ADB Capacity Building Project

On Governance Reforms
Ministry of Finance
Government of Mongolia

Subject: A comparative analysis of budget systems and planning

In Mongolia and Thailand

Tarun Das, Strategic Planning Expert

Attached Table-1 presents in a tabular form the budget planning, preparation, approval, execution
and evaluation systems and procedures by the Government of Thailand as compared to those by
the Government of Mongolia. It may be observed from the Table that the Government of
Mongolia adopts almost similar systems and procedures for budget preparation, approval by the
Parliament, and execution by the Agencies. However, the systems in Thailand appear to be much
more developed than those in Mongolia in the following respects:

(a) Thailand has a Government Administrative Plan for 4 years (Item 10.1 in the Table-1)
which guides the preparation of the Strategic Plans for Agencies. Mongolian Parliament
is yet to approve a National Development Plan.
(b) Thailand has a very elaborate and detailed Program Assessment Rating Tool (PART)
(Items 8.4, 13, 38). Mongolia is yet to develop such a model.
(c) Thailand has a very elaborate and detailed EVMIS (Evaluation Management
Information System) (Item 8.4, 37). Mongolia is yet to develop such a model.
(d) Thailand has well established system and procedures for a Mid-year budget review
(Item 8.2, 17, 36). Mongolia can also establish such a system.
(e) Thailand also produces an Annual Thailand Performance Report (Item 10.5).
Mongolia can also produce such a consolidated report.
(f) Thailand has well developed E-Budgeting System (Item 14): an automated budget
information link between line agencies and the Bureau of the Budget (BOB). It also
provides support for the strategic management and performance evaluation of the
Agencies, and the Annual Evaluation and Monitoring Information System.
(g) Thailand has well developed system for estimation of Output Cost (Items 21, 24) and
also Budget Allocation Guidelines (Item 30).

Government of Mongolia can learn from the government of Thailand on the following aspects:

1. Development of PART, EVMIS and Mid-Year Budget Review and Revisions.

2. Development of E-Budgeting System Software for (a) establishing intra- and inter-
linkages between the Ministry of Finance, Line ministries, Aimags and all other the
Budgetary entities; and for (b) developing PART and EVMIS.
3. Mongolian GFMIS, FISCAL and PLASTIC Software Packages can be further
developed on the basis of (1) and (2) above.
4. Mongolia can also learn from Thailand on the Budget Allocation Guidelines and the
software used for estimation of output cost.

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 TABLE-1
Comparative analysis of budget systems and planning in Mongolia and Thailand

Items Thailand Mongolia

1. Major macroeconomic indicators in 2005 (rank in the world from top)

a) Area in million sq. kms 0.55 (55) 1.56 (19)

b) Population in million 64.23 (19) 2.55 (137)

c) GDP PPP in billion US 596.5 (21) 5.85 (151)

dollar
d) GDP PPP per capita in 9167 (87) 1983 (196)
US dollar
e) GDP nominal per capita 2750 (104) 736 (148)
in US dollar
2. Budget preparation Bureau of the Budget in the Ministry of Finance
authority Office of the PM
3. Budget staff 1012 16
-- per million sq. km of area 1840 10.3
-- per million of population 15.8 6.3
-- per US$ billion GDP 5.7 8.5
-- per US$ GDP per capita 0.37 0.02
4. Agencies for budgeting Bureau of the Budget Does not exist
Auditor General Auditor General
Ministry of Finance Ministry of Finance
Bank of Thailand Bank of Mongolia
CG CG
NESDB (National Economic Does not exist
and Social Development
Board?)
Budget Agencies Budget Agencies
5. Current Budget System Strategic Performance Based Strategic Output Budgeting/
Budgeting System (SPBBS) Program Budgeting
since 2003 (Performance Evaluation
system is not yet fully
developed)
6. SPBBS Principles (a) Policy aspects
• Top down policy driven For selected ministries
• Strategic allocation For selected ministries
• Fiscal discipline Yes
• Effective budgeting Yes
• People oriented Yes

