Topic #1: Linking and integrating national policy and strategy with the Budget

Replies to This Discussion

Permalink Reply by Arunaselam Rasappan on April 27, 2009 at 9:47am

Dear Colleagues - further to my post earlier on the above topic, I'd urge members to participate and post responses and experiences with the questions raised. From my experience in several countries in Africa, Asia, and even in the Middle East, the missing link between policies at the macro level and the use of limited resources to obtain systematic policy results is a real challenge. In many cases, the real challenge is not the lack of money but the lack of a systematic way to approach the planning and utilization of such limited resources. I'd like to see some country examples of such challenges and country cases being shared with other members.

Best regards

Aru Rasappan

• ▶ Reply

Permalink Reply by Nader Metwalli on May 4, 2009 at 3:05pm

You touched on an interesting subject. As you mentioned the subject is relevant in Africa, Asia and the Middle East. The issue starts with planning. A five year plan is either non-existing, developed by a donor agency or only carry the title but does not qualify as a plan. Many development countries operate in "emergency" mode or "fire fighting” mode where priorities are decided based on emerging conditions not normal conditions. Priorities could also shift with change in persons at all levels. There is a lack of evidence based policy making where decisions are made based on information rather than intuition and experience. There is also insufficient transparency in budget allocation where there are many closed boxes. Those are a few observations from working in several counties on development projects
Nader

• ▶ Reply

Permalink Reply by Ledule Bosch on May 5, 2009 at 7:02am

Hi Aru,

Thanks for a very interesting question. Attached file details how South Africa attempts to align its planning with budgetary processes to achieve results. I thought it could be benefiacial for this discussion.

Regards,

Ledule (South Africa)

Attachments:

• pframework0805.doc FINAL.doc, 1.4 MB

• ▶ Reply

Permalink Reply by Arunaselam Rasappan on May 8, 2009 at 8:32pm

Dear Ledule - many thanks for sharing this document with us. It is certainly relevant and interesting. Perhaps, do you think you might be able to extract salient points from the document and repost them on this discussion? Not sure if everyone will actually download the document and read it. it may be helpful if you could just extract relevant issues and points from the paper and post them here...thanks again for your useful contribution.

Aru Rasappan

Ledule Bosch said:

Hi Aru,
Thanks for a very interesting question. Attached file details how South Africa attempts to align its planning with budgetary processes to
achieve results. I thought it could be benefiacial for this discussion.

Regards,

Ledule (South Africa)

• ▶ Reply

Permalink Reply by Arunaselam Rasappan on May 8, 2009 at 8:45pm

Hi Nader - thanks for your useful feedback and comments. I cant agree with you more. I'm sure the World Bank and other donors who have been supporting the Medium Term Expenditure Framework (MTEF) and related initiatives would vouch for this. Getting developing countries to adopt a more realistic and actionable five year development plan is much easier on paper - many countries claim they have it...but as you rightly pointed out, it is the action and results that count. We had a good discussion on this issue when we last discussed the integrated development planning under the IRBM system discussions last year.

In this respect, I'd lke to highlight the decisions/resolutions made at the last Accra meeting in Sept., 2009. To me that was an important milestone. If everyone (donors and recipients alike) have agreed on the need for integrated development planning that is holistic and results-oriented, than what is now stopping developing countries from moving ahead with their development plans? The AAA is only a resolution on what we all should do or want to do but the issue now is HOW? and WHAT does it take to get these decisions operationalised in a meaningful and sustainable manner? Many countries keep on harping on the lack of money for their failure to show results...but my contention is that limited resources is not the main reason. I know at least of one country in Souther Africa where there is plenty of money but minimal results! Why? What has gone wrong? How can we help rectify this and make development work for the country? Lets hear others' opinions on these issues. Am sure there are many "rich" experiences from many countries...it would be good to share such experiences and be able to have some concrete discussions on this important topic.

