Multiyear Performance oriented budgeting: Proposals from the Project

1
Multi-year Performance oriented
budgetingProposals from the Project

• Alistair Pirie
• Team Leader, State Budget Reform Project

2
Multi-year Performance oriented budgeting
(??????????? ???)

• ???
• MTEF approach - Differences from existing
  multi-year planning in Russia
• Operational tool used to solve real problems
• More detail, more useful
• Integral part of budget planning and
  implementation process
• Not only multi-year
• But also method for prioritisation of
  expenditures
• Continuous cyclical process this years work is
  used next year

3
Lessons from international experience

• Importance of
• Political commitment
• Linkages between elements
• Evolution manageable steps on a broad front
• Long timescale
• Change mentality
• Incentives and motivation
• Quick wins

4
Russia - specifics

• Vast country and administrative system
• Linkages, information, communication
• Federal state
• decentralised service provision
• Executive and legislature
• Emphasis on legal structures
• Tradition of planning
• But new focus on unity of policy finance

5
Russia medium term vision for reform of the
budget process - 1

• Political commitment
• Linkages
• ???? budget cycle components
• Forecasts, 3 year plan, Top down sectoral
  limits for 3 years, Bottom up budget
  applications for 3 years on POB basis, draft
  budget for year 1, execution, reporting,
  evaluation
• Within Minfin
• Minfin - line ministries
• Evolutionary process
• work on practical steps, building capacity and
  skills

6
Russia - medium term vision for reform of the
budget process - 2

• Long timescale
• 5 years for initial full implementation
• Change mentality
• focus on results
• medium term discipline, stability for management
• delegation - decisions nearer the action
• Incentives and motivation
• prioritisation and effectiveness better each year
• quick wins for the public and for ministries
  which use the new approach effectively

7
Next steps towards the vision

• Goals
• Embed ???? principles and approach, continue
  change of mentality
• Higher effectiveness of prioritisation and
  results of expenditures in next cycle
• Practicalities concentrate on the budget
  application stage
• Performance orientation make this more rigorous
  and productive
• 3 year applications, prioritisation within limits
• Programmes
• Incentives

8
Programme classification

• Essential for planning expenditures by reference
  to objectives and outcomes
• Programmes must be properly justified by
  reference to strategic goals, objectives and
  outcomes
• Programmes not so difficult to build

9
Incentives and motivation for reform

• Integrate FTPs and rest of budget process and
  motivate MMBFs to establish priorities
• Resources for new activities depend on quality of
  applications
• More flexibility for ministries which meet
  Criteria of readiness
• Advantages for genuinely programmed expenditures

10
Further steps towards the vision

• Linkages, coordination, support between
  components
• Co-ordinated Action on other aspects as soon as
  practicable cycle No 2
• Strengthened forecasting for macro budget
  decisions
• Administrative Consolidation to facilitate
  sectoral allocation priorities
• Integration with formal budget and process in
  legislature
• Accounting
• Reporting, evaluation (performance audit),
  feedback

11
Russian realities

• Achieving the vision will take some years
• Realism - many steps, not all possible at once
• Training, new roles for Minfin and
  ministries/agencies
• Essential to act now
• budget and the use of taxes is too important for
  Russia and its people to miss this opportunity
• Former Soviet Union partners are in advance of
  Russia

12
Support from SBR Project and European Commission

• Project
• Capacity building support, training for Minfin
  and selected ministries
• Articulating practical processes
• Support to help resolve difficulties
• European Commission
• Ready to consider additional small policy
  projects