ByBy

NORA C. OLIVEROSNORA C. OLIVEROSDirectorDirector

ByBy

NORA C. OLIVEROSNORA C. OLIVEROSDirectorDirector

Introduction of Results-Based Budgeting (RBB) and Best Practices

in the Philippines

Introduction of Results-Based Budgeting (RBB) and Best Practices

in the Philippines

Department of Budget and ManagementDepartment of Budget and ManagementDepartment of Budget and ManagementDepartment of Budget and Management

South Asia Regional Forum on Mainstreaming South Asia Regional Forum on Mainstreaming Managing for Development Results (MfDR)Managing for Development Results (MfDR)

Colombo, Sri LankaColombo, Sri LankaOctober 13-14, 2009October 13-14, 2009

South Asia Regional Forum on Mainstreaming South Asia Regional Forum on Mainstreaming Managing for Development Results (MfDR)Managing for Development Results (MfDR)

Colombo, Sri LankaColombo, Sri LankaOctober 13-14, 2009October 13-14, 2009

Part I. Public Expenditure Management (PEM)

Part II. PEM Reforms Medium Term Expenditure Framework (MTEF) Organizational Performance Indicator

Framework (OPIF)

Part III. Key Developments and Next Steps

Part IV. Lessons Learned

PRESENTATION OUTLINEPRESENTATION OUTLINEPRESENTATION OUTLINEPRESENTATION OUTLINE

PART I

PUBLIC EXPENDITURE MANAGEMENT

Public Expenditure Public Expenditure Management (PEM)Management (PEM)

Uses the budget as instrument

for ensuring desired results

PEM Framework PEM Framework

Medium Term Medium Term Philippine Philippine

Development Development PlanPlan

Medium Term Medium Term Public Investment Public Investment

ProgramProgram

Medium Term Medium Term Fiscal PlanFiscal Plan

OPIF-Based Annual OPIF-Based Annual BudgetBudget

FiscalFiscal InvestmentInvestment

Forward Forward EstimatesEstimates

Paper on Paper on Budget Budget

StrategyStrategy

PEM FrameworkPEM Framework

Pursues: Aggregate Fiscal Discipline

Spending within affordable limits

Allocative Efficiency spending on the “right things” or “right

priorities”

Operational Efficiency Providing goods and services at reasonable

cost

A holistic approach to budgeting that focuses on:

Policy reforms

Institutional arrangements

Management systems

Information systems

Attainment of policy results

Public Expenditure Management Public Expenditure Management (PEM) (PEM)

TWO MAJOR COMPONENTS that are mutually supportive

Medium-Term Expenditure Framework (MTEF)

Organizational Performance Indicator Framework (OPIF)

PUBLIC EXPENDITURE MANAGEMENT: PUBLIC EXPENDITURE MANAGEMENT: FOCUS ON RESULTSFOCUS ON RESULTSPUBLIC EXPENDITURE MANAGEMENT: PUBLIC EXPENDITURE MANAGEMENT: FOCUS ON RESULTSFOCUS ON RESULTS

PART II

EXPENDITURE MANAGEMENT REFORMS

MTEF OPIF

MTEFMTEF Whole of government framework

Strategic Policy-based

Integral to annual budget cycle Cost of existing policies Sector strategies and priorities

• Forward Estimates

Determines fiscal space for new projects

Validates agency budget proposals

• Paper on Budget Strategy

Sets development priorities

Identifies policy issues (opportunities, threats)

Provides options/choices for decisions

MTEF Components MTEF Components

3-year future costs of existing programs

Existing policies automatically rolled over into budgetary allocations on annual basis

Estimates updated at least annually

Forward Estimates (FE)* Forward Estimates (FE)*

* to be undertaken before preparation of PBS

Development priorities

Progress in meeting MTPDP objectives

Issues based on sustainable policy (opportunities, threats)

Budget performance & pressure points

Options/choices for decisions

Preliminary ceilings

Paper on Budget Strategy Paper on Budget Strategy (PBS) (PBS)

• Key to results-based approach in PEM whereby government is able to:

Establish priority expenditures

Identify targets

Assess accomplishments

Report results

Organizational Performance Organizational Performance Indicator Framework (OPIF) Indicator Framework (OPIF)

Shift in emphasis from input-based to output-focused budgeting

Inputs still important in assessing efficiency

Encourage departments & agencies to focus efforts on the delivery of outputs relevant to their goals (outcomes)

Specify and document expected performance of each department/agency and require accountability

Report to the public and Congress in clear terms on the efficiency of output delivery by departments and agencies

OPIF OBJECTIVESOPIF OBJECTIVESOPIF OBJECTIVESOPIF OBJECTIVES

Increased effectiveness for core business Integrate agencies’ strategic and financial planning Links operations and strategies Links planning and budgeting processes

Improved efficiency in policy implementation and service delivery Managers focus on results - the how, what and why Improved reporting and enhance transparency

Better resource allocation Improve the quality of budgetary decision-making

Why OPIF Matters: the Government and Why OPIF Matters: the Government and CommunityCommunityWhy OPIF Matters: the Government and Why OPIF Matters: the Government and CommunityCommunity

Greater clarity on agency roles, functions, and accountabilities

More predictable funding for core business Predicated on a reformed Plan-Budget process (esp. forward

estimates), better cash management, Contingency Reserve Greater control over internal resource deployment (i.e.,

managers empowered to do so)

