CAPACITY BUILDING : LITHUANIAS EXPERIENCES FROM 10 YEARS OF REFORM

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CAPACITY BUILDING LITHUANIAS EXPERIENCES FROM
10 YEARS OF REFORM

• Vilnius, Lithuania
• 20-21 March, 2007

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PRESENTATION OUTLINE

• PREREQUISITES OF THE REFORM
• GOALS AND IMPLEMENTATION STAGES
• REFORM SWOT ANALYSIS

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SITUATION BEFORE

• POOR STATE FINANCIAL SITUATION IN 1998-1999
• CURRENT ACCOUNT DEFICIT 12
• FISCAL DEFICIT 8 in 1999
• GOVERNMENT BORROWING INTEREST RATE - 1214
• LARGE AMOUNT OF EXTRABUDGETARY FUNDS
• NO LINKS BETWEEN POLICY FORMATION AND BUDGETING
• POOR DECISION MAKING PROCESS
• NO FISCAL RELATIONS ACROSS LEVELS OF GOVERNMENT

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FACTORS STIMULATED REFORMS

• STRONG POLITICAL WILL
• ASPIRATION FOR EUROPEAN-ATLANTIC INTEGRATION
• ATTITUDE OF SOCIETY TOWARDS PUBLIC ADMINISTRATION
• POOR FINANCIAL SITUATION

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GOALS OF THE BUDGET REFORM

• CONSOLIDATION OF PUBLIC FINANCIAL RESOURCES
• PRIORITY BASED PLANNING
• RESULT ORIENTED ACTIVITIES
• RESPONSIBILITY AND ACCOUNTABILITY
• TRANSPARENCY

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IMPLEMENTATION STAGES1998 ?REFORM INITIATIVE

• THE SEIMAS RESOLUTION ON THE BUDGET STRUCTURE
• REFORM CONCEPTION
• - THREE-YEAR PLANNING
• - PROGRAMME BUDGET
• - CONSOLIDATION OF RESOURCES
• - TRANSPARENCY

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IMPLEMENTATION STAGES1998?REFORM OF MUNICIPAL
BUDGET FORMATION PRINCIPLES STAGE I

• THE LAW ON THE METHODOLOGY FOR DETERMINATION OF
  MUNICIPAL BUDGETARY REVENUE
• MUNICIPAL BUDGETS FORMATION PRINCIPLE TO
  OBSERVE THE REVENUE EQUALISATION PRINCIPLE TO
  CARRY OUT ALL FUNCTIONS OF MUNICIPALITIES

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IMPLEMENTATION STAGES1999?PROGRAMME BUDGET

• THE DRAFT OF STATE BUDGET WAS PREPARED BY
  PROGRAMMES AND SUBMITED TO THE SEIMAS FOR ITS
  CONSIDERATION AND APPROVAL
• PROGRAMMING BUDGETING IS OBLIGATORY TO ALL
  APPROPRIATION MANAGERS

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IMPLEMENTATION STAGES2000?GOVERNMENT STRATEGIC
PLANNING SYSTEM

• STRATEGIC PLANNING METHODOLOGY IS OBLIGATORY TO
  ALL STATE BUDGET APPROPRIATION MANAGERS
• RECOMENDED TO MUNICIPALITIES
• THE INTEGRATED PLANNING MODEL AND THE LONG-TERM
  DEVELOPMENT STRATEGY WAS ESTABLISHED
• THE LAW ON THE GOVERNMENT AND THE LAW ON THE
  BUDGET STRUCTURE EMBED THE STRATEGIC PLANNING AS
  A MEASURE FOR ORGANISATION OF ACTIVITIES AND
  FINANCING PLANNING

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IMPLEMENTATION STAGES2001? REFORM OF MUNICIPAL
BUDGET FORMATION PRINCIPLES STAGE II

• THE ESSENCE OF THE REFORM
• TO USE THE REVENUE EQUALISATION PRINCIPLE ONLY
  FOR CARRYING OUT INDEPENDENT FUNCTIONS OF
  MUNICIPALITIES
• TO ALLOCATE GRANTS FROM THE STATE BUDGET FOR
  IMPLEMENTATION OF THE FUNCTIONS DELEGATED BY THE
  GOVERNMENT

