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INTRODUCING RESULTS-BASEDAPPROACHES INTO PUBLIC SECTOR
MANAGEMENT PROCESSES:The Philippine Experience
INTRODUCING RESULTSINTRODUCING RESULTS--BASEDBASEDAPPROACHES INTO PUBLIC SECTORAPPROACHES INTO PUBLIC SECTOR
MANAGEMENT PROCESSES:MANAGEMENT PROCESSES:The Philippine ExperienceThe Philippine Experience
A Paper Presentedby
SECRETARY EMILIA T. BONCODINDepartment of Budget and Management
Philippines
2nd International Roundtable on Managing for Development ResultsMarrakech, Morocco
05 February 2004
RESULTS-BASED APPROACH:Major Element of
Philippine Public Sector ManagementReform Program
RESULTSRESULTS--BASED APPROACH:BASED APPROACH:Major Element ofMajor Element of
Philippine Public Sector ManagementPhilippine Public Sector ManagementReform ProgramReform Program
Department of Budget and ManagementRepublic of the Philippines
PUBLIC SECTOR MANAGEMENT REFORM PROGRAM
PUBLIC SECTOR MANAGEMENT PUBLIC SECTOR MANAGEMENT REFORM PROGRAMREFORM PROGRAM
4 operational leakages
4 weak corporate and regulatory environment
4 weak public institutions and enforcement
4 poor incentive structures
4 slow response capability to changing situations and needs
4 inadequate resources for basic services
4 deteriorating fiscal position
4 slow and unstable growth
poverty
To address key dysfunctions:
Department of Budget and ManagementRepublic of the Philippines
PUBLIC EXPENDITURE MANAGEMENT:DESIRED RESULTS
PUBLIC EXPENDITURE MANAGEMENT:PUBLIC EXPENDITURE MANAGEMENT:DESIRED RESULTSDESIRED RESULTS
To reduce poverty by creating investment and job opportunities through:
a) Addressing the inadequacy of resources for basic services
b) Arresting the deteriorating fiscal position
Department of Budget and ManagementRepublic of the Philippines
PUBLIC EXPENDITURE MANAGEMENT:FOCUS ON RESULTS
PUBLIC EXPENDITURE MANAGEMENT:PUBLIC EXPENDITURE MANAGEMENT:FOCUS ON RESULTSFOCUS ON RESULTS
q Use of the budget as instrument for ensuring desired results
q Strengthening of existing incentive structures to advocate and implement reforms
q Active partnership with civil society in monitoring results
q Clear targets and assessment mechanisms
Department of Budget and ManagementRepublic of the Philippines
PUBLIC EXPENDITURE MANAGEMENTFRAMEWORK
PUBLIC EXPENDITURE MANAGEMENTPUBLIC EXPENDITURE MANAGEMENTFRAMEWORKFRAMEWORK
q Fiscal Discipline
q Allocative Efficiency
q Operational Efficiency
Department of Budget and ManagementRepublic of the Philippines
MAJOR REFORM INITIATIVESMAJOR REFORM INITIATIVESMAJOR REFORM INITIATIVES
OUTCOMEOUTCOME INSTRUMENTINSTRUMENT
Fiscal Discipline Medium Term Fiscal Plan (MTFP)
Assessment of contingent liabilities; fiscal risks
Allocative Efficiency Medium Term Public Investment Program (MTPIP)
Organizational Performance Indicator Framework (OPIF)
Department of Budget and ManagementRepublic of the Philippines
Major Reform Initiatives…Major Reform Initiatives…Major Reform Initiatives…
OUTCOMEOUTCOME INSTRUMENTINSTRUMENT
Operational Efficiency Sectoral Effectiveness and Efficiency Review (SEER)
Agency Performance Review (APR)
Procurement reform
Installation of new government accounting system and auditing procedures
Department of Budget and ManagementRepublic of the Philippines
OUTCOME INSTRUMENT
Compensation Review
Reengineering the bureaucracy
Strengthening key sector areas:
judicial reform; electoralcampaign reform; peace andorder campaign; regulatoryreform
Investment in IT and IT-based services
Major Reform Initiatives…Major Reform Initiatives…Major Reform Initiatives…
Department of Budget and ManagementRepublic of the Philippines
MEDIUM-TERM EXPENDITURE FRAMEWORK
MEDIUMMEDIUM--TERM EXPENDITURE TERM EXPENDITURE FRAMEWORKFRAMEWORK
Medium-TermPhilippine Development
Plan
Medium-TermFiscal Plan
Annual Budget
Medium-TermPublic Investment
Program
OrganizationalPerformance Indicator
Framework
AgencyPerformance
Review
SectoralEffectiveness and Efficiency
Review
Incentive Structure
FISCAL INVESTMENT
MEDIUM-TERM FISCAL PLAN:FEATURES
MEDIUMMEDIUM--TERM FISCAL PLAN:TERM FISCAL PLAN:FEATURESFEATURES
q Explicit medium term fiscal targets:deficit reduction strategy; revenue and disbursement targets; debt management strategy
q Medium term estimates of cost of ongoing and committed programs (baseline +)
