Our study documents the implemention of performance budgeting (PB) in 14 worldwide case studies that display a wide variation of institutional settings. The synthesis leads us to conclude that, despite some disappointment, PB can positively impact Public Financial Management and governance reforms, including those in LMIC's, given proper contextualization and rightsizing of reform ambitions. This presentation presented some results from our upcoming book: Performance Budgeting Reform: Theory and International Practice, edited by Alfred T. Ho, Maarten de Jong, and Zaozao Zhao. New York: Routledge forthcoming 2019

1. Unmet Expectations and
Underexplored
Opportunities:
14 Performance Budgeting
Case Studies
Maarten de Jong
Alfred Tat-Kei Ho
Governance Learns
World Bank HQ
Washington D.C.
Nov. 9th , 2018

2. The PB debate in 2018
Gartner Hype Cycle

3. The PB debate in 2018
Starting point for our research:
• PB has not impacted appropriation decision-making
• Today it is viewed more broadly than a budget reform
• Mimmicking foreign best practice is seldom successful
• One size does not fit all
• Sequencing matters (but how remains unclear)

4. Research Questions
• Why are countries interested in performance budgeting
reform at some point of time? What is the common
motivation of the reform?
• Has PB been successful? What impacts does it make?
• What are the key factors influencing its success or failure?
• What lessons can be learned from different countries’
experiences? What reform strategies and implementation
steps should be pursued?

5. 14 case studies from high/ upper middle/ lower middle/ low-
income countries, a Chinese province and two Chinese cities.
What we did

6. Research team
• Professor Andrew Podger, Australia National University, Australia
• Professor Tobin Im, Seoul National University, South Korea
• Jay H. Kwon, Ph.D. student Syracuse University, US
• Dr. Mary Venner, Professional Associate, University of Canberra, Australia
• Professor Edgar E. Ramirez, Center for Research and Teaching in Economics, CIDE, Mexico
• Professor Gabriel Puron-Cid, Center for Research and Teaching in Economics, CIDE, Mexico
• Dr. Juan Pablo Martinez Guzman, Post-doctoral fellow, University of Maryland, US
• Dr. Zaozao Zhao, National Academy of Economic Strategy, PRC
• Professor Wenbin Li, South China University of Technology, PRC
• Dr. Victor Yue Yuan, Dataway Horizon Group, PRC
• Aichiro Suryo Prabowo, PhD student University of Indonesia
• Professor Kurt Thurmaier, Northern Illinois University, US
• Frankline Muthomi, PhD student, University of Nairobi/Northern Illinois University, US

7. Country case studies

8. Background info
• The countries that we studied
vary in income, social
conditions, culture, and
governance contexts
• However, all of them have
attempted some form of
performance-oriented
budgetary practices in their
history.

9. Research
framework
INSTITUTIONAL
CHARACTERISTICS
strat.planning, leadership,
goal ambiguity, partisan politics,
pressure from civil society, donor
pressure, history, etc.
PB IMPACTS
goal alignment, oversight,
professionalization, analytical
capacity, program learning,
position MoF, budget dialogue,
technical efficiency etc.
PB/PFM SYSTEM
discretionary power, PB
legislation, MoF roles, analytical
capacity, budget dialogue, etc.

10. Country Afghanistan Australia Chile China Indonesia Iraq Kenya Korea, Rep. Mexico Netherlands Philippines Tunisia U.S.
Initiation of PB
Reform
mid- to late
2000s
late 1970s -
now 1990s early 2000s late 1990s --
late 1990s -
early 2000s early 1970s mid-1990s late 1980s
1950s (1st
wave), 1970s
(2nd wave),
1990s (3rd
wave) 2000s-2010s
1910s
(subnational),
1950s (federal)
Political stability Very low Very high
Medium
(democratic
transition) High
Medium
(democratic
transition) Very low Low High Medium Very high Medium Low Very high
Normative
institutional
readiness Very low Very high High Medium Medium Very low Medium Medium Medium Very high Medium Medium Very high
Fiscal stress as a
trigger for reform No
Yes (late 1970s,
mid-1980s) No To some extent To some extent -- No
Yes (early
1970s)
Yes (1980s-early
1990s)
Yes (1970s, mid-
1980s) To some extent No
Yes (1970s, mid-
1980s)
Budget execution
capacity Low Very high Medium Medium Medium Very low Low High Medium Very high Low-Medium Medium Very high
Budgetary and anti-
corruption control Very low Very high Medium Medium Medium Very low Medium High Medium Very high Low-Medium Low-Medium Very high
Home-grown
demand for reform Very low Very high
Medium, but
unstable Medium High Very low Medium Very high Very high Very high Medium high high
Domestic leadership
support Very low Very high
Medium, but
unstable High High Very low
Low-High
(varying) Very high Very high high Medium high high
Donor support Very high None Low Low High Low Very high None Low None Very high Very high None
Foreign influence Very high To some extent To some extent To some extent High Very high Very high To some extent To some extent Somewhat Very high Very high Somewhat
Top-down,
centralized mandate Yes Yes Yes No (initially) Yes -- Yes Yes Yes
No (within the
central
government) Yes Yes No
Reform
implementation by
incremental stages Yes Yes Yes Yes
No (the big
bang approach) -- Yes Yes No Yes Yes Yes Yes
Pilot experimentation Yes Yes Yes Yes No -- Yes Yes No No Yes Yes Yes

