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Budget Preparation: Policy Based Budgeting

 

 

International Good Practices and Reference Models

Australia’s Experience in Utilizing Performance Information in Budget and Management Processes: This document, from the Australian Government, Department of Finance and Administration, provides a description of Australia ’s performance system and the budgeting and management framework that is an important aspect of the government’s public sector financial structure.

Implementing Resource based FM: This article describes the UK government’s move to a new resource based FM system in 2001, and how it brought together central government planning and budgeting to become one of the world leaders in FM reform in the public sector.

Budget Reform: Making it Happen: This Power Point presentation was presented by an official at the Department of Finance in South Africa.   It highlights how the South African government successfully introduced the MTEF in 1998 after a failed attempt in 1994 and highlights lessons from the budget reform and problems that were overcome.

Public Investment Management in the New EU Member States (World Bank Working Paper):  This paper describes the characteristics of public investment management (PIM) in seven EU countries as it applies to a single sector - transport infrastructure. The report highlights some of the common challenges that four relatively new EU member states - Poland, Slovakia, Slovenia, and Latvia - face as they plan and execute their transport infrastructure projects. It recognizes the importance that EU-mandated processes and procedures have in shaping national systems in the new member states (NMS), but the report finds that actual practices often fall short of EU goals due to capacity constraints, weak institutional structures, and other factors. The experiences of the NMS are compared with those of more developed economies (namely Spain, the UK, and Ireland) to assess whether the later countries have faced similar challenges in PIM, and if so, what measures they have adopted to overcome them. This comparative analysis serves to draw out several good practice examples that are relevant for all countries.

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Guidance and Tips

Performance Budgeting - Is Accrual Accounting Required: This IMF working paper reviews the role of accounting in budget system reform from the perspective of emerging economies who wish to adopt the OECD’s performance budgeting reforms.  Moreover, while recognizing that accrual accounting does support PEM best practices, it is also argued that many of the objectives of performance-oriented budgeting can be attained by less than full accrual accounting, and that unless certain preconditions are met it is safer for countries to remain with, and improve, their cash based accounting systems.

From Program to Performance Budgeting - The Challenge for Emerging Market Economies: This IMF working paper first reviews the evolution of the “new” performance budgeting model, increasingly being applied in industrial countries.   By identifying its main components, the tasks faced by emerging market economies when converting their present budget systems to this model are determined.  It also recognizes four major reform elements as the prerequisites for a successful introduction of the new performance-budgeting model.

Public Investment Management in the New EU Member States (World Bank Working Paper): This paper describes the characteristics of public investment management (PIM) in seven EU countries as it applies to a single sector - transport infrastructure. The report highlights some of the common challenges that four relatively new EU member states - Poland, Slovakia, Slovenia, and Latvia - face as they plan and execute their transport infrastructure projects. It recognizes the importance that EU-mandated processes and procedures have in shaping national systems in the new member states (NMS), but the report finds that actual practices often fall short of EU goals due to capacity constraints, weak institutional structures, and other factors. The experiences of the NMS are compared with those of more developed economies (namely Spain, the UK, and Ireland) to assess whether the later countries have faced similar challenges in PIM, and if so, what measures they have adopted to overcome them. This comparative analysis serves to draw out several good practice examples that are relevant for all countries.

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Country Case Studies and Lessons Learnt

Performance Budgeting - Managing the Reform Process  This IMF working paper examines the process of budget system reform involved in moving from traditional centralized input-oriented systems to more modern developed performance-based systems. It is based on the experience of various countries attempting this reform, and identifies the principal elements of a successful change management strategy with lessons learned for other nations.

Results-Oriented Budget Practice in OECD Countries (Published by the Overseas Development Institute): This is a background paper to seven country studies on the practice of performance based public expenditure management in low income developing countries.  It includes information on the New Zealand model of reform in addition to means of achieving efficiency / effectiveness of a country’s budgeting and performance.

Budget Reform Seminar - Country Case Studies: This publication was compiled by the Expenditure Planning Unit within the Budget Office of the National Treasury of South Africa.  It includes information on: integrating expenditures towards policy priorities; lessons learnt from first reforms; forward results-based budgeting for better economic management; public finance reforms; and reforms for poverty reduction. Studied countries: Botswana, Kenya, Malawi, Mauritius, Mozambique, Namibia, South Africa, Tanzania, and Uganda.

Beyond ‘Best Practice” and “Basics First’ in Adopting Performance Budgeting Reform: Matthew Andrews, Public Sector Specialist with the World Bank, analyses experiences in seven cases of performance-based reforms to examine whether a ‘basics first’ approach is more successful than a ‘best practices’ approach.   It advises that reformers move beyond best practices and basics first design models and reform based on factors that define the situation in a broader context.

Overseas Development Institute Briefing Paper - Results Oriented Public Expenditure Management: Examples of Ghana, Tanzania, and Uganda introducing results-oriented budgeting in late 1990s; Bolivia introducing annual performance plans for ministries, departments and officials; Burkina Faso and Mali introducing program budgets in late 1990s; Cambodia is forecasting medium term sector strategies; Factors of success deal with political commitment, ministry of finance as best placed driver of reform, single apex source of initiatives and point of reference, and sector strategy test beds.

Good Practice Note - Implementing a Medium Term Perspective to Budgeting in the Context of National Poverty Reduction Strategies: This guidance note, prepared by the Overseas Development Institute, is based on a Synthesis Report reviewing nine countries (Albania, Benin, Burkina Faso, Cameroon,Ghana, Rwanda, South Africa, Tanzania, and Uganda) experience with the implementation of MTEFs and the links being made to national poverty reduction strategies.  It includes good practices in implementing an MTEF, from getting started through implementation.

From Line-item to Program Budgeting: Global Lessons and the Korean Case:   This document from the Korean Institute of Public Finance and the World Bank contains four separate papers written by the World Bank and consultants on Korea’s innovations in public finance, particularly program budgeting.  It addresses the conceptual and practical issues in shifting from traditional to program budgeting, different models for program budgeting, Korea’s application of lessons learned from other countries, and the implementation plan for the final program and performance budgeting proposals.

Public Investment Management in the New EU Member States (World Bank Working Paper): This paper describes the characteristics of public investment management (PIM) in seven EU countries as it applies to a single sector - transport infrastructure. The report highlights some of the common challenges that four relatively new EU member states - Poland, Slovakia, Slovenia, and Latvia - face as they plan and execute their transport infrastructure projects. It recognizes the importance that EU-mandated processes and procedures have in shaping national systems in the new member states (NMS), but the report finds that actual practices often fall short of EU goals due to capacity constraints, weak institutional structures, and other factors. The experiences of the NMS are compared with those of more developed economies (namely Spain, the UK, and Ireland) to assess whether the later countries have faced similar challenges in PIM, and if so, what measures they have adopted to overcome them. This comparative analysis serves to draw out several good practice examples that are relevant for all countries. 

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Other Reference Materials

Mission Driven, Results Oriented Budgeting:  This research published by National Performance Review in 1993 describes the need for government to focus on accountability and achieving results. It provides recommendations for a financial framework changing the management culture in the federal government to focus on results, quality, and customer service.

Performance Budgeting - Past Initiatives Offer Insights for GPRA Implementation: This paper provides an analysis of budgeting alternatives and the implementation of the Government Performance and Results Act (GPRA).   It provides information on the following performance budgeting initiatives: Hoover Commission reforms during post-WWII; Planning-Programming-Budgeting System in 1965; Management by Objectives in 1973; and Zero Based Budgeting in 1977.

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