Public expenditure for development results and poverty reduction

Review and case studies of "Results-oriented (or ‘performance’ or ‘output’) budgeting": the planning of public expenditures for the purpose of achieving explicit and defined results. These policies have often been first implemented through sector-wide approaches (SWAps), particularly in health and education. Concerns have been raised that results-focused management of public expenditure gives rise to unnecessary bureaucracy, causes distortions in the implementation of policies, and ignores the subtleties and complexities of public service provision. These papers look at 7 low income countries with PRSPs to establish how far performance budgeting and management are used in practice, and to relate these findings to features of macroeconomic and budget management, accountability structures, and administrative structures and practices. The countries focused on are Bolivia, Burkina Faso, Cambodia, Ghana, Mali, Tanzania and Uganda. This experience is compared with that of the OECD countries, which generally adopted performance budgeting in the 80's and 90s The findings of the studies include:significant elements of performance budgeting and management can take root and be at least locally effective in countries where there are significant shortcomings in sound public administration and public finance controls. However these problems can have demonstrably negative effect on the generalisation of good practice outside ‘islands of excellence’, and can lead to a cynical disregard of disciplines involved.conditions that favour the implantation of a results culture and results-oriented practices include political leadership, and unified central direction of performance budgeting and management initiatives. The dispersion of responsibility between various central authorities leads to loss of direction and momentum and failures in lesson learning and in the application of performance assessment information to allocation decisionsa clear results framework is important in overcoming principal-agent problems in implementing political and administrative decentralisation in ways which are consistent with the pursuit of a nation-wide pro-poor agendathere are usable performance information on key indicators in the case study countries. Performance information is available, and is often compiled. The weakest link in the performance management chain lies in the comparative evaluation of the information produced and its re-presentation for the benefit of decision makers. In general the process is one of measurement without management follow-up. The weakness of performance management is mostly a consequence of weak domestic pressure for results accountability – from service users, auditors, parliament and civil society, and even from ministers.Benefits in the planning and management of service delivery are already perceptible in the countries that have adopted performance budgeting and management most successfully. Benefits include:greater policy focus and prioritisation in resource allocation, programme planning and management, because bids for resources and their allocations have to be justified in terms of national and sectoral strategiesbetter coherence between achievement aspirations and resources available, and greater realism in target setting, achieved, over time, through experience of difficulties and the obligation to render account of performance stronger motivation on the part of line managers and service providers, thanks to consultation about target setting, clearer communication of objectives and targets to be met, and the obligation on service providers to report resultsmore effective diagnosis and treatment of cases of underperformance due to more systematic monitoring and evaluation of resultsThe overall conclusion of the research programme is that low income countries are practicing performance budgeting and management, in some cases to useful, if unspectacular, effect. They have, with modest external support, been finding their own solutions to the problem of how to translate public expenditure into pro-poor development results. They face many challenges, and in some cases their experiments have not wholly succeeded. Nevertheless, in this highly empirical field of activity, they have been willing to learn from their own experiences and from those of others. Their initiatives will play a vital role in the successful implementation of their poverty reduction strategies. They accordingly deserve strong external interest and encouragement.Based on this, donors should:acknowledge, encourage and support countries’ own initiatives, recognising that they will take time to bed down before yielding tangible performance improvements, and giving credit for process reforms as well as to improvements in indicators of poverty reductionoffer support in the form of expertise in performance management, especially in diagnosis and performance assessmentavoid initiatives of their own which engender competing systems and institutions with overlapping mandates, or which undermine the unity of purpose and direction of countries’ performance budgeting and management systemsencourage the demand for results accountability by parliament and civil societyThe reports are available as a main, synthesis report and 8 separate country studies [adapted from author]