11. Institutional Characteristics

12. PB Strategies

15. Key Lessons Learned:
1. About the Motivation of the Reform
• Some fiscal and economic pressure → Need to do more with
less, need to find ways to improve the efficiency &
effectiveness of spending
• But the economic problem cannot be so big that it may cripple the
capacity of the government to pursue reform
• Donor pressure and foreign government demand
• Pressure to learn from the West and the more “modern,”
“advanced” system
• Some political and social pressure to demonstrate
accountability and build legitimacy

16. Has PB Been Successful?
• PB reform has mostly failed to impact the appropriation process
• It has limited success in enhancing the allocative efficiency and
economic rationality of spending
• However, in many countries, it has impacted budget preparation
and budget execution → strengthening budgetary dialogue,
greater goal alignment, technical efficiency at the program /
departmental level,
• It has also brought positive governance changes: greater
transparency, more capacity building, better financial control,
greater outcome-oriented culture, greater public accountability
➔ “Unmet expectation, unexplored opportunities”

17. Has PB been successful? It depends ...
Not at all (1) / to a very little extent (2) / to some extent (3) / Almost always (4) / Absolutely yes (5)

18. •PB is mostly an executive reform.
• It is more about “Budget Management” (i.e., how the
appropriated money should be spent) than about
budgeting (i.e., how much tax and spending a country
should have and what policy goals a country should
pursue given its resources)
Lessons Learned & Implications for
Practitioners

19. Right-sizing PB reform ambition:
1. Reform Must Address the Needs of the Local Institutional Contexts
2. Local Adaptation of Western Reform Ideas is Important
3. Performance Budgeting is Not for All Countries
4. Develop Home-Grown Analytical Capacity Over Time
5. Sequence reform steps and structural changes over time
6. Be careful with Gaming in Performance Budgeting
7. Consider Combining Citizen Participation and Performance Budgeting
8. Adopt an Incremental, Bottom-up Approach
Lessons Learned & Implications for
Practitioners

20. Low High
Capacity to Measure and Analyze
Performance
Consequences
LittleSerious
Unintended
consequences,
frauds,
strategic
gaming
Optimal
zone
Lessons Learned & Implications for
Practitioners
The “sweet spot”
for reform

21. Aim for
realistic
and
relevant
reform
goals

22. Bear in mind interdepencies and conditions
PB Results Required Conditions
Strengthen budget dialogue Capacity at the departmental level, explicit links
between goals-budget
Increase efficiency/quality by learning Analytical capacity, discretionary power
Bottom-up budget preparation (MTEF) Budget dialogue with departmental and program
managers, assertive MoF
Aligning goals and resources Training, education, familiarity process, formal status
planning / legislative requirements
• No universal sequencing beyond a reasonable functional budget process
• Reform results, reform strategies, and contextual factors are interwined.
For example:

23. Conclusion
•PB Reform has a long and arguably
disappointing history
•It is a reform that is “presumed dead” but is still
alive and well
•Reason: there is clear institutional logic for the
reform. It is here to stay, and it will continue to
evolve

24. THANK YOU !
Prof. Alfred Tat-Kei Ho
Professor
School of Public Affairs & Administration
University of Kansas
alfredho@ku.edu
Dr. Maarten de Jong
Affiliated faculty, VU University
Amsterdam /
Netherlands Court of Audit
m.de.jong@vu.nl