Budget process vital in project planning

Tuesday June 26, 2018 Written by Published in Economy
Natalie Cooke, the economic policy advisor at the Ministry of Finance & Economic Management (MFEM), spoke about the budget process during the Global Breakfast Update last week Thursday. 18062503 Natalie Cooke, the economic policy advisor at the Ministry of Finance & Economic Management (MFEM), spoke about the budget process during the Global Breakfast Update last week Thursday. 18062503

The government has to follow an established budget process before giving the green light to infrastructure projects, says the economic policy advisor at the Ministry of Finance & Economic Management (MFEM), Natalie Cooke.

In her presentation during the Global Breakfast Update at the Rarotongan Resort on Thursday of last week, Cooke said the budget process would determine exactly where the money went to meet those infrastructure priorities.

At the beginning of each calendar year, the ministries submitted a business plan and in the case of infrastructure, a “project assign” document, to the finance ministry.

The finance ministry worked closely with a budget support group, made up of officials from across the government, and the infrastructure committee, which is made of members from the private sector, to look into the submissions, she added.

“These two committees access those budget processes. They come up with list of recommendations which then goes to the Ministry of Finance and the financial secretary. In these recommendation, they say which projects they believe should receive funding for the next financial year.”

Each December, the finance ministry released a half-year economic and fiscal update, containing a budget policy statement which detailed exactly what the government was planning to focus on in the next budget.

Cooke said the government looked at the National Sustainable Development Plan (NSDP) goals for each year before deciding which projects to undertake.

She said they also considered the project assign document, which outlined the path of achieving the project, the timeframe and other crucial elements.

“We also need to consider the economic, the social and the environmental impact of the projects. One key aspect in this is thinking about the capacity of the Cook Islands to undertake all these projects,” Cooke said.

“We might want to complete $50 million to $60m worth of infrastructure projects, but do we have the capacity on the island to undertake all these projects in one year? I would say we don’t.”

Cooke said a huge amount of human resources would be needed to take on large projects, and the fiscal update in that year also had to be considered.

“We need to determine exactly how much we are able to spend in any financial year. We consider a range of fiscal targets that government has, and these may include the debt target and the cash reserve target. Each needs to be considered to determine how much money we can spend each year.”

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