q Proposed revenue enhancing measures over the medium term
q Clear rules for updating revenue and cost estimates
q Fiscal Responsibility Bill
Department of Budget and ManagementRepublic of the Philippines
MEDIUM-TERM FINANCIAL PLAN:HIGHLIGHTS
MEDIUMMEDIUM--TERM FINANCIAL PLAN:TERM FINANCIAL PLAN:HIGHLIGHTSHIGHLIGHTS
Department of Budget and ManagementRepublic of the Philippines
2003 2004 2005 2006 2007 2008 2009
NG Deficit (% of GDP) 4.6 4.2 3.6 2.9 2.1 1.2 0.2
Public Investment (% of GDP)(Capital projects) 2.7 2.2 1.8 2.0 1.9 2.1 2.2
Public Debt to GDP ratio (NG Outstanding Debt) 69.1 66.9 65.1 63.1 61.5 58.1 55.0
Particulars
MEDIUM-TERM PUBLIC INVESTMENT PROGRAM
MEDIUMMEDIUM--TERM TERM PUBLIC INVESTMENT PROGRAMPUBLIC INVESTMENT PROGRAM
q Sectoral investment requirements over 6 years
q Published major sectoral investment programs
q Alternative financing modes for specific projects
Department of Budget and ManagementRepublic of the Philippines
MEDIUM-TERM PUBLIC INVESTMENT PROGRAM
MEDIUMMEDIUM--TERM TERM PUBLIC INVESTMENT PROGRAMPUBLIC INVESTMENT PROGRAM
Department of Budget and ManagementRepublic of the Philippines
0
50
100
150
200
2003 2004 2005 2006 2007 2008 2009
In B
illio
n P
eso
s
Total CO ODA Others
ORGANIZATIONAL PERFORMANCEINDICATOR FRAMEWORK: GOALSORGANIZATIONAL PERFORMANCEORGANIZATIONAL PERFORMANCEINDICATOR FRAMEWORK: GOALSINDICATOR FRAMEWORK: GOALS
q Shift to output/outcome performance indicators
q Clarify expected performance and accountability of government agencies
q Encourage agencies to focus efforts on the delivery of outputs relevant to goal
q Establish integrated performance management system where organizational performance targets cascaded down to lower level units and used as basis of performance-based compensation
q Report to public and Congress in clear terms output of departments/agencies
Department of Budget and ManagementRepublic of the Philippines
ORGANIZATIONAL PERFORMANCEINDICATOR FRAMEWORK:
PROCESS
ORGANIZATIONAL PERFORMANCEORGANIZATIONAL PERFORMANCEINDICATOR FRAMEWORK:INDICATOR FRAMEWORK:
PROCESSPROCESS
q Identification of desired outputs and outcomes
a Agency; Oversight
a MAJOR FINAL OUTPUTS (MFOs), in terms of quantity, quality, timeliness, cost (QQTC)
q Harmonization: Agency with Oversight (DBM, NEDA)
q Identification of programs/projects contributing to the accomplishment of MFOs
Department of Budget and ManagementRepublic of the Philippines
Organizational Performance IndicatorFramework: Process…Organizational Performance IndicatorOrganizational Performance IndicatorFramework: Process…Framework: Process…
q Establishment of Performance Indicators
4 PI to determine whether program/projects contributed to MFO
4 PI must be verifiable in a quick, accurate and cost-effective manner
Department of Budget and ManagementRepublic of the Philippines
ORGANIZATIONAL PERFORMANCEINDICATOR FRAMEWORK:
Example: LTO
ORGANIZATIONAL PERFORMANCEORGANIZATIONAL PERFORMANCEINDICATOR FRAMEWORK:INDICATOR FRAMEWORK:
Example: LTOExample: LTO
Outcome - Road safety (less incidence of road accidents)
MFO - Licensing services (Drivers)
Performance indicators:
Quality - % of licenses issued in accordance with operating standards; client satisfaction
Timeliness - % of licenses issued in accordance with timeliness standards
Department of Budget and ManagementRepublic of the Philippines
ORGANIZATIONAL PERFORMANCEINDICATOR FRAMEWORK:
STATUS
ORGANIZATIONAL PERFORMANCEORGANIZATIONAL PERFORMANCEINDICATOR FRAMEWORK:INDICATOR FRAMEWORK:
STATUSSTATUSAgencies in advance stage of the OPIF process
4 Agriculture sector agencies (Agriculture, Agrarian Reform, Environment and Natural Resources)
4 Social Welfare
4 Labor and Employment,
4 Education
Agencies in intermediate stage of OPIF
4 Health
4 Internal Revenue
4 Customs
Agencies in the early stage
4 Infrastructure agencies
Department of Budget and ManagementRepublic of the Philippines
SECTOR EFFECTIVESS AND EFFICIENCY REVIEW:
FEATURES
SECTOR EFFECTIVESS AND SECTOR EFFECTIVESS AND EFFICIENCY REVIEW: EFFICIENCY REVIEW:
FEATURESFEATURES
q Periodic review of ongoing programs and projects in terms of relevance, performance, cost/benefit
q System for establishing and updating strategic priorities over the medium term
