INTRODUCTION OF

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INTRODUCTION OF PERFORMANCE BUDGETING (PB)
MECHANISM AT THE COMMUNITY LEVEL TO SUPPORT
THE ACHIEVEMENT OF MDGs
United Nations Development Programme
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Goal of the Project

• The long-term goal is to support the
  decentralization process in the country through
  improving the LSG capacity , ensuring citizen
  participation and an accountable and measurable
  public expenditure management (PEM).

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Aim of the Project

• The aim of the Project is to support the
  introduction of a Results based/Performance
  Budgeting (PB) methodology into planning,
  monitoring and evaluation processes at the
  community level.

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What is Performance/Result Based Budgeting?

• Budget Types
• Line item budget- is a financial document
  classified by expenditure types, which defines
  the amounts that will be or have been spent for
  each expenditure item. (What was purchased or
  how much was spent on what?) Expenditures are
  classified into groups, such as salaries,
  allocations, and purchased goods and services
• - Program Budget- under this budget, funds are
  allocated by activity types and programs this
  budget contains details of the expenditure items,
  prioritizing the goals, rather than the process
  or means of achieving them.

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What is Performance/Result Based Budgeting?

• Performance Budget- is a financial plan providing
  a statement of the municipality mission, goals,
  and objectives and a regular assessment of their
  performance as a part of the budgeting process,
  which creates linkage between the necessary
  inputs for the implementation of the municipality
  strategic development plan and anticipated
  outcomes.

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Phases of Performance Budgeting

• Strategic planning process
• Mission Statement Development
• Information Collection and Analysis
• SWOT Analysis
• Formulation of strategic issues/problems by
  sector (social and economic Infrastructure,
  administration, income generation, etc )
• Setting strategic goals, objectives, targets and
  their costs
• Prioritization
• Selection of Prioritization methodology (pair
  wise assessment, assessment based on criteria,
  etc)
• Prioritizing Targets in each sector based on
  criteria (impact on poverty, number of
  beneficiaries, sustainability, gender
  mainstreaming, youth involvement, linkage with
  national level strategies, financial feasibility,
  etc )
• Developing a list of prioritized targets from all
  sectors

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Phases of Performance Budgeting-continuation

• Budgeting
• Estimation of Municipality revenues for three
  years
• Initial estimation/costing of priority
  Targets/Projects
• Development of List of long-term Priority
  Targets/ Projects with costs and cumulative costs
  for three years -2006-2008
• Distribution of targets/projects by years and
  coding
• Setting performance indicators for the projects
• Development of annual 2006 municipality budget
• Approval of the Municipality 2006 budget by the
  community council (public hearings)

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Phases of Performance Budgeting-continuation

• Budget execution, monitoring and control,
• Execution, internal and external accountability
  (quarterly status reports for budget
  implementation)
• Control, internal (municipality council) and
  external (NA, Governmant) control-assessment of
  actual implementation of the budget upon planned
  budget
• Provision of recommendations
• Revision of budget expenditures based on the
  recommendations
• Audit and evaluation

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Linkage between Local Development, HR and Gender
in Performance Budgeting process

• Principals of Human Rights Based Approach
• Participation
• Empowerment of individuals
• Encouragement of transparency and accountability
• Principals of Performance Budgeting
• Participation-through Civic forums, WGs and IGs
• Empowerment of individuals-discussions, ongoing
  consultancies and actual budgeting process, which
  is a decision making process
• Encouragement of transparency and
  accountability-PB by its nature is a transparent
  system
• Gender Mainstreaming
• Women and men are equally involved in the
  decision making process

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Performance Budgeting Manual Content

• Budget Types
• Essence of Performance Budget, Budgeting
  Principles, Scope, and Cycle
• Municipality Staff Structure and General
  Situation Overview as Baseline for Performance
  Budgeting
• Budgeting Process Phases and Participants
• Performance Budget Planning
• Budget Execution and Controls
• Performance Budgeting Audit and Evaluation
• Performance Budgeting Training Program

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Factors of success

• Public participation and engagement municipality
  staff and council, WGs and IGs
• Selection of Pilot Municipalities size, sector
  and open minded municipality heads
• Selection of Partners Community Finance Officers
  Association
• Cooperation with donor organizations and
  programmes ASIF, CHF/USAID, US Treasury
  Department
• Cooperation with national and local Government
  partners Ministry of Territorial Administration
  and Ministry of Finance and Economy, Pilot LSGs
• Effective cooperation between the Headquarters,
  Regional Office and Country Office

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Acknowledgments

• Many thanks to
• Ron McGill UN CDF- New York
• Dafina Gercheva- UNDP Bratislava
• Glendal Wright- UNDP Bratislava
• Semuel Coxsen- USAID/ RTI
• Gail Ostler US Treasury Department
• Community Finance Officers Association
• USAID/CHF
• Armenian Social Investment Fund
• Government counterparts