Nader - perhaps you can share some specific examples from countries where you have worked in (but not necessarily give away names if that is sensitive). Thanks again.

Aru Rasappan

Nader Metwalli said:

You touched on an interesting subject. As you mentioned the subject is relevant in Africa, Asia and the Middle East. The issue starts with planning. A five year plan is either non-existing, developed by a donor agency or only carry the title but does not qualify as a plan. Many
development countries operate in "emergency" mode or "fire fighting”
mode where priorities are decided based on emerging conditions not
normal conditions. Priorities could also shift with change in persons
at all levels. There is a lack of evidence based policy making where
decisions are made based on information rather than intuition and
experience. There is also insufficient transparency in budget
allocation where there are many closed boxes. Those are a few
observations from working in several counties on development projects
Nader

• ▶ Reply

Permalink Reply by Marie-Lise HOW FOK CHEUNG on May 13, 2009 at 1:33am

Planning through Programme Based Budgeting


Introduction

I thank the CoP-MfDR Africa for organising this discussion, especially in the present economic conjuncture undermined by a world economic crisis, where fiscal spaces are reduced.

Benjamin Disraeli, Prime Minister of the United Kingdom- UK House of Commons in 1862, once mentioned, “I have so often maintained in this House that … expenditure depends on policy”.

I would concur by saying that the failure to link policy, planning and budgeting is one of the single most important cause of poor budgeting outcomes. Programme-based budgeting (PBB) or performance based budgeting provides us with an important tool for tracking and reporting on the alignment of the organization's resources with its strategic goals. While every organisation has different needs and capabilities, program-based budgeting can offer a lesson in considering budget and program priorities concurrently. PBB seeks to improve expenditure efficiency by systematically linking funding to results, making use of performance information to achieve that linkage. In my opinion, PBB, therefore, is seen as the missing process between established strategic goals and working toward attaining them.

The Mauritian Experience
It is against this backdrop of efficiency and forward planning that the Mauritian Government launched, in financial year (FY) 2006/07, an economic reform programme, spearheaded by the Ministry of Finance & Economic Empowerment (MoFEE), focusing on increasing the competitiveness of the economy, attracting foreign direct investment, empowering the poor and strengthening fiscal management.

As part of fiscal management reforms, it was decided to reform the budget process by introducing a Programme Based Budget (PBB) in the context of a Medium-term Expenditure Framework (MTEF). Analysing budget reform in other countries suggested that MTEF improved the budget process and outcomes through greater: 1) Clarity of policy objectives; 2) Predictability in budget allocations; 3) Comprehensiveness of coverage; and 4) Transparency in the use of resources.

The main motivations for introducing PBB were also similar to those prevailing in other countries that have moved in this direction. These countries have typically been concerned about a high level of public debt and excessive budget deficits that constrained their fiscal space to expand social and development spending.
By developing and implementing PBB, the Government of Mauritius aimed to achieve six objectives:

•To reform the framework governing public management in order to make it more results-oriented and geared to achieving development outcomes;

•To improve efficiency and effectiveness of government ministries when developing and implementing their Programmes and Sub-Programmes of activities;

•To provide more concrete information to the Cabinet on performance for decision-making purposes and for setting future targets and priorities;

•To provide information to help reallocate resources between Programmes and Sub-Programmes;

•To help reduce expenditure when necessary.

•To institutionalise gender equity throughout the process of aligning budgets to policy priorities and increasing the transparency and accountability of the system.


The first stage of implementing the budget reform was undertaken for the FY 2007/08 budget with the introduction of an indicative PBB to change the focus of the budgetary process from an input-based annual activity to a performance based multi-annual exercise linking funds to outputs by costing activities, and performance towards achieving these outputs measured through SMART performance indicators. The indicative PBB was submitted alongside the traditional line-item budget in FY 2007/08 as a starting point and the fully-fledged PBB embedded in a three year MTEF has been implemented as of FY budget 2008/09.

