Why the answer is always “sorry, there is no budget”?
AUTHOR Ibrahim Albuainain - AUGUST 2024
Managing finances is essential for government activities, directly impacting how well, how efficiently, and overall, how effectively government organisations operate. Despite careful planning and distribution of resources, many government organisations struggle to stick to their financial plans.
This issue, which might seem simple, reveals a complex set of problems. Even when a budget is technically achieved, it often means sacrificing opportunities, resources, including talents. In this article, we will look at four main reasons for this situation, offering insights for those dealing with the ongoing challenge of "sorry, no budget."
1. Budgeting as a Formality, Separated from the Big Picture
A key problem is that budgeting is often seen as just a formal process, disconnected from the organisation's overall strategy and aims. Budgets are normally created from past data with incremental changes instead of being in line with the strategic goals of the organisation.
This disconnect means that the budget doesn't truly reflect the organisation's priorities or its long-term vision.As a result, resources are distributed in ways that don't support important projects, leading to inefficiencies and missed opportunities.
For example, a bonus or a reward paid to top performing employees in the organisation should be included as part of the following year’s budget, rather than praying for a surplus at the end of the fiscal year. This lack of strategic connection can lead to budgets that are technically balanced but fail to drive significant progress.
2. The Roller-coaster of Bureaucracy
Bureaucracy, while essential for governance and accountability, often introduces inefficiencies that can derail budget plans. Complex approval processes, excessive paperwork, and hierarchical decision-making will indeed slow down project implementation and increase administrative costs.
Additionally, procurement processes in government organisations can be cumbersome, leading to delays and cost overruns. The rigidity of bureaucratic structures also hampers the ability to adapt to changing circumstances, further worsening budgetary constraints.
ILLUSTRATION BY Ibrahim Albuainain. Buckle up for the bureaucracy ride of your life, where the cash is as unpredictable as the twists and turns!
3. Not Seeing the Budget Clearly
Another major issue is not being able to see the budget clearly throughout the organisation. Often, only a few people at the top of the management chain have a clear visibility of the budget, leaving those in middle management and operational roles in the dark.
This lack of transparency makes it difficult to monitor and control spending. Without immediate access to spending information, it's hard to make well-informed decisions, spot potential overspending, or reallocate resources effectively. This absence of budget visibility creates a situation where financial mismanagement can flourish, leading to budget shortfalls and financial inefficiencies.
ILLUSTRATION BY Ibrahim Albuainain. Unveiling financial forecasts with a touch of suspense.
4. Misuse of the Budget by Top Officials
Another important factor is the misuse (could be unintentional) or abuse of the budget by top officials. In some cases, funds are distributed based on personal interests or short-sighted thinking instead of the needs and priorities of the organisation.
This misallocation can result in a large part of the budget being spent on non-essential projects or administrative costs, leaving important services and projects underfunded. Such practices not only cause budget shortages but also damage the organisation's integrity and trustworthiness. The lack of accountability and oversight in how budgets are used makes this problem a recurring issue.
ILLUSTRATION BY Ibrahim Albuainain. Big brother's indulgence leaves the budget in a melt-down!
Key Takeaways
The ongoing battle of government agencies to adhere to their financial plans is a complicated issue. The challenges include budget planning as a mere document exercise, inefficiencies within the bureaucracy, lack of transparency in budget allocation, and misuse of funds by higher-ups. By recognising these elements, leaders in the government sector can actively work to reduce financial risks.
Improving methods for predicting financial needs, making bureaucratic procedures more efficient, increasing the clarity of budget information, and ensuring that budgets support strategic objectives. Although the concept of a "no budget" may not completely vanish, adopting a more sophisticated approach to budgeting can significantly decrease its occurrence and consequences.
To conclude this blog, let's draw a parallel with the classic question, "Who ate my ice cream?"—a query commonly posed by younger siblings. Frequently, the eldest sibling assumes control over the younger ones, particularly when the parents are not around. This perceived authority by the eldest often results in chaos. So, if you find yourself not in charge within your organisation, then has someone eaten your ice cream?
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