The Potential of Performance Budgeting Can it really make a difference?

Transcription

1 The Potential of Performance Budgeting Can it really make a difference? Prepared for: December 6, 2017

2 Who We Are Dr. Stephen Lewarne Principal in Emerging Markets practice More than 25 years of experience leading economic and fiscal reform programs around the world Supported transitions to market economics across Eastern Europe and Central Asia Julie Cooper International PFM specialist with USAID, IMF, World Bank 20 years of experience in performance budgeting in Central Asia, Africa and the Middle East Supported PFM reforms in Australian Federal Government Jimmy Rollins PFM and performance management specialist with USAID, World Bank, IMF, CDC Supported government performance budgeting efforts in Jordan, Jamaica, Bangladesh, and the US 2

3 Overview What is performance budgeting History of performance budgeting Performance budgeting today Success factors for performance budgeting Common challenges Can performance budgeting really make a difference? Case studies 3

4 What is Performance Budgeting? WHAT IT IS ß WHAT IT ISN T A comprehensive framework Integration of planning and budgeting Performance reporting Adaptable tools and techniques One part of performance ecosystem Formula/algorithm for funding decisions A single tool or technique Use to cut or increase budgets Only for Budget Department Remedy for all performance issues 4

5 History of Performance Budgeting Performance budgeting has been in practice for decades 1950s: introduction of the principles of Management by Objectives 1990s: extensive public sector reforms in response to economic, social and political pressures New Public Management evolved which widened the scope of Performance Budgeting Today: term used to mean a comprehensive public sector management framework 5

6 Performance budgeting today

7 Performance budgeting today Comprehensive framework Budget planning and preparation Budget execution and reporting Performance management culture Focus on outputs and outcomes over inputs Focuses on quality, efficiency and effectiveness Influences policy decisions 7

8 Performance budgeting today Tool for performance improvement opportunities Stronger accountability and transparency Includes civil service and reform to work culture Drives behavior changes 8

9 Success characteristics Deloitte has developed the following framework in its extensive work with governments around the world Performance Budgeting Success Characteristics The right things are measured Performance data informs policy decisions Performance is monitored and evaluated regularly Management culture focuses on performance Are there clear links to strategic priorities? Are budget documents structured clearly? Do systems provide availability of timely, reliable data? Does senior leadership focus on performance management? Success Factors Are programs rational and costed appropriately? Is performance used in internal budget allocation decisions? Do regular reviews of progress take place within ministries? Are roles and responsibilities clearly defined? Are KPIs clear and compelling? Is performance used in national level budget allocations? Do regular reviews of progress take place with central authorities? Are program managers held accountable? Are program and funding changes made when needed? Is there a system of program evaluation? Is performance information available to citizens? 9

10 Success characteristics Deloitte works with organizations to realize benefits of multiple simultaneous reforms Performance Budgeting Sustainable Capacity Development Technical Process Improvement Challenge: Challenge: Challenge: Governments struggle to align resources with public goals and objectives Public service job duties and skills often do not keep pace with reform Governments need assistance to prioritize, sequence and implement PFM reforms Possible Solution: Possible Solution: Possible Solution: Link strategies with budget formulation and execution: Build institutional abilities to absorb and sustain PFM reforms Rationalize and prioritize key process improvement initiatives: Tools and Approaches: Program Creation or Rationalization Forward Estimates Framework and Tools Performance Measures Assessment and Guidance Analytical Tools Business Process Reengineering Tools and Approaches: Training Needs Assessment Training Plan Competency Framework and Surveys Training of Trainers Program Strategic Organizational Reviews Tools and Approaches: Synthesis of Existing Assessments Detailed Risk Questionnaires PFM Risk Assessment Capability Maturity Model PFM Improvement Plans 10

11 Common implementation errors

12 Common implementation errors Lack of a comprehensive performance framework Continued focus on inputs Little or no attention to creating a performance work culture Used to name and shame rather than to improve performance Monitoring and evaluation system not used as a management tool Emphasizing technical solutions over improving analytical skills 12

13 Common implementation errors Oversimplified performance reporting (Green/Yellow/Red headlights) Not improving governance and accountability for service delivery Ignore concurrent reforms Downplay institutional capacity constraints or resistance No or little focus on budget execution requirements 13

14 Can it make a difference?

15 Can it make a difference? YES But it s not easy Requires mandate and political support Civil service needs to be performance focused Integrate with government-wide performance management practices 15

16 Performance budgeting cases

17 Illustrative example: Jamaica The World Bank Motivation: macroeconomic downturn, Fiscal Policy Potential topics to address with assignment countries include revenue and expenditure government transition planning, public expenditure management, policy implications and sustainability In this area, Deloitte has: Reform: rationalize programs and integrate Provided taxation and expenditure technical assistance in dozens of countries, including Zambia, Rwanda, Kosovo, Jordan and Paraguay performance measures Focus on change management Developed or evaluated performance budgeting frameworks and procedures in Jamaica, Jordan, and Bangladesh for the World Bank and USAID

18 Illustrative example: Jordan U.S. Agency for International Development (USAID) Fiscal Policy Motivation: program budget not Potential changing topics to address with culture assignment countries include revenue and expenditure planning, public expenditure management, policy implications and sustainability Reform: move from compliance to management In this area, Deloitte has: Upgrading Budget Analyst skills seen as critical Provided taxation and expenditure technical assistance in dozens of countries, including Zambia, Rwanda, Kosovo, Jordan and Paraguay Developed or evaluated performance budgeting frameworks and procedures in Jamaica, Jordan, and Bangladesh for the World Bank and USAID

19 Illustrative example: Oklahoma Fiscal Policy Motivation: commodity price drop, Potential topics no to strategy address with assignment countries include revenue and expenditure planning, public expenditure management, policy implications and sustainability Reform: government-wide programs and objectives Link with Chart of Accounts Focus on transparency to public In this area, Deloitte has: Provided taxation and expenditure technical assistance in dozens of countries, including Zambia, Rwanda, Kosovo, Jordan and Paraguay Developed or evaluated performance budgeting frameworks and procedures in Jamaica, Jordan, and Bangladesh for the World Bank and USAID

20 Illustrative example: Australia Motivation: focus on greater efficiency and effectiveness Fiscal Policy Potential topics to address with assignment countries include revenue and expenditure planning, public expenditure management, policy implications and sustainability Reform: Output and Outcome Framework Accrual budgeting and accounting Purchaser/Provider agreements In this area, Deloitte has: Provided taxation and expenditure technical assistance in dozens of countries, including Zambia, Rwanda, Kosovo, Jordan and Paraguay Developed or evaluated performance budgeting frameworks and procedures in Jamaica, Jordan, and Bangladesh for the World Bank and USAID

21 Conclusion

22 Questions and Answers

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