October 15, 2009Doug Hadden
Marc Robinson and Duncan Last from the IMF have produced a Technical Note on Performance-Based Budgeting.
The objectives for the Technical Note are clear – minimizing complexity and supporting governments with limited resources. The authors describe the pre-conditions.
Performance Management has had a significant impact on government thinking. Governments want to improve development outcomes. There are numerous techniques and tools used in the private sector. The key difference for government is the importance of budgeting. This is a very timeley note. “Performance-based budgeting aims to improve the efficiency and effectiveness of public expenditure by linking the funding of public sector organizations to the results they deliver, making systematic use of performance information.”
The authors recommmend the use of performance indicators during budget preparation and execution. They recommend the use of program budgeting within Charts of Accounts. This is not entirely accepted within the PFM community, although the authors make a very compelling case. The COA should include the performance indicators tied to organizational, economic, project and activity information.
There is very good advice in the Technical Note:
- performance information needs to be used in the budget process
- “reconsideration of spending priorities and program performance need to be
- formally integrated into the budget process
- formalized analysis of results
- need to “enforce the execution of budgets as planned”
The Technical Note does not address the complexity associated with defining and tracking outputs and outomes. Government organizations stuggle with uncovering effective measurements. There should be some thought on the sequencing of outputs and outcomes. Perhaps governments should begin by measuring outputs followed by outcomes.