In summary, the link to be established between policy and programming is seen as follows:
Policy Plan Strategy PBB (Outputs and Costing) Delivery Units

Going a Step Further- Engendering the PBB
Gender-responsive budget (GRB) initiatives ensure the realisation of gender equality goals and improved compliance with the objectives of the Beijing Platform for Action and the Convention on the Elimination of Discrimination Against Women (CEDAW). They promote greater accountability for equity in allocation of public resources.

Consequently, in March 2008, the Government adopted the National Gender Policy Framework (NGPF), drafted in line with the reforms of the Government towards performance management and programme based budgeting. The NGPF provides the broad institutional and operational strategies for sectoral Ministries/ departments to develop their respective gender policy statements in line with their respective PBBs.

The Ministry of Women’s Rights, Child Development and Family Welfare, as lead agency of the National Gender Machinery, has subsequently provided technical assistance to four pilot Ministries (Youth, Education, Women’s Rights, and Labour) to engender their PBBs by re-defining their outcomes, objectives, outputs and performance indicators to render them gender sensitive. Concurrently, the Ministry has also provided technical expertise to assist these pilot Ministries in developing their sectoral gender policies and strategies to achieve gender equity and equality.

Given the success of the first initiative, this process is now being extended to formulation of additional four sectoral gender policies. A Strategic alliance with MoFEE has been secured and eight programmes have been retained for FY 2009/10 to be engendered.

However, strengthening capacity in this regard remain primordial for ownership by different sectors of this process and also for its sustainability.

• ▶ Reply

Permalink Reply by Bimerew Alemu on May 29, 2009 at 4:22am

Dear Friends
Warm greetings
I have an interest to participate on topic Policy, budget and planning and particularly Aligning strategic resources with program priorities. My focus is obviously my institutiion.

Objective is accelerated sustained and broad based development. Priority sectors for allocating resources are : food security, education, health, road, water. Public expenditure programs reforms have taken place during the last years. One of the activities being shifting from line item budget to program budget. Planning , programming and budgeting in relation to accountability, efficiency and effectiveness are started. This is on the basis of activity based costing and measuring results.
The Ethiopian budget process is Ministry of Finance and Economic Development (MoFED) issues call letter to sectoral line ministries, public spending agencies prepare and submit their budget, MoFED reviews the budget, then budget hearing is held for each ministry. At this stage strong arguments can be observed; after that revision of program budget is done and submitted to the Council of Ministers and the to the House of Representatives (Parliament), where the final approval of the annual budget is decided. Based on this approved budget my institution is mandated to administer the budget, activities such as budget transfer are managed by MoFED and at regional levels BoFEDS undertake similar activities.

• ▶ Reply

Permalink Reply by Dr. Sohail Amjad on June 16, 2009 at 2:53pm

Dear Colleagues,

My viewpoint on the subject of linking policy, planning and budgeting is attached.

Enjoy!

Best Regards

Sohail Amjad

Bimerew Alemu said:

Dear Friends
Warm greetings
I have an interest to participate on topic Policy, budget and planning and particularly Aligning strategic resources with program priorities. My focus is obviously my institutiion.

Objective is accelerated sustained and broad based development. Priority sectors for allocating resources are : food security, education, health, road, water. Public expenditure programs reforms have taken place during the last years. One of the activities being shifting from line item budget to program budget. Planning , programming and budgeting in relation to accountability, efficiency and effectiveness are started. This is on the basis of activity based costing and measuring results.
The Ethiopian budget process is Ministry of Finance and Economic Development (MoFED) issues call letter to sectoral line ministries, public spending agencies prepare and submit their budget, MoFED reviews the budget, then budget hearing is held for each ministry. At this stage strong arguments can be observed; after that revision of program budget is done and submitted to the Council of Ministers and the to the House of Representatives (Parliament), where the final approval of the annual budget is decided. Based on this approved budget my institution is mandated to administer the budget, activities such as budget transfer are managed by MoFED and at regional levels BoFEDS undertake similar activities.