Better managed performance expectation What is achievable and realistic within funding constraints

Communication tool

Promote better workforce Encourages innovation More job satisfaction

Why OPIF Matters: Department and Why OPIF Matters: Department and AgenciesAgenciesWhy OPIF Matters: Department and Why OPIF Matters: Department and AgenciesAgencies

Greater clarity on contribution to outcomes Through business planning and performance management

process, employees can see how their activities contribute to organizational outcomes

Better job satisfaction Better task delegation, clear links to corporate goals

Improved performance Incentives potential to provide rewards for performance

Career Development Better communications between managers and staff, regular

and effective performance feedback, personal development an integral part of performance management

Why OPIF Matters: EmployeesWhy OPIF Matters: EmployeesWhy OPIF Matters: EmployeesWhy OPIF Matters: Employees

OPIF Key ElementsOPIF Key Elements

OPIF OPIF

Performance Indicators

(Output/Outcome-based)

MFOs (Outputs)

Goods and services that a department or agency is mandated to deliver to external clients, funded by the Budget Consumed outside of the department or agency

(i.e., end user is external)Achieved through implementation of programs,

activities and projects (PAPs)

Contribute directly to attainment of organizational outcomes

Within the control of the department or the agency

Major Final Outputs (MFOs)Major Final Outputs (MFOs)Major Final Outputs (MFOs)Major Final Outputs (MFOs)

Performance Indicators Performance Indicators

Performance measures for assessing MFOs and outcomes

Quality, quantity, timeliness and cost specifications

The characteristics of well-formulated indicators are:SMART

S - specific M - measurable A - achievable, R - realistic and T - time-bound

CREAM C – clear, precise and unambiguous R – relevant, appropriate and timely E – economic or available at reasonable cost A – adequate or sufficient to assess performance M – monitorable or can be independently measured

Verifiable

Performance Indicators (PIs)Performance Indicators (PIs)Performance Indicators (PIs)Performance Indicators (PIs)

Performance Targets (PTs)Performance Targets (PTs)

Identifies specific ,planned level of results to be achieved within an explicit timeframe.

Characteristics: Expresses different dimensions of results e.g. quantity (how

much), quality (how good), or efficiency (least cost) values With specific timeframe or timeliness dimension

e.g. % increase in irrigation systems by (year), % increase in yield/hectare by (year), % decrease in cost of production/hectare by (year)

Logical framework (Logframe) is an analytic tool that demonstrates the causal relationships between different levels of expected results and the underlying assumptions made about them.

The process provides information on the:

Why? an intervention needs to be carried out

Who? will benefit

What? are the benefits to the client, to society

How? the intervention is to be executed

Which? Strategies/factors are crucial for the success of the intervention

OPIF can best be understood by the OPIF can best be understood by the Logframe Approach Logframe Approach

OPIF ANALYTICAL FRAMEWORK

SOCIETAL GOALS

SECTOR GOALS

ORGANIZATIONAL OUTCOME

MAJOR FINAL OUTPUTS

P/A/Ps

BUDGET

Performance Indicator/s

(Impact)

(Outcome)

(Outputs)

Targets(Inputs)

Key activities or integrated group of activities (programs) and projects undertaken by the department/agency to achieve MFOs

Programs/Activities/Projects Programs/Activities/Projects (PAPs)(PAPs)

Programs/Activities/Projects Programs/Activities/Projects (PAPs)(PAPs)

Identify and document Major Final Outputs (MFOs) and desired outcomes

Identify the programs/activities/projects contributing to the MFOs and organizational outcomes

Clarify link between outcomes, MFOs and PAPs

Find suitable Performance Indicators (PIs)

Sign off on OPIF logframe by department/agency heads

OPIF PROCESS - SUMMARYOPIF PROCESS - SUMMARYOPIF PROCESS - SUMMARYOPIF PROCESS - SUMMARY

Key Developments and Next Steps

PART III

Key DevelopmentsKey Developments

• Phased installation of OPIF in whole of government

FY 2007-2008 budget, 122 agencies have established their logical framework, MFOs , PIs, and PTs , which were compiled and submitted to Congress

FY 2009 budget, all remaining national government agencies and 112 State Universities and Colleges

Key DevelopmentsKey Developments

• Published the OPIF Book (FY 2007, FY 2008 and 2009 budget)Major Final Outputs (MFOs) developed

Performance Indicators (PIs) identified

Performance Targets set

Budget Performance Assessment Reporting system rolled out in 2008

Work in ProgressWork in Progress Capability building program

Results-Based Monitoring and Evaluation Framework

Restructuring of Programs, Activities and Projects for transparency and for clarity of cost allocation by MFO

Agency Cascading of OPIF for advocacy and ownership and accountability

MTEF refinements

Next Steps Next Steps

Design and install RBME system to monitor and use OPIF information for budget decisions

Shift to OPIF-based Appropriations for clearer and more transparent budget

Advocacy/Communication Strategy for support in the reforms

Institutionalize Corporate Planning to set priorities, strategies and risk management

PART IVPART IV

LESSONS LEARNED

To manage and implement reformsTo manage and implement reforms

Leadership Change Management Team Reform champions Wider participation of stakeholders Support systems (IT, IFMIS, Incentive)

THANK YOU!!