By NORA C. OLIVEROS Director

1. South Asia Regional Forum on Mainstreaming Managing for Development Results (MfDR) Colombo, Sri Lanka October 13-14, 2009 Introduction of Results-Based Budgeting (RBB) and Best Practices in the Philippines By NORA C. OLIVEROSDirector Department of Budget and Management

2. PRESENTATION OUTLINE 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

3. PART I PUBLIC EXPENDITURE MANAGEMENT

4. Public Expenditure Management (PEM) Uses the budget as instrument for ensuring desired results

5. PEM Framework Medium Term Philippine Development Plan Investment Fiscal Medium Term Fiscal Plan Medium Term Public Investment Program Paper on Budget Strategy Forward Estimates OPIF-Based Annual Budget

6. PEM 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

7. Public Expenditure Management (PEM) • A holistic approach to budgeting that focuses on: • Policy reforms • Institutional arrangements • Management systems • Information systems • Attainment of policy results

8. PUBLIC EXPENDITURE MANAGEMENT: FOCUS ON RESULTS TWO MAJOR COMPONENTS that are mutually supportive • Medium-Term Expenditure Framework (MTEF) • Organizational Performance Indicator Framework (OPIF)

9. PART II EXPENDITURE MANAGEMENT REFORMS • MTEF • OPIF

10. MTEF • Whole of government framework • Strategic • Policy-based • Integral to annual budget cycle • Cost of existing policies • Sector strategies and priorities

11. MTEF Components • 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

12. Forward Estimates (FE)* • 3-year future costs of existing programs • Existing policies automatically rolled over into budgetary allocations on annual basis • Estimates updated at least annually * to be undertaken before preparation of PBS

13. Paper on Budget Strategy (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

14. Key to results-based approach in PEM whereby government is able to: Establish priority expenditures Identify targets Assess accomplishments Report results Organizational Performance Indicator Framework (OPIF)

15. OPIF OBJECTIVES • 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

16. Why OPIF Matters: the Government and Community • 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

17. Why OPIF Matters: Department and Agencies • 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

18. Why OPIF Matters: Employees • 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

19. OPIF Key Elements OPIF MFOs (Outputs) Performance Indicators (Output/Outcome-based)

20. Major Final Outputs (MFOs) • 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

21. Performance Indicators • Performance measures for assessing MFOs and outcomes • Quality, quantity, timeliness and cost specifications

22. Performance Indicators (PIs) • 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

23. 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)

24. OPIF can best be understood by the Logframe Approach • 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

25. SOCIETAL GOALS SECTOR GOALS ORGANIZATIONAL OUTCOME MAJOR FINAL OUTPUTS P/A/Ps BUDGET OPIF ANALYTICAL FRAMEWORK (Impact) (Outcome) Performance Indicator/s (Outputs) (Inputs) Targets

26. Programs/Activities/Projects (PAPs) Key activities or integrated group of activities (programs) and projects undertaken by the department/agency to achieve MFOs

27. OPIF PROCESS - SUMMARY • 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

28. PART III Key Developments and Next Steps

29. Key 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

30. Key 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

31. Work 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

32. 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

33. PART IV LESSONS LEARNED

34. To manage and implement reforms • Leadership • Change Management Team • Reform champions • Wider participation of stakeholders • Support systems (IT, IFMIS, Incentive)

35. THANK YOU!!