Attachments:

• Linking Policy Planning, Budgeting with Performance.doc, 39 KB

• ▶ Reply

Permalink Reply by Zaam Ssali on June 18, 2009 at 7:11am

Dear Colleagues,

My submissions below are intended to share with you what Uganda has done in terms of integrating national policy and strategy with the budget with a view to guide resource usage and development results. In addition there are also highlights from an Independent Evaluation of the development framework.

In 1997, the Government of Uganda (GoU) endorsed a comprehensive national development framework aimed at guiding public expenditure. The framework was titled the Poverty Eradication Action Plan (PEAP) with an overriding mission to eradicate poverty in Uganda. The overall target of the PEAP was to reduce the proportion of Ugandans unable to meet their basic needs to less than 10% by 2017 from a baseline of 44% as recorded in the inception year. The PEAP was implemented on a 3year cycle matching the Medium Term Expenditure Framework (MTEF); this guided the budgeting process for Uganda. Both internally raised resources and development partner contributions supported priorities identified in the PEAP. Since 1997, the PEAP has been guided by a set of objectives and was revised twice in 2000 and 2004. While the 1997 PEAP focused on priority programme areas with indicators monitored under sectors; the 2000 PEAP focused on a mechanism of poverty monitoring and analysis; the 2004 PEAP developed a specific Results and Policy Matrix with clearly defined outcomes, measurable indicators, with baselines and targets. It should be noted that the PEAP has now ended and a more elaborate 10year National Development Plan (NDP) is being drafted.

Within the period of the PEAP implementation, initiatives like Sector Working Groups (SWGs), Results Oriented Management, Output-Oriented Budgeting were used and all were geared to linking macro level development policies and priorities to the budget.

An Independent Evaluation of the PEAP was done in 2008 intended to inform the drafting of the new National Development Plan. The evaluation raised a number of issues that may have affected the performance of the PEAP and thereby its delivery on results in light of linking policy priorities and the budget. Some of the issues raised include;

- Overall, the PEAP was effective as an instrument for the prioritization of public policy and resources however over time prioritization weakened. The most important factor in the decline was the fading of active political leadership of the PEAP as the prime instrument for achieving national aspirations during the period of PEAP 2004. This was manifest in top down demands on the budget for competing policy priorities and a failure to take strong political action to curb heavy budgetary demands from some powerful ministries.

- Changing political priorities created a growing gap between the priorities of the PEAP and the capacity of the budget to fund them. There was a proliferation of priorities at the expense of national – level focus, and a failure to adapt in a timely manner to big policy shifts at the political level. The gains from strengthening the SWGs and elaborating sectoral policies were ultimately negated by disengagement at the macro government level.

- The PEAP’s own processes for policy prioritisation had mixed success. The Sector Working Groups (SWGs) in many instances achieved real success as intermediate policy prioritisation processes. On the other hand, the weakening of the top-down poverty eradication vision, the bottom up policy pressures in the PEAP/ MTEF, and the horizontal influence of the development partners, combined to blur the strategic focus, and inhibit timely strategic reorientation.

- The effectiveness of the PEAP has been impeded by poor implementation. This problem arises partly from deficiencies in responsibility and accountability within the public service and the lack of sound control systems to enforce them. Nevertheless, some implementation problems are the result of wider policy and governance problems.

- Serious deficiencies in compliance and accountability systems were noted in the public service and these contribute to inefficiency and corruption. The sectors where these problems are most evident are also the sectors most central to the PEAP .The strengthening of management controls in the public service is therefore a high priority.

- The budgeting processes of the PEAP have worked more strongly than the planning processes, and this has weakened the capacity of planning to combat the natural tendency of budgets towards incrementalism.

- The lack of an organised process amongst the central control agencies for ensuring that PEAP objectives are properly financed and implemented and that problems in policy and delivery should be identified and fixed. The Results Oriented Management (ROM) initiative is unlikely to succeed in strengthening the results orientation of the public service because it should have been sequenced after rather than before better compliance and control is established.

