budgets, issuing circulars, supporting tools, and related instructions, with developed procedures documented and disseminated to enable relevant entities to use them in planning and budget preparation. The consulting firm will also provide a clear roadmap for implementing enhanced medium-term budget and program/performance budget processes throughout the implementation period, alongside project management and quality assurance.

The second track, technical in nature, involves comprehensive computerization of budget submission and approval processes, ensuring direct integration between Hyperion solutions and related Oracle components within the GFMIS. This integration extends to other systems interconnected with budget preparation, including contracts, procurement, and human resources systems, while providing the necessary foundations, interfaces, and technical solutions to implement program and performance budgeting, as well as line-item, classification-based, and medium-term budgets. The documents stipulated that the system must be capable of keeping pace with developed budget preparation procedures, adapting to future requirements and related reforms, thereby allowing continuous development of financial work without limiting the system to current needs.

The project involves activating estimated monthly cash flow plans for ministries, attached entities, and independent institutions, in addition to exchanging financial data between the new system and the Government Financial Management System. This includes migrating original and supplementary budget entries and appropriations for all entities from Hyperion to the General Ledger in the Government Financial Management System, and transferring actual and closing entries in the reverse direction, thereby supporting budget monitoring and the preparation of related reports. The consulting and implementing entities will provide advice on suitable Hyperion solutions for implementation during the project period and develop an implementation plan in accordance with specified requirements.

Analysis of 10 Services: The Ministry seeks to provide an integrated platform for reviewing and analyzing government service prices and evaluating their profitability or losses, with the aim of enhancing transparency and enabling financial decisions based on accurate data. This step begins with the study and analysis of 10 government services selected by the Ministry as an initial pilot phase, preparing a detailed financial guide for them that includes cost and revenue elements, as well as profitability and loss indicators. The selected services are then prepared and listed on the platform to be ready for actual use. The platform allows for the issuance of detailed reports and performance indicators related to costs, revenues, and profitability, enables comparisons between services, and facilitates testing of hypothetical scenarios to measure the impact of changing data on financial outcomes. Its design is required to be flexible, allowing for the addition of new government services in the future, with training provided to the Ministry of Finance team to prepare and list these services independently to ensure operational sustainability.

Program and Performance Budgeting Pilot: The project involves piloting the preparation of the Ministry of Finance’s budget according to the program and performance budgeting methodology, while continuing to prepare the budget on a line-item and object basis, adhering to accepted accounting bases, including the modified cash basis and the accrual basis for independent institutions. The implementing entity proposes the components included in the pilot application, ensuring they add value, align with the current state of public financial management, and are feasible within the available timeframe. The pilot is accompanied by knowledge transfer to relevant staff and training on the methodology and system, as well as holding awareness workshops and seminars for all key stakeholders involved in the project.

Operation by Government Staff: The Ministry has set as a target outcome the empowerment of its staff and staff of relevant government entities to operate the system without external assistance by the end of the project, through a sustainable training program covering enhanced budget preparation processes and the use of Hyperion. The consulting and implementing entities are committed to providing a clear plan for technical capacity development and knowledge transfer, starting with an assessment of training needs and covering various users and employees responsible for the pilot implementation. The Ministry provides training facilities, while the implementing company provides the remaining requirements, ensuring the qualification of government cadres to operate the system in the long term.

Transparency and Implementation Quality: The Ministry seeks a joint or consortium proposal between a consulting entity and an implementing entity for the system, to provide the required expertise, independence, and transparency, along with proof of the ability to execute the project and a track record of successful projects in this field. The documents emphasized that software modifications and components must adhere to global practices in software development, security, and protection, and that these standards must be consistently applied throughout the development period.

The Ministry reaffirmed its commitment to a fair, transparent, and competitive tendering process, supported by a specialized evaluation team, with the aim of securing the best value for the government while adhering to governance principles in the use of public resources.