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INTRODUCING RESULTS-BASED APPROACHES INTO PUBLIC SECTOR MANAGEMENT PROCESSES: The Philippine Experience

INTRODUCING RESULTS-BASED APPROACHES INTO PUBLIC SECTOR MANAGEMENT PROCESSES: The Philippine Experience. A Paper Presented by SECRETARY EMILIA T. BONCODIN Department of Budget and Management Philippines 2 nd International Roundtable on Managing for Development Results

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INTRODUCING RESULTS-BASED APPROACHES INTO PUBLIC SECTOR MANAGEMENT PROCESSES: The Philippine Experience

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  1. INTRODUCING RESULTS-BASED APPROACHES INTO PUBLIC SECTOR MANAGEMENT PROCESSES: The Philippine Experience A Paper Presented by SECRETARY EMILIA T. BONCODIN Department of Budget and Management Philippines 2nd International Roundtable on Managing for Development Results Marrakech, Morocco 05 February 2004

  2. RESULTS-BASED APPROACH: Major Element of Philippine Public Sector Management Reform Program Republic of the Philippines Department of Budget and Management

  3. PUBLIC SECTOR MANAGEMENT REFORM PROGRAM To address key dysfunctions: • inadequate resources for basic services • deteriorating fiscal position • slow and unstable growth • operational leakages • weak corporate and regulatory environment • weak public institutions and enforcement • poor incentive structures • slow response capability to changing situations and needs poverty Republic of the Philippines Department of Budget and Management

  4. PUBLIC EXPENDITURE MANAGEMENT: DESIRED RESULTS To reduce poverty by creating investment and job opportunities through: • Addressing the inadequacy of resources for basic services b) Arresting the deteriorating fiscal position Republic of the Philippines Department of Budget and Management

  5. PUBLIC EXPENDITURE MANAGEMENT: FOCUS ON RESULTS • Use of the budget as instrument for ensuring desired results • Strengthening of existing incentive structures to advocate and implement reforms • Active partnership with civil society in monitoring results • Clear targets and assessment mechanisms Republic of the Philippines Department of Budget and Management

  6. PUBLIC EXPENDITURE MANAGEMENT FRAMEWORK • Fiscal Discipline • Allocative Efficiency • Operational Efficiency Republic of the Philippines Department of Budget and Management

  7. MAJOR REFORM INITIATIVES OUTCOMEINSTRUMENT 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) Republic of the Philippines Department of Budget and Management

  8. Major Reform Initiatives… OUTCOMEINSTRUMENT Operational Efficiency Sectoral Effectiveness and Efficiency Review (SEER) Agency Performance Review (APR) Procurement reform Installation of new government accounting system and auditing procedures Republic of the Philippines Department of Budget and Management

  9. Major Reform Initiatives… OUTCOMEINSTRUMENT Compensation Review Reengineering the bureaucracy Strengthening key sector areas: judicial reform; electoral campaign reform; peace and order campaign; regulatory reform Investment in IT and IT-based services Republic of the Philippines Department of Budget and Management

  10. Medium-Term Philippine Development Plan FISCAL INVESTMENT Medium-Term Public Investment Program Medium-Term Fiscal Plan Organizational Performance Indicator Framework Annual Budget Sectoral Effectiveness and Efficiency Review Agency Performance Review Incentive Structure MEDIUM-TERM EXPENDITURE FRAMEWORK

  11. MEDIUM-TERM FISCAL PLAN: FEATURES • Explicit medium term fiscal targets:deficit reduction strategy; revenue and disbursement targets; debt management strategy • Medium term estimates of cost of ongoing and committed programs (baseline +) • Proposed revenue enhancing measures over the medium term • Clear rules for updating revenue and cost estimates • Fiscal Responsibility Bill Republic of the Philippines Department of Budget and Management

  12. MEDIUM-TERM FINANCIAL PLAN: HIGHLIGHTS Republic of the Philippines Department of Budget and Management

  13. MEDIUM-TERM PUBLIC INVESTMENT PROGRAM • Sectoral investment requirements over 6 years • Published major sectoral investment programs • Alternative financing modes for specific projects Republic of the Philippines Department of Budget and Management

  14. MEDIUM-TERM PUBLIC INVESTMENT PROGRAM Republic of the Philippines Department of Budget and Management

  15. ORGANIZATIONAL PERFORMANCE INDICATOR FRAMEWORK: GOALS • Shift to output/outcome performance indicators • Clarify expected performance and accountability of government agencies • Encourage agencies to focus efforts on the delivery of outputs relevant to goal • Establish integrated performance management system where organizational performance targets cascaded down to lower level units and used as basis of performance-based compensation • Report to public and Congress in clear terms output of departments/agencies Republic of the Philippines Department of Budget and Management