2
 Items Thailand Mongolia

6. SPBBS Principles: (b) Management aspects

• Deconcentration Yes
• Management flexibility Yes
• Good governance Yes
• Financial discipline Yes
7. Strategic Performance 1. Operation and Yes
Based Budgeting implementation plan
2. Budget plan Yes
3. Monitor and Evaluation Yes, but not fully developed
8.SPBBs characteristics 1. SPBBs to focus on: Yes
(a) govt policy and strategy
(b) Integrated strategy in three Allocations for outputs/
dimensions: functions, agenda, programs and Agencies and
area Aimags, local governments
2. More flexibility No

(a) Contingency Fund No1

(b) Mid-year budget review No
3. Budget devolution: Yes
(a) Decentralization to
provinces and municipals
(b) Focus on peoples needs Yes
4. Longer time frame- MTEF Yes
4. Continuous monitoring and Yes, but not fully developed
evaluation
• Program Assessment No
Rating Tool (PART)
• EVMIS (Evaluation No
Management
Information System)
9. Elements of SPBBs (a) Result oriented Yes
• Strategic target Yes
• Ministry target Yes
• Output targets Yes
(b) MTEF Yes
(c) Devolution Yes
(d) Good governance Yes
(e) Monitoring and evaluation Yes, but not fully developed

1
Mongolia has a Contingent Fund which is technically different from a Contingency Fund. Mongolian
Contingent Fund is bacsically a Contingent Liabilility Fund which is used for financing government
expenditure for unforeseen events. But, the Thailand Contingency Fund is used to finance expenditure
overruns during the year subject to certain rules and procedures, and every budgetary entity is allowed to
have some contingency fund as a part of its annual budget.

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 Items Thailand Mongolia

10. Royal Decree on Good 1. Govt Administrative Plan No

Governance for 4 years
- Good Governance Act of 2. Ministerial Medium Term For selected ministries
2003 Strategic Plan (4 yrs)
3. Annual Action Plan for all Yes
Agencies
4. Budget Allocation Yes

5. Thailand Performance
Report
11. Correlations between Identify inputs/ resources
planning and outcomes
Determine processes/
activities
Specify outputs or objectives
Define outcomes or goals
No
Yes for selected ministries
Yes for selected ministries
Yes for selected ministries
Yes for selected ministries

12. Medium Term (a) Macro fiscal projections Yes

Expenditure Framework
(b) Micro baseline projections Yes
for agency level
(c) Reconciliation of top-down Yes
and bottom-up projections
13. Program Assessment Detailed diagnostic tool for No
Rating Tool (PART) comprehensive evaluation
14. ICT (a) E-budgeting: an automated No
budget information link
between line agencies and
BOB.
(b) to support for the strategic No
management and performance
evaluation
(c) Evaluation and Monitoring No
Information System
(d) Govt. Financial Yes
Management Information
System (GFMIS)

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 Items
15. Budget Reforms:
Key objectives
16. Budget Cycle
17. Midyear budget revision
Thailand Mongolia
(a) Fiscal discipline Yes
• Appropriate fiscal Yes, fiscal deficit less than 3
targets percent of GDP
• Sound economic Yes, socio-economic
assumptions parameters
• MTEF as a budget Yes, in addition short-term
controlling fiscal forecasting
(b) Effective allocation Yes
• National priorities Yes
• Top-down budgeting Yes, also bottom-up approach
and reconciliation
• MTEF as a tool for Yes, in addition short-term
activity phasing fiscal forecasting
(c) Operational efficiency
• Output oriented Yes
• Empowerment and Yes
increased flexibility
• Performance budgeting No
a) Fiscal year- January-December
Oct-Sept
b) Budget planning- Very elaborate and time bound
Feb-Mar system as indicated in Annex.
Moves back and forth between
MOF and line agencies during
Mar-June
c) Budget preparation- 10 June- 1st September
April-May
d) Budget adoption- 15th Sept – 1st December
June-Sept
e) Budget Execution- January-December
Next financial year
f) Budget Revision- No
October-January
Done on the basis of Not done
information feedback from
monitoring and evaluation
process including:
Departmental performance Not done
plans and output costs
And MTEF Not done
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 Items Thailand Mongolia