On the other hand the evaluation proposed as follows:

- The National Development Plan should be the GoU’s only national strategic plan and the MTEF should finance it. This provides for a single strategic plan with clear priorities and financing/budgeting options.

- The GoU should not have competing plans whether they be the MTEF itself, the ruling party manifesto, or non-aligned development partner programmes and projects.

- The Ministry of Finance Planning and Economic Development (MoFPED) should be structured to integrate budget work, poverty reduction and other national strategies, and the MTEF. Strategic objectives in the MTEF should drive budget allocation not just influence it. Plans of spending units in MDAs should be prioritised against strategic goals – it should not be enough to be “NDP compliant”.

- The planning elements of the NDP need to be strong enough to translate medium - term objectives into annual activities and work plans, and for regular policy and progress review - to guard against the system becoming dominated by annual incrementalism.

- The plan and the resources required must be matched within the NDP - and an adjustment to resources should require an adjustment of the plan.

- The creation of a “Government Performance” oriented central body with oversight of the budget, action, and review phases of the NDP management cycle, and the capacity and authority to address incentives and problems in all three phases.

It is important to note that initially the PEAP was intended to be implemented over 20years. However, the policy shifts among other issues that have taken place over the decade of its implementation have necessitated a change of plans.We all look forward to the National Development Plan which is expected to address the shortcomings of the PEAP.

regards,

Zaam

• ▶ Reply

Permalink Reply by Dr. Sohail Amjad on June 18, 2009 at 10:25am

Dear Colleagues,

I have tried to explain most of the components of MfDR vision, policy, planning and linking budgets with results in a single slide attached.

Dr. Sohail Amjad said:

Dear Colleagues,

My viewpoint on the subject of linking policy, planning and budgeting is attached.

Enjoy!

Best Regards

Sohail Amjad

Bimerew Alemu said:

Dear Friends
Warm greetings
I have an interest to participate on topic Policy, budget and planning and particularly Aligning strategic resources with program priorities. My focus is obviously my institutiion.

Objective is accelerated sustained and broad based development. Priority sectors for allocating resources are : food security, education, health, road, water. Public expenditure programs reforms have taken place during the last years. One of the activities being shifting from line item budget to program budget. Planning , programming and budgeting in relation to accountability, efficiency and effectiveness are started. This is on the basis of activity based costing and measuring results.
The Ethiopian budget process is Ministry of Finance and Economic Development (MoFED) issues call letter to sectoral line ministries, public spending agencies prepare and submit their budget, MoFED reviews the budget, then budget hearing is held for each ministry. At this stage strong arguments can be observed; after that revision of program budget is done and submitted to the Council of Ministers and the to the House of Representatives (Parliament), where the final approval of the annual budget is decided. Based on this approved budget my institution is mandated to administer the budget, activities such as budget transfer are managed by MoFED and at regional levels BoFEDS undertake similar activities.

Attachments:

• Policy Planning and budgeting.ppt, 223 KB

• ▶ Reply

Permalink Reply by Arunaselam Rasappan on June 29, 2009 at 12:31pm

Dear Colleagues,

There has been limited discussion on this topic though it is very important Before we close this topic, I'd like to get some feedback from you all on the following aspect of this topic. We are facing this dilemma and your experience with this in your country would be most helpful.

In a poor developing country which has limited resources, there is a huge challenge of turning myriad national policies (most of them sound very nice and politically correct) into actions and results on the ground. Sometimes, it is not just due to the lack of limited resources but due to several other factors. Some countries have been successful in strategically utilizing their limited resources into real development results at the grassroot levels.

What is the secret here? What happens to all that development/aid money that a country gets? Why is the money not being used to produce the desired results in priority areas? Is it due to corruption, lack of capacity, poor implementation,, poor planning and other reasons? We would like to get some feedback on this topic as it is extremely important to move ourself forward with the MfDR.

