The Philippines’ experience with performance-based budgeting goes back to 1998, when the DBM introduced an initial form named Organizational Performance Information Framework (OPIF). The basic building blocks of that framework are Major Final Outputs (MFOs) and Program Activities and Projects (PAPs), and the relationship between them. An MFO is defined as goods and services that an agency is mandated to deliver to external clients through the implementation of its PAPs. Each department identifies and specifies the MFOs that it is required to produce in pursuit of its objectives. MFOs are linked to organizational outcomes that in turn are linked to sectoral and societal goals identified by the medium-term Philippines Development Plan, and converge to one of the five key result areas (KRAs) of the present administration. The result is an Agency OPIF Logical Framework (Logframe):
PAPs →MFOs → Organizational Outcome → Sector Outcome → Societal Outcome →KRA
Over the years, this framework has undergone several improvements and is now well established in the national government. The process of improvement, however, has been a long and arduous one. The present form of OPIF was introduced in 2005. It attempts to define and establish where government agencies should direct their development efforts and the priority areas to which agencies should allocate their resources. In identifying MFOs, departments are expected to review their mandate and functions, formulate the organizational outcomes that they are expected to achieve or contribute to, and the MFOs they are expected to deliver for that purpose. In doing so, they are also expected to identify activities that need to be reoriented or given up. A massive capacity building effort was required for the departments to build understanding of the new framework and to learn how to implement it. DBM and the National Economic Development Agency (NEDA) facilitated the process with a series of workshops, coordination and harmonization meetings and discussions among the oversight agencies and the departments.
The process of integrating OPIF with the budget has taken a number of years. Since 2007, DBM started producing a consolidated Book of Outputs for all the government departments, but it remained an isolated performance reporting tool, with little or no bearing on budget decision making, which continued to be line-item based. As the framework matured and capacity developed in the line departments, DBM gained confidence to integrate OPIF with the budget. IMF technical assistance helped it overcome the remaining hurdles. A February 2013 Fiscal Affairs Department technical assistance mission assisted the DBM in designing a new budget structure that simplified budget presentation and integrated performance information. The mission also provided a roadmap for improving the budget process to take advantage of the available information in budget decision-making.
Challenges, however, remain. The framework still offers scope for technical refinements. There has been a surge of available information that needs to be systematically verified and made use of in resource allocation decisions. Putting together an efficient performance monitoring and evaluation mechanism is likely to be equally challenging and daunting. Not overawed by these challenges, the GoP continues to make progress and needs to be congratulated for being among the first in its peer group of countries in the region to have presented a performance-oriented budget.
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