General Budget Principles

The aim of the public financial management and budget principles is to guide budget actors during the budget process. They shall be primary factors taken into consideration in preparation of annual budgets. The principles provide an overview of good practices and also give practical guidance to policy makers and other stakeholders responsible for enhancing the Kosovo’s public budgeting system over the years to come.

General principles for Public Financial Management and Budgeting are:

1. Understandability – the information disclosed in budgets and financial statements shall be concise and unambiguous to users who have sufficient financial knowledge to understand the documents.
2. Consistency - the same accounting methods and presentation is used on an on-going basis in preparation of budgets and financial statements. If the presentation and methods change, there must be established clear and understandable connections between the old and new methods and presentations for comparability of information across different periods of time..
3. Materiality – budgets and financial statements shall set out all material information. Information in budgets and financial statements is considered material if failure to disclose the information could influence the decisions made by the users of the documents on the basis thereof.
4. Objectivity – information presented in budgets and financial statements shall be objective and reliable.
5. Substance over form – revenues, expenditures and investments are recorded in budgets and financial statements based on their substance, not the legal form of contracts and documents they result from.
6. Optimality – providing additional detail of information in budgets and financial statements must not be costlier than benefits arising from the use of such information.
7. Transparency – timely information on budgets and financial statements is publicly available. Budgets and financial statements are made available on regular basis to those who have a right to know and use the information from them. Transparency strengthens public sector accountability.
8. Accountability – the government gives an account of how it meets its budget responsibilities to the parliament. Within the executive, the accountability of budget organizations is clearly defined and the national audit office reports at least annually to the parliament on budget execution.
9. Stability - budget and public debt (fiscal policy) objectives are determined in the context of a regularly updated medium-term budget strategy. The rates and bases of taxes and other charges are kept relatively stable.
10. Efficiency and effectiveness – the necessary inputs (resources) will be purchased at the lowest cost. The highest volume of outputs (good and services) shall be produced with the given amount of resources and the specific policy objectives are to be achieved.