Hope to get some quick responses on this.

Thanks

Aru Rasappan

• ▶ Reply

Permalink Reply by Sithole Humbe on July 1, 2009 at 6:25am

Hie Dr Aru

I can see that im late since the doors of this discussion were closed yesterday. I have been away on my vacation leave where internet connectivity was impossible.

In my country the real problem in attempting to link and intergrate national policy and strategy with the Budget lies with Attitude problem at our Ministry of Finance offices. The Budget Officers at MoF are not in support with Program Based Budgeting or Performance Based Budgeting. Instead they demand Activity Based Budgets submissions from line Ministries year in year out ,without critically emphasizing Programmes linked to "agreed " National Development Policies as enshrined in the Fiscal Policy statements.

When important top level meetings are called by the Reforms Department to strategize the ideal implementation of National policies , MoF representatives would be too junior to articulate the way the wind would be blowing. This problem can be witnessed by you during your last trip to Zimbabwe in October 2008( IDP ).

Again, in my country resources are plentiful if managed well. But mismanagement of resources at both levels has seen intended results not being attained. Mismanagement plus corruption at the highest enchelons of management has set a bad precedence which leading us to the present predicament. Corruption has been accepted as a norm certain quotas although efforts to bring to sanity the environment are underway.

The reason which gave rise to corruption is lack of systematic supervision, monitoring and evaluation of Programmes heavily funded from domestic and external sources. The implemention of programmes are contracted to "Indeginious" contractors in the name of Black Economic Empowerment who lacks Capacity to deliver results at "agreed " timelines. What the Contractors would be doing is milking the donor funds and fiscus with no physical progress made. What would be paid is IPCs Certificates. If an independent audit was tobe carried it could be open truth that these so called contrators are owned by serving Ministers and Governors.

Gender based budgeting is only lamented from the Women Organisations but practical linking of micro and macro Goals are foung missing in an attempt to reduce extreme poverty by assisting less privileged people.

National Security is of higher priority over anything in my country. There is no ideal revelation as to how much the Ministry/ Sector is provided with as Funding for fear of Enemies. So the pryramid of MfDR ( i.e. Accountability, Capacity,Transparency and Authority) are not applied .From my experience, it is sleep-talk idealising linking national policy to budget.

The national Policy might seem to be linked to budget when the blue-print is prepared to outsource donor funds/ grants to traditional money-lenders. When the money is released through central bank, the hawks might pounce on it to serve unstated necessities such as political campaigns or villification of villagers.

What need to be done is to lead by example, stamping out corruption, allow traditional contractors to undertake multi-purpose services, agree on private public partnerships in infrastructure development and depoliticize the civil service. The Budget Officers need capacity development and training in Results Based Management(all modules) in all countries such that METF system can be implemnted working closely with officials from Economic Planing & Development where the 2 Ministries are separated.

Thanks Dr to accept my late submission.


Arunaselam Rasappan said:

Dear Colleagues,

There has been limited discussion on this topic though it is very important Before we close this topic, I'd like to get some feedback from you all on the following aspect of this topic. We are facing this dilemma and your experience with this in your country would be most helpful.

In a poor developing country which has limited resources, there is a huge challenge of turning myriad national policies (most of them sound very nice and politically correct) into actions and results on the ground. Sometimes, it is not just due to the lack of limited resources but due to several other factors. Some countries have been successful in strategically utilizing their limited resources into real development results at the grassroot levels.

What is the secret here? What happens to all that development/aid money that a country gets? Why is the money not being used to produce the desired results in priority areas? Is it due to corruption, lack of capacity, poor implementation,, poor planning and other reasons? We would like to get some feedback on this topic as it is extremely important to move ourself forward with the MfDR.

Hope to get some quick responses on this.

Thanks

Aru Rasappan

• ▶ Reply

• ‹ Previous
• 1
• 2
• Next ›
• Page