Unit Cost Budgeting: The Uncertainty Problem (3/4)
In this blog piece – the third in a series of four – I look at why budgeting based on unit costs doesn’t work well for services where there is a lot of uncertainty about…
When Unit Costs Don’t Work (2/4)
In this blog piece — the second of a four-part series on unit cost budgeting — I look at why unit cost budgeting cannot be applied to outputs which are highly “heterogeneous,” of which there…
Unit Cost Budgeting? (1/4)
Funding public services based on output unit costs is a great idea. However, it only works for selected government services. The idea that the entire government budget should be based on output unit costs is…
The Illusion of Outcome-Based Budgeting
The notion that performance budgeting means budgeting based on outcomes is surprisingly widespread. It is, however, a misconception – a misconception which has led to confusion and missteps in PFM reform in some countries, particularly…
Making Spending Review Fit for Purpose
Spending review, as I wrote recently, will be needed more than ever in the post-pandemic era. Surely, then, it is encouraging that there has over the past decade been a major expansion in the number…
Don’t Confuse Indicators and Targets
One of the problems which bedevils performance budgeting – and performance management more generally – is the failure of some to clearly distinguish between performance indicators and performance targets, and to properly understand the roles…
Non-Performing Performance Indicators
It is shocking that, in quite a few countries which embarked on performance budgeting reforms years ago, performance indicators remain awful. Performance indicators are, after all, a basic building block of any performance budgeting system.…
Population Aging and Public Expenditure: Lessons from Japan
I’ve commented previously on the widespread tendency to exaggerate the impact of population ageing on public expenditure. Sure, it is an important source of upward spending pressure, particularly on long-term care and pensions. However, by…
Debt, not Net Worth, is what matters
With government debt levels now at exceptionally high levels, many economists and policymakers are reflecting deeply on the challenge of how debt can be reduced to fiscally sustainable levels over the longer term. A few…
Strengthening New Spending Decision-Making
Disciplined decision-making about new spending is crucial to good budgeting. Yet it is something which is absent, or weak, in many countries. This is particularly true in developing countries, but is by no means confined…