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CAPACITY BUILDING : LITHUANIA ’S EXPERIENCE S FROM 10 YEAR S OF REFORM

This presentation outlines the 10-year reform journey of Lithuania's budget system, highlighting the prerequisites, goals, and implementation stages. It discusses the poor financial situation that prompted the reform, factors that stimulated the reforms, and the goals of the budget reform. It also explores the various stages of implementation, including the reform of municipal budget formation principles, government strategic planning system, and evaluation of budget implementation. Finally, it presents a SWOT analysis of the reform, identifying strengths, weaknesses, opportunities, and threats, along with findings and the importance of capacity building in public administration.

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CAPACITY BUILDING : LITHUANIA ’S EXPERIENCE S FROM 10 YEAR S OF REFORM

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  1. CAPACITYBUILDING:LITHUANIA’S EXPERIENCES FROM 10YEARS OF REFORM Vilnius, Lithuania 20-21 March, 2007

  2. PRESENTATION OUTLINE • PREREQUISITES OF THE REFORM • GOALS AND IMPLEMENTATION STAGES • REFORM SWOT ANALYSIS

  3. 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

  4. FACTORS STIMULATED REFORMS • STRONG POLITICAL WILL • ASPIRATION FOR EUROPEAN-ATLANTIC INTEGRATION • ATTITUDE OF SOCIETY TOWARDS PUBLIC ADMINISTRATION • POOR FINANCIAL SITUATION

  5. GOALS OF THE BUDGET REFORM • CONSOLIDATION OF PUBLIC FINANCIAL RESOURCES • PRIORITY BASED PLANNING • RESULT ORIENTED ACTIVITIES • RESPONSIBILITY AND ACCOUNTABILITY • TRANSPARENCY

  6. IMPLEMENTATION STAGES:1998 →REFORM INITIATIVE • THE SEIMAS RESOLUTION ON THE BUDGET STRUCTURE • REFORM CONCEPTION: - THREE-YEAR PLANNING; - PROGRAMME BUDGET; - CONSOLIDATION OF RESOURCES; - TRANSPARENCY

  7. 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

  8. 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

  9. 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

  10. 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

  11. 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

  12. 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

  13. 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

  14. 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

  15. 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

  16. 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

  17. 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

  18. 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”

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