18. Macro review a) Fiscal space Yes

b) Departmental budget Yes
ceilings
19. Coverage review a) Past performance Yes
b) Department capacity Yes
c) Legal requirements Yes
d) Economic/ social Yes
environment
e) Existing public policies Yes
f) New policies Yes
g) statistics Yes
20. Target identifying a) Output/ outcome Yes
revision
b) Performance indicators Yes, but not fully developed
c) Phasing Yes
21. Expense estimation Fixed cost Yes
Commitments Yes
Basic running cost Yes
Strategic expenses- exiting Yes
policies and new policies
22. Input/ output/ outcome Expert judgment Yes
consistency
Trends and statistics Yes
Mathematical models Yes
23. Priority revision On the basis of needs of Not done
urgency
24. Fixed costs a) Wages and salary, other Yes
benefits, baseline plus
retirement benefits,
salary adjustment
factors
b) Office rent Yes
c) Utility- kept constant Yes
for efficiency
enhancement
25. Commitments New policy commitments Yes (however, this term is not
used in the budget document,
instead a new output category
is added)

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 Items Thailand Mongolia

26. Basic running costs a) Funding of departmental Yes

legal obligations and
missions
b) Criteria: Yes
• delay of output delivery
may cause damages,
• output delivery is
insensitive to govt terms
c) Forward estimate Yes
consistent with currently
agreed targets
27. Medium term budgeting a) Quality development Yes, Mongolia Budget 2008
strategy of society and human specifies objectives for
resources investment, expenditure,
revenue, special measures
b) Reduction of poverty Yes
c) Balanced and Yes
competitive economic
structure
d) Administration and Yes
management of natural
resources and
environment
e) Sustain national Yes
security
28. Fiscal sustainability a) Public debt/GDP ratio No target2
not more than 50%
b) Debt service ratio not No target
more than 15%

2
Rather, Mongolia Budget for 2008 specifies the following targets:
Macro-economic and budgetary parametersMTBF2008 budget 1. Minimum real GDP growth rate,
percent8.710.12. Ceiling on inflation, percent5.05.53. Ceiling on total budget revenue40.244.04. Ceiling on
total budget expenditure43.247.05. Floor on current balance 7.97.76. Ceiling on budget deficit-3.0-3.07.
Floor on capital expenditure8.08.8

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 Items Thailand Mongolia

29. Budget Preparation

a) Budget circulars
b) Budget request
c) Budget review and
appraisal
d) Budget presentation
30. Budget Allocation
Guidelines
31. Strategic framework Very elaborate as indicated in
the footnote3.
• White paper Yes
• Budget allocation policy Yes
• Ministry ceiling Yes
• Strategic plan Yes, for selected agencies
• Operational plan Yes
• Budget figures Yes
• Advisory and Yes
negotiations
• Cabinet approval Yes
• Budget documents Yes
• Draft budget bills Yes
a) Strategy, outputs, Yes, but not as elaborate as in
indicators, activities Thailand
b) Functional coverage Not yet fully developed
c) Service delivery targets Not yet fully developed
d) Within mission Not yet fully developed
boundary
e) Operational potentials Not yet fully developed
f) Cost related parameters Benchmarks, needs to be
developed
Yes, but not yet implemented
for all line ministries/
budgetary entities

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Strategic Framework
Government⇒National strategy⇒Strategy targets←Indicators↑⇓⇑ ⇓↓Ministry⇒Ministry strategy⇒
Service delivery targets←Indicators↑⇓⇑ ⇓↓Department⇒Service plan⇒Outputs←Indicators ↑⇓⇑ ⇓↓
Work plan/
Project⇒Activity⇒ProcessesProgress evaluation

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 Items Thailand Mongolia
32. Budget structure Expenditure- Yes
- Current expenditure
- Capital expenditure
- Principal repayment