q Allows the redirection of resources to strategic programs
Department of Budget and ManagementRepublic of the Philippines
SECTORAL EFFECTIVENESS ANDEFFICIENCY REVIEW:
PROCESS
SECTORAL EFFECTIVENESS ANDSECTORAL EFFECTIVENESS ANDEFFICIENCY REVIEW:EFFICIENCY REVIEW:
PROCESSPROCESS
q Consultations: agencies; stakeholders; funding agencies
q Presentation of Results and Recommendations
q Approval of Cabinet Committee
q Input to Updated Development Plan, Public Investment Program, Budget
Department of Budget and ManagementRepublic of the Philippines
SECTORAL EFFECTIVENESS ANDEFFICIENCY REVIEW:
Results
SECTORAL EFFECTIVENESS ANDSECTORAL EFFECTIVENESS ANDEFFICIENCY REVIEW:EFFICIENCY REVIEW:
ResultsResults
q Cancel excess financing (6)
q Terminate projects or remaining components of projects (1)
q Restructure projects, including loans (30)
q Proceed (68)
Department of Budget and ManagementRepublic of the Philippines
AGENCY PERFORMANCE REVIEWAGENCY PERFORMANCE REVIEWAGENCY PERFORMANCE REVIEW
q Short term review of revenue and expenditure performance vis-à-vis budget targets
q Ranking of Agency Budget Performance and public reporting
Department of Budget and ManagementRepublic of the Philippines
AGENCY PERFORMANCE REVIEW:RESULTS
AGENCY PERFORMANCE REVIEW:AGENCY PERFORMANCE REVIEW:RESULTSRESULTS
CY 2002 - All agencies of the National Government underwent APR
Most got outstanding rating; review was based on agency-determined targets
CY 2003 - Low-budget agencies were exempted from the APR
Most got satisfactory rating
Department of Budget and ManagementRepublic of the Philippines
INCENTIVE STRUCTURESINCENTIVE STRUCTURESINCENTIVE STRUCTURES
q Greater flexibility in exchange for financial discipline hurdles
4 Use of budget savings from procurement and streamlining activities
4 Creation of one-liner budgets
4 Expenditure autonomy for low-budget agencies
q Performance-based management
4 Performance-based compensation
4 Collective negotiation agreements (CNA)
Department of Budget and ManagementRepublic of the Philippines
KEY ACCOMPLISHMENTS TO DATEKEY ACCOMPLISHMENTS TO DATEKEY ACCOMPLISHMENTS TO DATEA. Planning/Budget Processes
4 Linked Budget to Planning starting in 1999
4 Changed from input-based to outcome-based budgeting in 2002 Budget Call
4 Formulated budget strategy as precondition to approval of new foreign loans in 2001
4 Conducted first Sectoral Effectiveness and Efficiency Review (SEER) 2001
4 Conducted first Agency Performance Reviews (APRs) in 2002
4 Conducted ODA Portfolio Review in 2003
Department of Budget and ManagementRepublic of the Philippines
Key Accomplishments to Date…Key Accomplishments to Date…Key Accomplishments to Date…
B. Reengineering the Bureaucracy
4 Formulated Reengineering Plan for the Bureaucracy
4 Reengineered key regulatory agencies: financial markets, energy, ICT
C. Capability Building (1999-2003) Workshops, Training
4 Oversight agencies (18)
4 Individual agencies (3 major, 17 minor)
Department of Budget and ManagementRepublic of the Philippines
D. Assessments and Documentation
4 2001 Budget Preparation, Performance Orientation,
4 Public Expenditure Management Manual
4 Documentation of 2002 APR
4 Public Expenditure, Procurement and Financial Management Review with World Bank (WB) and Asian Development Bank (ADB)
Key Accomplishments to Date…Key Accomplishments to Date…Key Accomplishments to Date…
Department of Budget and ManagementRepublic of the Philippines
CHALLENGESCHALLENGESCHALLENGES
Department of Budget and ManagementRepublic of the Philippines
q Refining multi-year resource constrained planning
q Completing inventory of contingent liabilities
q Enhancing the predictability of revenues
q Cascading performance management system down to personnel appraisal
q Shifting to a performance based compensation system
q Advocating PEM reforms in Congress
MOVING FORWARDMOVING FORWARDMOVING FORWARD
2004 2005 2006 2007
4limitedbudgetautonomy
4compensationreview
4reengineeringthe bureaucracy
4expandedbudget autonomy
4Initial implementationof compensationreform
4Reengineeringthe bureaucracy
4PEM substantially operations
4Alignment of agency with individual performance
4PEM fullyoperational
Department of Budget and ManagementRepublic of the Philippines