Typical budgetary cycles

Most budget cycles have four stages:(1)

Stage 1: Budget formulation: when the executive branch of government puts the budget plan together.(2)

State 2: Enactment: when the budget plan may be debated, altered, and approved by the legislative branch.

Stage 3: Execution: when the policies of the budget are carried out by the government.

Stage 4: Auditing and assessment: when the actual expenditures of the budget are accounted for and assessed for effectiveness.

Each of these stages creates different opportunities for participation by Employers' Organizations.

Budget Formulation(3)

The initial formulation of the budget occurs almost exclusively within the executive branch of government. This process can take a few weeks to several months, largely depending on the extent to which departments are involved and their views are taken into account.

In general, budgets are not built from the ground up every year. Instead, new budgets tend to use the budget most recently adopted into law as a starting point (or baseline), with changes measured from that.

Role of the Employers' Organization

Because the budget is rarely constructed from scratch, major parts of the budget may be anticipated. This creates an opportunity for analysis and advocacy at the formulation stage by the Employers' Organization. During the development of the budget Employers' Organizations can release analyses on issues known to be under consideration or that they believe ought to be priorities with the hope of influencing the budget being formulated.(4) There might also be opportunities for Employers' Organizations to establish informal lines of communication with executive branch officials. In countries where the legislative process has little impact on the budget Employers' Organizations may have to concentrate on the formulation stage as that is when the key decisions are made.

Budget enactment

The second stage of the budget cycle occurs when the executive's budget is discussed in the legislature and consequently enacted into law. The budget enactment stage typically is when public attention on the budget is the greatest and information about the budget is made broadly available.

Role of the Employers' Organization

With public discussion and interest in the budget typically at their high point when the executive presents its budget to the legislature, this creates opportunities for the Employers' Organization to get media coverage for its budget analyses and proposals.

Budget execution: implementation, monitoring, and control

The next stage of the process occurs once the budget has been enacted. Governments differ widely in how they regulate and monitor spending to ensure adherence to budgets. In some cases, the Treasury (or Finance Ministry) exercises strong central control over spending, reviewing allocations to departments and approving major expenditures. Where departments are more independent, treasuries will monitor expenditures by requiring, for instance, regular reporting by each department of its spending.

Role of the Employers' Organization

Employers' Organizations may engage in some monitoring activities. For instance whether amounts for specific policies or projects have been used for the intended purpose. They also can assess the quality of the spending to see if their policy goals and the associated budget allocation are being met, and if government funds are being used effectively.

Outcome assessment and reporting: audits and performance evaluations

The last stage in the budget cycle includes a number of activities that aim to measure whether there is an effective use of public resources. Ideally, the executive branch should report extensively on its fiscal activities to the legislature and the public. These fiscal activities also should be subject to regular review by an established independent and professional body, such as audit institutions or an Auditor General. The audit office should have the capacity to produce accurate reports in a timely manner.

Role of the Employers' Organization

This budget stage presents a valuable opportunity for the Employers' Organization to obtain information on the effectiveness of particular budget initiatives, as well as to advance accountability by assessing whether the legislature and executive branches respond appropriately to the findings of audit reports.


(1) There is an emerging consensus on what countries should do to ensure that their budget formulation processes are fair, open, and accountable. These recommended practices are drawn and synthesized from a number of international organizations including the International Monetary Fund (IMF), the World Bank, the Organisation for Economic Co-operation and Development (OECD) and the Government Finance Officers Association (GFOA).

(2) See example of the Irish Business and Employers Confederation overall pre-budget submission 2009: http://www.irishtimes.com/indepth/budget2010/submissions/IBEC.pdf; Example of the Australian Chamber and Commerce and Industry's pre-budget submission 2010 on a specific issue: http://www.acci.asn.au/text_files/submissions/2010/Feb%202010_ACCI%20Submission%20on%20R&D%20Tax%20Credit.pdf

(3) Vivek Ramkumar: Our money, our responsibility: A citizens' guide to monitoring government expenditures, 2008.

(4) See the example from the Confederation of British Employers (CBI) which outlines their overarching economic policies and strategies in an pre-budget communication to the Chancellor of the Exchequer (March 2010): http://www.cbi.org.uk/pdf/20100308-cbi-budget-submission.pdf