  16. ORGANIZATIONAL PERFORMANCE INDICATOR FRAMEWORK: PROCESS • Identification of desired outputs and outcomes • aAgency; Oversight • aMAJOR FINAL OUTPUTS (MFOs), in terms of quantity, quality, timeliness, cost (QQTC) • Harmonization: Agency with Oversight(DBM, NEDA) • Identification of programs/projects contributing to the accomplishment of MFOs Republic of the Philippines Department of Budget and Management

  17. Organizational Performance Indicator Framework: Process… • Establishment of Performance Indicators • PI to determine whether program/projects contributed to MFO • PI must be verifiable in a quick, accurate and cost-effective manner Republic of the Philippines Department of Budget and Management

  18. ORGANIZATIONAL PERFORMANCE INDICATOR FRAMEWORK: Example: 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 Republic of the Philippines Department of Budget and Management

  19. ORGANIZATIONAL PERFORMANCE INDICATOR FRAMEWORK: STATUS Agencies in advance stage of the OPIF process • Agriculture sector agencies (Agriculture, Agrarian Reform, Environment and Natural Resources) • Social Welfare • Labor and Employment, • Education Agencies in intermediate stage of OPIF • Health • Internal Revenue • Customs Agencies in the early stage • Infrastructure agencies Republic of the Philippines Department of Budget and Management

  20. SECTOR EFFECTIVESS AND EFFICIENCY REVIEW: FEATURES • Periodic review of ongoing programs and projects in terms of relevance, performance, cost/benefit • System for establishing and updating strategic priorities over the medium term • Allows the redirection of resources to strategic programs Republic of the Philippines Department of Budget and Management

  21. SECTORAL EFFECTIVENESS AND EFFICIENCY REVIEW: PROCESS • Consultations: agencies; stakeholders; funding agencies • Presentation of Results and Recommendations • Approval of Cabinet Committee • Input to Updated Development Plan, Public Investment Program, Budget Republic of the Philippines Department of Budget and Management

  22. SECTORAL EFFECTIVENESS AND EFFICIENCY REVIEW: Results • Cancel excess financing (6) • Terminate projects or remaining components of projects (1) • Restructure projects, including loans (30) • Proceed (68) Republic of the Philippines Department of Budget and Management

  23. AGENCY PERFORMANCE REVIEW • Short term review of revenue and expenditure performance vis-à-vis budget targets • Ranking of Agency Budget Performance and public reporting Republic of the Philippines Department of Budget and Management

  24. AGENCY PERFORMANCE REVIEW: RESULTS 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 Republic of the Philippines Department of Budget and Management

  25. INCENTIVE STRUCTURES • Greater flexibility in exchange for financial discipline hurdles • Use of budget savings from procurement and streamlining activities • Creation of one-liner budgets • Expenditure autonomy for low-budget agencies • Performance-based management • Performance-based compensation • Collective negotiation agreements (CNA) Republic of the Philippines Department of Budget and Management

  26. KEY ACCOMPLISHMENTS TO DATE A. Planning/Budget Processes • Linked Budget to Planning starting in 1999 • Changed from input-based to outcome-based budgeting in 2002 Budget Call • Formulated budget strategy as precondition to approval of new foreign loans in 2001 • Conducted first Sectoral Effectiveness and Efficiency Review (SEER) 2001 • Conducted first Agency Performance Reviews (APRs) in 2002 • Conducted ODA Portfolio Review in 2003 Republic of the Philippines Department of Budget and Management

  27. Key Accomplishments to Date… • Reengineering the Bureaucracy • Formulated Reengineering Plan for the Bureaucracy • Reengineered key regulatory agencies: financial markets, energy, ICT C. Capability Building (1999-2003) Workshops, Training • Oversight agencies (18) • Individual agencies (3 major, 17 minor) Republic of the Philippines Department of Budget and Management

  28. Key Accomplishments to Date… D. Assessments and Documentation • 2001 Budget Preparation, Performance Orientation, • Public Expenditure Management Manual • Documentation of 2002 APR • Public Expenditure, Procurement and Financial Management Review with World Bank (WB) and Asian Development Bank (ADB) Republic of the Philippines Department of Budget and Management

  29. CHALLENGES • Refining multi-year resource constrained planning • Completing inventory of contingent liabilities • Enhancing the predictability of revenues • Cascading performance management system down to personnel appraisal • Shifting to a performance based compensation system • Advocating PEM reforms in Congress Republic of the Philippines Department of Budget and Management

  30. 2004 2005 2006 2007 • PEM fully operational • PEM substantially operations • Alignment of agency with individual performance • limited budget autonomy • compensation review • reengineering the bureaucracy • expanded budget autonomy • Initial implementation of compensation reform • Reengineering the bureaucracy MOVING FORWARD Republic of the Philippines Department of Budget and Management

  31. THANK YOU !!! Republic of the Philippines

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