Planning and Budgeting—Two Sides of the Same Coin?

This chapter by Richard Allen and Mary Betley argues that planning and budgeting are two essential and closely related functions of government that have evolved on separate tracks and continue to differ in important ways. Many countries prepare medium-term national development plans as well as longer-term strategic plans and “vision statements”. In many advanced countries, medium-term budgets combined with plans for key sectors such as defense and health and cross-cutting areas such as climate and gender have taken over from national development plans as the primary policy document. A similar transformation has not yet occurred in many developing countries. Organizational arrangements have been fluid: planning and budgeting functions are typically organized separately, often in different ministries, thus creating challenges of communication and coordination. The chapter provides an empirical analysis of planning and budgeting systems using data from PEFA and PIMA reports. It also reviews various options for harmonizing the frameworks and assumptions used in preparing budget and development plans.