CAPACITY BUILDING :LITHUANIA’S EXPERIENCES

FROM 10 YEARS OF REFORM

Vilnius, Lithuania

20-21 March, 2007

PRESENTATION OUTLINE

PREREQUISITES OF THE REFORM

GOALS AND IMPLEMENTATION STAGES

REFORM SWOT ANALYSIS

SITUATION BEFORE

•POOR STATE FINANCIAL SITUATION IN 1998-1999• CURRENT ACCOUNT DEFICIT – 12 %

• FISCAL DEFICIT – 8 % in 1999

• GOVERNMENT BORROWING INTEREST RATE - 12–14 %

• LARGE AMOUNT OF EXTRABUDGETARY FUNDS

•NO LINKS BETWEEN POLICY FORMATION AND BUDGETING

•POOR DECISION MAKING PROCESS

•NO FISCAL RELATIONS ACROSS LEVELS OF GOVERNMENT

FACTORS STIMULATED REFORMS

STRONG POLITICAL WILL ASPIRATION FOR EUROPEAN-ATLANTIC

INTEGRATION ATTITUDE OF SOCIETY TOWARDS PUBLIC

ADMINISTRATION POOR FINANCIAL SITUATION

GOALS OF THE BUDGET REFORM

CONSOLIDATION OF PUBLIC FINANCIAL RESOURCES

PRIORITY BASED PLANNING RESULT ORIENTED ACTIVITIES RESPONSIBILITY AND ACCOUNTABILITY TRANSPARENCY

IMPLEMENTATION STAGES:1998 →REFORM INITIATIVE

THE SEIMAS RESOLUTION ON THE BUDGET STRUCTURE

REFORM CONCEPTION:

- THREE-YEAR PLANNING;

- PROGRAMME BUDGET;

- CONSOLIDATION OF RESOURCES;

- TRANSPARENCY

IMPLEMENTATION STAGES:1998→REFORM OF MUNICIPAL BUDGET

FORMATION PRINCIPLES – STAGE I

THE LAW ON THE METHODOLOGY FOR DETERMINATION OF MUNICIPAL BUDGETARY REVENUE

MUNICIPAL BUDGETS FORMATION PRINCIPLE – TO OBSERVE

THE REVENUE EQUALISATION PRINCIPLE TO CARRY OUT ALL FUNCTIONS OF MUNICIPALITIES

IMPLEMENTATION STAGES:1999→PROGRAMME BUDGET

THE DRAFT OF STATE BUDGET WAS PREPARED BY PROGRAMMES AND SUBMITED TO THE SEIMAS FOR IT’S CONSIDERATION AND APPROVAL

PROGRAMMING BUDGETING IS OBLIGATORY TO ALL APPROPRIATION MANAGERS

IMPLEMENTATION STAGES:2000→GOVERNMENT STRATEGIC PLANNING

SYSTEM

STRATEGIC PLANNING METHODOLOGY IS OBLIGATORY TO ALL STATE BUDGET APPROPRIATION MANAGERS

RECOMENDED TO MUNICIPALITIES

THE INTEGRATED PLANNING MODEL AND THE LONG-TERM DEVELOPMENT STRATEGY WAS ESTABLISHED

THE LAW ON THE GOVERNMENT AND THE LAW ON THE BUDGET STRUCTURE EMBED THE STRATEGIC PLANNING AS A MEASURE FOR ORGANISATION OF ACTIVITIES AND FINANCING PLANNING

IMPLEMENTATION STAGES:2001→ REFORM OF MUNICIPAL BUDGET

FORMATION PRINCIPLES – STAGE II

THE ESSENCE OF THE REFORM:

TO USE THE REVENUE EQUALISATION PRINCIPLE ONLY FOR CARRYING OUT INDEPENDENT FUNCTIONS OF MUNICIPALITIES

TO ALLOCATE GRANTS FROM THE STATE BUDGET FOR IMPLEMENTATION OF THE FUNCTIONS DELEGATED BY THE GOVERNMENT

IMPLEMENTATION STAGES:2003→EVALUATION OF BUDGET IMPLEMENTATION

THE INTERNAL AUDIT’S FUNCTIONS: TO EVALUATE THE ECONOMY, EFFECTIVENESS AND

EFFICIENCY OF THE PROGRAMS, WAS IMPLEMENTED IN PUBLIC INSTITUTIONS

THE EXTERNAL AUDIT INTITUTION’S FUNCTIONS: TO EVALUATE WHETHER APPROPRIATIONS ALLOCATED

HAVE BEEN USED FOR THE GOALS SET IN THE PROGRAMMES;

