Improving public sector expenditure efficiency through multi-year budgeting : an evaluation

Abstract

Public Sector Budgeting is said to promote control, co-ordination and optimum resource allocations in any country. As such, it is seen as an essential political, economic and social tool. Notwithstanding, it has been argued that retaining a single year focus in public sector budgeting could not only lead to inefficiencies but ultimately even to failure. In trying to mitigate these shortfalls, countries have moved away from annual budgeting systems and settled for ones which promote a multi-year setting. The current Maltese budgetary process features some characteristics of multi-annual budgeting especially since the Budget Office prepares financial estimates for public revenues and expenditures for the coming three financial years. Nevertheless, the single year focus still seems to prevail. This study gives an understanding of how the present budgeting system results in a number of inefficiencies related to the single year focus. In addition, the introduction of a more robust multi-annual budgeting system in the local context is discussed. The aim is to determine whether it will help eliminate the identified shortfalls in the current system and improve efficiency in public sector expenditure.