Performance Budgeting

September 11, 2013

The Philippines Leads Its Peers in Performance Budgeting

Posted by Sandeep Saxena

The Government of the Philippines’ (GoP) budget proposals for the year 2014, presented to the Congress in July, contain important performance information for every government program. For the first time, government departments and agencies have spelt out their vision, mission, target outputs that they will produce from the resources sought, and the expected performance standards in service delivery. For instance, one of the Bureau of Fire Protection’s targets is to respond within five to seven minutes to 87 percent of the more than 5,000 distress calls the Bureau expects to receive in the year. The National Police promises a minimum of 629,258 crime investigations and a 25 percent increase in the number of foot and mobile patrols. The Department of Education aims to deliver a pass rate of 84 percent in the National Achievement Test that will be taken by 12.56 million secondary school students; and the Department of Social Welfare undertakes to serve meals to more than 2.5 million schoolchildren.

This move by the Department of Budget and Management (DBM) is being hailed in the country as “the single most important budgeting innovation in years”. According to media reports, the legislators are “pleasantly amused” at the detailing of information on what an agency must deliver with the use of public resources. They expect the budget scrutiny to be lengthier and the discussion on the floor of the Congress to be more meaningful. With this reform, the government has taken an important step forward in its commitment to promoting and developing a people-centric and results-based public administration.

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January 22, 2013

Recent Performance-Based Budgeting Reforms in The Netherlands – Another Lap Around the Windmill!

Posted by Maarten de Jong[i]

An unknown person once noted that a cynical person is an idealist who, at some point, made the mistake of turning his ideals into his expectations. Looking at the increasing amount of critical studies on the impact of performance-based and program budgeting reforms, one could become a bit cynical towards this popular and ambitious type of budget reform. Not unlike the experience in other countries, the implementation of performance-based and program budgeting in the Netherlands over a decade ago has only partly lived up to its expectations.

There has not been much evidence that major reallocation of spending has taken place as a result of these reforms. In addition, the informational value of budgets and the administrative burden for line ministries have been continuous sources of debate.  Nevertheless, the concept of linking funding to results has proven its usefulness in agency management and does help the Ministry of Finance differentiate between a powerful claim and a powerful claimant in the budget process. Neither is anyone inclined to give up the benefits of increased transparency and enhanced managerial flexibility that resulted from introducing a program budget. Instead of becoming cynical or glorifying the "good old days" of input budgeting, the Netherlands Ministry of Finance accepted the fact that it may have had some unrealistic expectations and that some of the criticism on performance budgeting as implemented actually made sense and demanded a solution. This resulted in a major overhaul of the budget presentation and program structure in recent years called “Verantwoord Begroten” (translated as Accountable Budgeting).

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October 23, 2012

New Budgetary Reforms in Austria: An Emphasis on Flexibility, Performance, and Gender

Posted by Ralph Schmitt-Nilson

Following up on a first set of reforms in 2010, the Austrian budget for 2013 introduces a new set of public financial management (PFM) reforms. Whereas the first stage focused on implementation of a medium-term expenditure framework, the second and latest stage of reform brings fundamental change in a range of fields. It signals three main aspects: more discretion for line ministries, a new performance-oriented budget structure, and a commitment to Gender Responsive Budgeting (GRB).

To improve flexibility for line ministries and big federal agencies, appropriations are shifted to a more aggregated level. The budget entities are given clearly structured duties and global budgets for flexible use. The stated rationale is that an increase in autonomy and responsibility leads to more motivated management and staff of institutions and more efficient use of funds. This builds upon positive experiences that Austria has with the introduction of more flexibility for line ministries since 2000. Line ministries also receive the authority to carry over a substantial part of the budget into the next year. The aim is to avoid spending sprees at the end of the fiscal year when departments often look for ways to use up the current budget. A carry-over facility gives them an incentive to remain frugal with their spending until the end of the year and to improve room for maneuver in the next year. Still, these developments could also be dangerous for yearly budget credibility. First, carry-over facilities make it harder to exactly plan expenditures for the fiscal year on an aggregate level. Second, high levels of carry-over can weaken the incentive for solid budget planning at the line ministry level.

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September 04, 2012

Performance Budgeting: Facing Up to the Hard Questions

Posted by Dirk Kraan[1]

The IMF’s new resident advisor for South Eastern Europe, Dirk Kraan challenges the practicality of performance budgeting, one of the favourite innovations of New Public Management. Has performance information on a government program provided by a line ministry ever provided a critical assessment of its success? Are Ministries of Finance really interested in performance, let alone equipped to deal with it? Some of the hard questions that will be discussed in this post.....  

The history of performance budgeting now stretches over forty years. Arriving at the Dutch Ministry of Finance in 1980, I well remember how we tried to cope with the article of the Budget Code introduced in the early 1970s prescribing that the budget documentation had to provide “performance information”.  Around the same time  the ideas of the Planning,  Programming, Budgeting, System (PBBS) and Management by Objectives (MBO) had been blown over the ocean and been adapted to European conditions in the form of “Rationalisation des Choix Budgétaires” (France), Program Budgeting and Review (UK), and “Policy Analysis” (the Netherlands). The latest attempts to implement these reforms were still very much alive in 1980.

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October 17, 2007

Program and Performance Budgeting Enthusiasm in India -- IMF Training Course

Pune_2_4  An IMF training course in Pune for senior civil servants from India and around the region went into the varied experiences with this “second generation” budget reform. Making program and performance budgeting (PPB) work in the context of capacity constraints and politicians familiar only with traditional line item budgeting led to lively discussions with the 29 participants from India’s central and state governments, and invited representatives of other countries' ministries of finance.

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October 04, 2007

Making Performance Budgeting Work: New IMF Book

41m8or4rrxl_ss260_ Member countries will find valuable advice on how to reform their budgeting practices to improve the effectiveness and efficiency of public expenditure in a major new work on performance budgeting produced by the Fiscal Affairs Department. The book, Performance Budgeting: Linking Funding and Results (500pp), came off the presses of the top UK publisher Palgrave Macmillan in September.

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