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IMPLEMENTATION STAGES2003?EVALUATION OF BUDGET
IMPLEMENTATION

• THE INTERNAL AUDITS FUNCTIONS
• TO EVALUATE THE ECONOMY, EFFECTIVENESS AND
  EFFICIENCY OF THE PROGRAMS, WAS IMPLEMENTED IN
  PUBLIC INSTITUTIONS
• THE EXTERNAL AUDIT INTITUTIONS FUNCTIONS
• TO EVALUATE WHETHER APPROPRIATIONS ALLOCATED
  HAVE BEEN USED FOR THE GOALS SET IN THE
  PROGRAMMES
• TO EVALUATE WHETHER APPROPRIATIONS HAVE BEEN
  USED AT THE HIGHEST POSSIBLE EXTENT OF ECONOMY
  AND IN THE MOST EFFECTIVE MANNER

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IMPLEMENTATION STAGES2003-2004?DECISION IMPACT
ASSESSMENT

• ADOPTION OF THE DECISION IMPACT ASSESSMENT
  METHODOLOGY ON
• - AN ADEQUATE AREA
• - ECONOMICS
• - PUBLIC FINANCES
• - SOCIAL ENVIRONMENT
• - CORRUPTION EXTENT
• - ENVIRONMENT

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IMPLEMENTATION STAGES2005?PERFORMANCE
ASSESSMENT CRITERIA SYSTEM

• OUTCOME / IMPACT CRITERION AN ASSESSMENT
  CRITERION FOR ACHIEVEMENT OF THE INSTITUTIONS
  STRATEGIC GOAL
• RESULT CRITERION AN ASSESSMENT CRITERION FOR
  THE FULFILMENT OF THE PROGRAMME OBJECTIVE
• OUTPUT CRITERION AN ACTIVITY IMPLEMENTATION
  ASSESSMENT CRITERION

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REFORM SWOT ANALYSISSTRENGTHS

• A UNIFORM STRATEGIC PLANNING METHODOLOGY
• INSTITUTIONS ACTIVITIES BASED ON SYSTEMATICAL
  PLANNING AND LINKING WITH FINANCING
• COMPREHENSIVELY REGULATED PLANNING PROCESS
• A POSSIBILITY TO ANALYSE AND TO ASSESS AN
  INSTITUTION AS A SYSTEM IN PURSUIT OF THE GOALS
  SET
• INSTITUTIONS ARE ENCOURAGED TO ORIENT THEIR
  ACTIVITIES TOWARDS THE RESULTS
• MORE RATIONAL DISTRIBUTION OF FINANCIAL, MATERIAL
  AND HUMAN RESOURCES
• PUBLICITY OF PROVIDING INFORMATION AND ITS
  COMPREHENSIVENESS TO THE PUBLIC

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REFORM SWOT ANALYSISWEAKNESSES

• INADEQUATE INSTITUTIONAL HUMAN RESOURCES AND
  CAPACITIES
• FORMULATION OF STRATEGIC GOALS OF AN INSTITUTION
  RESTS WITH THE INSTITUTION ITSELF
• STRATEGIC PLANNING IS APPLIED NOT IN ALL
  ADMINISTRATION LEVELS
• STRATEGIC PLANNING IS HIGHLY FORMALISED

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REFORM SWOT ANALYSISOPPORTUNITIES

• DEVELOPMENT OF THE PLANNING SYSTEM IN CONNECTION
  WITH ACCOUNTABILITY
• FURTHER CAPACITY BUILDING OF PUBLIC SERVANTS IN
  THE FIELD OF STRATEGIC PLANNING
• LESS FORMALISED STRATEGIC PLANS WOULD BE MORE
  COMPREHENSIBLE AND USEFUL TO THE PUBLIC AND
  POLITICIANS

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REFORM SWOT ANALYSISTHREATS

• STRATEGIC PLANNING SYSTEM MAY BECOME DECLARATORY
  AND FORMAL
• SEGREGATION OF STRATEGIC PLANNING AND BUDGETING
  PROCESSES
• NON-PERCEPTION OF THE IMPORTANCE OF STRATEGIC
  PLANNING MAY POSE THREATS TO ITS REDUNDANCY IN
  THE FUTURE

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FINDINGS

• CAPACITY BUILDING IN ALL LEVELS OF PUBLIC
  ADMINISTRATION
• SYSTEM SHALL BE UNIQUE IN DECISION MAKING AND
  BUDGETING PROCESS
• HUMANISATION OF THE SYSTEM
• LEARNING STRATEGIC THINKING