TO EVALUATE WHETHER APPROPRIATIONS HAVE BEEN USED AT THE HIGHEST POSSIBLE EXTENT OF ECONOMY AND IN THE MOST EFFECTIVE MANNER

IMPLEMENTATION STAGES:2003-2004→DECISION IMPACT ASSESSMENT

ADOPTION OF THE DECISION IMPACT ASSESSMENT METHODOLOGY ON:

- AN ADEQUATE AREA

- ECONOMICS

- PUBLIC FINANCES

- SOCIAL ENVIRONMENT

- CORRUPTION EXTENT

- ENVIRONMENT

IMPLEMENTATION STAGES:2005→PERFORMANCE ASSESSMENT CRITERIA SYSTEM

OUTCOME / IMPACT CRITERION – AN ASSESSMENT CRITERION FOR ACHIEVEMENT OF THE INSTITUTION’S STRATEGIC GOAL

RESULT CRITERION – AN ASSESSMENT CRITERION FOR THE FULFILMENT OF THE PROGRAMME OBJECTIVE

OUTPUT CRITERION – AN ACTIVITY IMPLEMENTATION ASSESSMENT CRITERION

REFORM SWOT ANALYSIS:STRENGTHS

A UNIFORM STRATEGIC PLANNING METHODOLOGY INSTITUTION’S ACTIVITIES BASED ON SYSTEMATICAL

PLANNING AND LINKING WITH FINANCING COMPREHENSIVELY REGULATED PLANNING PROCESS A POSSIBILITY TO ANALYSE AND TO ASSESS AN INSTITUTION

AS A SYSTEM IN PURSUIT OF THE GOALS SET INSTITUTIONS ARE ENCOURAGED TO ORIENT THEIR

ACTIVITIES TOWARDS THE RESULTS MORE RATIONAL DISTRIBUTION OF FINANCIAL, MATERIAL

AND HUMAN RESOURCES PUBLICITY OF PROVIDING INFORMATION AND ITS

COMPREHENSIVENESS TO THE PUBLIC

REFORM SWOT ANALYSIS:WEAKNESSES

INADEQUATE INSTITUTIONAL HUMAN RESOURCES AND CAPACITIES

FORMULATION OF STRATEGIC GOALS OF AN INSTITUTION RESTS WITH THE INSTITUTION ITSELF

STRATEGIC PLANNING IS APPLIED NOT IN ALL ADMINISTRATION LEVELS

STRATEGIC PLANNING IS HIGHLY FORMALISED

REFORM SWOT ANALYSIS:OPPORTUNITIES

DEVELOPMENT OF THE PLANNING SYSTEM IN CONNECTION WITH ACCOUNTABILITY

FURTHER CAPACITY BUILDING OF PUBLIC SERVANTS IN THE FIELD OF STRATEGIC PLANNING

LESS FORMALISED STRATEGIC PLANS WOULD BE MORE COMPREHENSIBLE AND USEFUL TO THE PUBLIC AND POLITICIANS

REFORM SWOT ANALYSIS:THREATS

STRATEGIC PLANNING SYSTEM MAY BECOME DECLARATORY AND FORMAL

SEGREGATION OF STRATEGIC PLANNING AND BUDGETING PROCESSES

NON-PERCEPTION OF THE IMPORTANCE OF STRATEGIC PLANNING MAY POSE THREATS TO ITS REDUNDANCY IN THE FUTURE

FINDINGS

CAPACITY BUILDING IN ALL LEVELS OF PUBLIC ADMINISTRATION

SYSTEM SHALL BE UNIQUE IN DECISION MAKING AND BUDGETING PROCESS

“HUMANISATION” OF THE SYSTEM LEARNING “STRATEGIC THINKING”