Correct program classification – that is, defining programs appropriately – is one of the most fundamental elements of a good government-wide performance budgeting system. Yet it is also an area where governments often make serious mistakes. The World Bank has just published a guide entitled Program Classification for Performance-Based Budgeting designed to help governments to define programs appropriately and in a manner consistent with the key objectives of a sound performance budgeting system. Written by myself, this guide sets out a number of rules which should be followed in defining programs. (more…)
Archive for the ‘Performance Budgeting & Management’ Category
The introduction of automated financial management information systems (FMIS) has, in some developing countries, had a remarkable unintended negative effect – namely, to set in a concrete an excessively detailed level of central line-item control over spending ministry budgets. This is a major obstacle to a successful introduction of performance budgeting in those countries. It also prevents ministries from using their resources in an efficient way even under traditional budgeting systems, and contributes to under-execution of budgets. (more…)
Performance budgeting is an important instrument for improving expenditure prioritization, effectiveness and efficiency. Its relevance is greater than ever today given the tougher fiscal circumstances that face many countries. Reaping the benefits of performance budgeting requires that the performance budgeting systems be properly designed and that they are accompanied by the right types of complementary reforms.
But what sort of performance budgeting works best at the government-wide level? What, on the other hand, does not work? What implementation strategies are required? These questions are the main focus of a chapter I have written for the recently published International Handbook of Public Financial Management. (more…)
Chile may be a new OECD member country, but in the realm of public financial management and fiscal policy it has a few things to teach many existing OECD members. The OECD Journal on Budgeting has just published a review of Chilean budgeting practice prepared by an OECD mission comprised of myself and two OECD staff members (more…)
The manual Performance-Based Budgeting is now available in Russian and Bosnian-Serbo-Croat translations, thanks to PEMPAL, the organization of Eastern European budget officials. The manual, written by myself and originally published in 2010 by CLEAR/World Bank, is a primer on the key forms and elements of performance budgeting. It covers a wide range of topics including program budgeting, the performance information underpinnings of PB, and the relation of PB to other budgeting and accounting reforms. To access the manual, please go to the following links: English version; Russian version; Serbo-Croat version. It is anticipated that a Spanish translation will be prepared in the near future.
The global CLEAR initiative – led by the World Bank – has just published an important new manual on performance budgeting. (more…)
Program budgeting has many critics. One of the most prominent is Allen Schick, who has advanced the proposition that budgeting by programs is unworkable because it is inconsistent with budgeting by organizational unit. Schick’s argument (2007: 113-6) is based on three propositions (more…)
Nowhere are the difficulties arising from conflicts between program and organizational structure more of a challenge than in developing countries. As discussed in a previous piece, the most serious technical challenge arises from the existence of organizational units which contribute to several programs. Where this is the case, it is necessary to allocate the expenditure of these organizational units between multiple programs in budget preparation and financial reporting. This is a challenge which is beyond the capacity of most developing countries. (more…)
What is the role, and appropriate scope, of “management” programs – that is, programs which group together ministry support services such as HR, IT and finance/accounting? There is wide agreement that management programs can be justified on the pragmatic ground that they avoid the need to allocate support service expenditure to output-based programs. (more…)
One of the thorniest problems for program budgeting is the relationship between programs and organizational structure. If ministries have major organizational units which straddle several programs, significant practical problems arise in linking organizational unit budgets and program budgets. It becomes necessary to allocate organizational unit expenditure between programs, both in budget preparation and in financial reporting. Such expenditure allocation is a challenging task in any country. In practical terms, however, it is beyond the capacity of many developing countries. For these reasons, strong pressures arise to force programs to conform to organizational structure, thereby by-passing the problem. (more…)