The Challenge of Reforming Budgetary Institutions in Developing Countries

Reform of budgetary institutions1 is a continuous and never-ending process. Interest in such reforms can be traced back for at least 2000 years. For example, Roman planners of the Claudian aqueducts considered eventual O&M costs in selecting alternative routes and designs. In more modern times, there is evidence of a stream of reforms from the “tally sticks” used to record the budget in seventeenth century England, to the latest techniques of fiscal rules, fiscal risk analysis, expenditure ceilings, medium-term fiscal frameworks, performance-related budgeting, accrual accounting and budgeting, and expenditure review. In Europe and the United States, a detailed history of the development of budget systems goes back for two hundred years or more. Yet the processes and determinants of this evolution, as societies move through varying stages of development, while critically important issues, are imperfectly understood.