Target audience

This workshop will provide an intense exchange of experience to professional staff and managers who participate in budget preparation process in ministries of finance, budget departments, spending ministries/agencies, local governments or any government organization impacted by budgets.

The workshop will be highly participatory. Participants are encouraged to be active in discussions and exercises throughout the three days. Participants will work in groups to discuss country specifics in introducing and implementing program budgeting reforms.

Participants are required to bring with them the official budget of the Ministry of Education of their country for year 2013 as it was submitted to the Parliament.

Course description

Many countries have in the last decade revised the budget classification with a view to improve the use of the budget as a tool to allocate financial resources over government programs – the so-called allocational function of the budget. Whereas traditionally the budget classification often was very detailed and based on inputs and spending units, after revision the classification usually became simpler, more comprehensive and based on the aims of sectoral programs rather than on inputs. Whereas unreformed budget classifications of the central government in many countries counted more than 2,000 line items (in some cases up to more than 50,000) after reform the number of line items is typically reduced to less than 500 (in some cases not more than 150).

Reforming the budget classification is not a purely technical exercise, because the budget is a tool by which government and parliament steer the allocation of resources. The Minister of Finance and the Prime Minister usually want to make sure that the government maintains control over crucial spending items, such as salaries and procurement. Parliament often has an interest in the allocation of resources over the regions of the country. Revision of the budget classification can therefore only succeed if the major stakeholders such as the Ministry of Finance, the office of the Prime Minister and Parliament are involved from the beginning.

In connection with the revision of the budget classification on the basis of programs, many countries have started providing information in the budget documents about the results achieved by the spending of public resources –so-called performance budgeting. However, most countries who have moved in this direction have encountered significant difficulties in this endeavor. As it turns out many government programs have aims that cannot easily be measured in quantitative terms. Furthermore, financial sanctioning of results can easily lead to perverse incentives. In practice it also appears that politicians often do not react to bad program results by withholding resources, but rather by increasing resources, often in conjunction with redesign of the program. This reaction is logical if one considers that politicians want to see results and the fact that a program fails to deliver, is therefore perceived as a deficiency in funding or program design, rather than as an indication that something is wrong with the aims of the program. In the light of these experiences, currently new trends are becoming visible with respect to the role of performance information.

These include:

Separation of the policy dialogue between parliament and the line minister from the budget process; under a program oriented budget process, performance information plays a key role in the policy process, but not necessarily in the budget process.
The steering of arm’s length agencies by the line minister on the basis of a permanent performance dialogue with the agency’s manager;
Removal of excessive performance information from the budget documentation;
Evaluation of program effectiveness and efficiency by the line ministry; more emphasis on the accountability of the line minister for effectiveness and efficiency.
Spending review procedures as a tool for the government and the ministry of finance to periodically assess the priority of programs in the light of new social and economic developments and new political demands.

The course will pay attention to each of these new developments and provide information about the recent reforms in the countries where they occurred. In Central, Eastern and South Eastern European (CESEE) countries, reforms aimed at performance budgeting were often lacking behind those in Western Europe. Given the reorientation that is currently taking place in Western Europe, this can now be seen as an advantage. CESEE countries can learn from the experiences of other countries and do not need to go through the same difficult process.

The course will be given by practitioners, therefore the emphasis will be on discussions and examples based on country practices; with theoretical discussions kept to a minimum. The focus will be on lessons learned in both advanced and less advanced economies and challenges that need to be taken into account.

Topics covered

The following topics will be discussed during the workshop:

Design of a program oriented budget classification
Program evaluation; procedures, regulations and implementation
Steering of arm’s length agencies: The role of performance information
Spending review; procedures, relation with the revision of the medium term expenditure framework.

Benefits to the individual

The objective of this workshop is to help participants better understand the challenges in implementing program oriented budgets.

By the end of this workshop, participants will be able to:

Reiterate key concepts of program and performance-based budgeting, including types of budget classifications and the role of performance information in policy evaluation and spending review and in the steering of agencies.
Describe key implementation challenges and the factors that are necessary to make program oriented budgeting work in practice.
Define the new trends in introducing and implementing program budgeting.
Benefit from the interactive exchange of knowledge among the workshop participants.

Faculty

Mr. Dirk-Jan Kraan, Public Financial Management Advisor for South East Europe of the IMF
Dirk-Jan Kraan is a Dutch citizen. He holds MA degrees in Law (1970) and Economics (1976) from Erasmus University in Rotterdam and a PhD degree in Economics from the same university (1989). He worked in several positions in the Directorate General of the Budget of the Dutch Ministry of Finance from 1980 to 2002, lately as head of the Division of Policy Review of the Inspectorate of Finance (Expenditure Division). He joined the Organisation for Economic Co-operation and Development (OECD) in 2002 as a senior economist in the Budgeting and Public Expenditures Division of the Directorate of Public Governance and Territorial Development. At the OECD he was among other things responsible for the Eastern European program of the Budgeting and Expenditure Division and for the OECD Value for Money Study on the organization of central government. He recently joined the International Monetary Fund (IMF) to work as a Regional Public Financial Management Advisor for South East Europe based at the CEF in Ljubljana, Slovenia.

Ms. Joanne Kelley, Professor of Public Administration, Australia/New Zealand School of Government
Dr. Joanne Kelly is Director of the Australia New Zealand School of Government (NSW) and an Associate Professor in Government at the University of Sydney. She specializes in the techniques, politics and processes of government from a comparative perspective. Professor Kelly has authored reports, journal articles and book chapters on these topics: including the co-authored books Managing Public Expenditures in Australia (2001) and Reallocation: the role of budget institutions (2005), and she is currently working on a third book entitled The Politics of Budgetary Control: expenditure review and reallocation in comparative perspective.

Professor Kelly has worked in both government and academia, including four years as academic advisor to the Secretary of the Treasury Board Secretariat of Canada. She has written reports for and provided advice to governments in Australia, Britain, Canada, Italy, New Zealand, and South Africa. Recent government reports include Appropriating for Results: reform in the Government of Canada (2006); Institutions for Effective Expenditure Review: Lessons for Italy from International Experience (2007); The Administration of Discretionary Grant Programs in the Commonwealth of Australia (2008); and Shaping a Strategic Centre (ANZSOG/MAB 2009), Planning & Budgeting in South Africa: a report for the President (2010). During 2011-12 she worked with the OECD´s Value for Money team to assess the systems of spending review & the policy co-ordination across the OECD member-states.

Mr. Frans van Nispen tot Pannerden, Associate Professor of Public Administration, Erasmusuniversity, Rotterdam
Dr. Frans van Nispen holds an MPA from Leiden University [1975] and a PhD from the Erasmus University Rotterdam [1993]. He has served for several years as policy analyst for the Dutch government [1977-1981], before he returned to academia. At the moment he is an Associate Professor of Public Administration and Director of Studies of the Masters Program in International Public Management and Policy at the Erasmus University of Rotterdam, The Netherlands. Previously he has been Affiliated Professor at Institute of Public Policy of George Mason University in Fairfax, Virginia and Senior Research Fellow at the Robert Schuman Centre for Advanced Studies of the European University Institute in San Domenico di Fiesole, Italy. He has published in various journals, primarily on issues at the interface of policy analysis and public budgeting in a European context. He has done consultancy for the EU, OECD and World Bank.

Program Budgeting, Evaluation and Spending Review

Target audience

Course description

Topics covered

Benefits to the individual

Faculty

Application procedure