Receipts- Revenue Yes

33. Budget appropriations
34. Budget Debate
35. Legal requirements for
budget documents
- Borrowing
a) Personnel expenses
b) Operating expenses
c) Investment
d) Subsidies
e) Other expenses
House of representatives
- 1st Reading by Budget
Scrutiny Committee
- 2nd and 3rd Reading
(total 105 days)
Debate in the Senate (20 days)
Annual Budget Act passed
a) Budget speech
b) Doc #1 (Orange) on
Receipts and Outlays
c) Doc #2 (Green) on
Government Revenue
d) Doc #3 (Red)4 on
Classified by
Departments
e) Doc #4 (yellow)5 on
Classified by program
f) Doc #5 (Purple) on
Financial report
g) Thailand Budget in
brief
Yes
Yes
Yes
Yes
Yes
Discussed in the Cabinet
during 15-30 September
Debated in the Parliament
during October-November
On 1st December
Single Budget Document
No such legal requirements
No separate documents
No separate documents
No separate documents
No separate documents
No separate documents

4
The Red Book provides details of Expenditure classified by departments, and contains Section-A on
Linkage between national strategic goals and departmental structure; and Section-B on the Linkage
between strategic delivery target and department target output.
5
The Yellow Book provides details of Expenditure classified by Programs and contains Section-A on
Overview of the Annual Budget and Allocation Strategy; Section-B on the Linkage among strategy,
program, delivery target and output; and Section-C on Expenditure classified by strategy and integrated
budget plan.

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 Items Thailand Mongolia

36. Mid-year budget Adopts well established No

adjustments
37. Budget Monitoring and
Evaluation
38. The Program Assessment
Rating Tool (PART)
procedures for mid-year
budget adjustments6.
Very elaborate as indicated in Not yet fully developed.
the footnote7. Needs to be developed.
• A series of questions Not yet developed.
designed to provide a Needs to be developed.
consistent approach to
rate the programs across
the Federal government.
• The PART is a
diagnostic tool that relies
on objective data to
inform evidence based
judgments to assess and
evaluate programs across
a wide range of issues
related to performance.
• Areas cover purpose and
design, strategic
planning, program
management and
execution, budget
cascade, results in terms
of quantity, quality and
cost of delivery of goods
and services.

6
Examples of mid-year adjustments in the Budget;
Examples of adjustmentDept HeadBOBCabinetLegislatureA. Within a Department1. Between items within
the same expenditure head√2. Between items/ expenditure objects across programs√√3. Between recurrent
and large capital expenditure√√B. Across Departments√
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Monitoring and Evaluation System
Ministry
BOB Departmental Performance
CGD Financial Performance
Auditor General Ex-post Audit⇓ ⇑Agency Performance Monitoring Evaluation and Reporting⇒⇓⇓⇓⇓
Parliament⇒CABINET

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 Annex-1 - State and Local Budget Planning Schedule in Mongolia
Deadline
Actions
1. Medium term budgeting- MOF delivers general financial 1 March
categories limits to general budget managers.
2. General budget governors prepare and submit to the MOF
20 March
the Operational plan for the next 3 years
3. Ministry of Finance discusses with each general manager
10 April
their Operational plan and budget
4. MOF finalizes and submits to the Cabinet the draft MTBF
20 April
and relevant calculations
5. The draft MTBF and MT economic and financial policy
30 April
discussed and approved by the Cabinet session
6. The draft Medium term budget framework and draft
1 May
Parliament resolution are submitted to the Parliament
7. Estimates reflected in the Parliament approved Budget
10 June
framework delivered to the general budget managers
8. Budget entity managers deliver proposals for the next year
1 July
budget to the general budget managers
9. General budget managers submit to the MOF proposal for
15 August
the next year’s draft budget and operational plan
10. MOF reviews the draft budget, and reach an agreement
1 September
with each general budget manager
11. Draft budget, medium term economic and financial policy
15 September
are finalized and submitted to the Cabinet
12. Next year’s draft budget, medium term economic and
30 September
financial policy are discussed by the Cabinet
13. Socio-economic development policy, draft state and
1 October
Agency budgets submitted to the Parliament
14. Budget approved by Parliament
1 December
15. Parliament approved budget is delivered to budget general
10 December
managers (GMs) in detailed estimates
16. GMs enter into output delivery and result- based contract
25 December
with each aimag and capital city GM
17. Citizen’s Representative Khural approved aimag and capital
15 January
city budgets submitted to MOF
18. Budget GMs approve monthly, quarterly budget financing 5 January
schedule and deliver to the MOF
19. Approved by the order of the MOF the monthly, quarterly
budget financing schedule for the current budget year is 20 January
delivered to the GMs.

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