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Performance Budgeting - Key Performance Indicators - Igor YAREMENKO, Russian Federation


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This presentation was made byIgor YAREMENKO, Ministry of Finance, Russian Federation, at the 15th Annual Meeting of OECD-CESEE Senior Budget Officials held in Minsk, Belarus, on 4-5 July 2019

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Performance Budgeting - Key Performance Indicators - Igor YAREMENKO, Russian Federation

  1. 1. Program and Performance Budgeting in the Russian Federation Minsk, Republic of Belarus July 2019 Meeting of the OECD’s Senior Budget Officials’ regional network for Central, Eastern, and South-Eastern European Countries Igor Yaremenko Ministry of Finance of the Russian Federation
  2. 2. М ]фМ ]ф Evolution of program and performance-based instruments for budget management 1. Possibility to develop and implement federal (regional, municipal) targeted programs (starting from 1995): Addressing priority social, economic, defense, research, environmental, and other key issues that typically are cross-sectoral in nature. 2. Implementation of agency-level targeted programs is provided for in the federal budget, subnational budgets, and local budgets (starting from 2007): Achieving goals, objectives and performance targets of individual bodies of government (local self- government). 3. Implementation of government (municipal) programs, transition to program-based budgets: A set of planned activities that are interlinked by their objectives, implementation periods, executing agencies and resources, supporting the attainment of government policy priorities and goals. 4. Incorporation of project management principles: developing and implementing national, federal, and agency-level projects: A set of interlinked activities that are aimed at achieving unique results of various scope in an environment of time and money constraints. 2
  3. 3. М ]фМ ]ф Problem issues in designing and implementing government programs [1] 1. Poor quality of goal setting and system of indicators: Goals, performance indicators and expected results are formulated by executing agencies of government programs and do not reflect specific priorities of government policies; Excessive number of indicators and lack of their hierarchy  impossibility to evaluate the effectiveness of government programs, subprograms, and key activities. 2. Absence of a systemic approach in creating a list and structure of government programs: A list and structure of government programs correspond to the existing system and structure of federal executive government authorities. 3. Incomplete assessment of resources and instruments for achieving government policy goals: There is no consideration of contribution made to the attainment of government programs’ goals by such instruments as controlling and supervisory activities, property management, etc.; application of tax benefits is not evaluated. Some government programs cover only a portion of federal budget spending for respective sectors (areas). Funds of consolidated subnational budgets, state corporations, and government-owned companies are reflected in government programs only nominally. 3
  4. 4. М ]фМ ]ф Problem issues in designing and implementing government programs [2] 4. Poor quality of administration of government programs: Weak interagency communication in managing government program implementation; Lengthy and labor-intensive procedures for reaching concurrence on government programs and their implementation plans. 5. Perfunctory nature of performance evaluations of government programs and nonuse of results of such evaluations: Absence of an approved uniform methodology for performance evaluation of government programs; Lack of established penalties for officials for poor implementation of government programs. 6. Inadequate integration of government programs into the budgeting process: The role of the executing agency in planning budget expenditures and its responsibility for spending efficiency and the quality of government program management are nominal in nature. No possibility to reallocate budget appropriations between government program activities in the course of budget execution  slow decision making. 4
  5. 5. М ]фМ ]ф System of strategic program-based planning What? Who? How? Strategy of (Concept for long- term) social and economic development Russian Federation’s long-term budget outlook Long-term forecast of social and economic development Three-year budget Sectoral strategies Government programs Conditions Goal setting Authority and instruments 5 Forecast of social and economic development for medium term (3 years) Presidential Decree #204 dated May 7, 2018 National projects
  6. 6. М ]фМ ]ф System of goal setting for Government of Russia activities Key Areas of Government of Russia Activities Until 2024 Government program 1 Government program 2 Government program 3 National project 1 Other government policy goals (including in the areas of security, international activity, improvement of public administration, etc.) National goals (section 1 of Presidential Decree #204 dated May 7, 2018) Government program 4 National project 3 National projects are developed for 6-year terms. Goals of national projects National project 2 Government program N National project is a priority area of government policy with special management arrangements. 6
  7. 7. М ]фМ ]ф 7 Ensuring linkages between government programs and national (federal) projects 1. Segregation, within a government program, of projects (definite implementation periods, specific achievable outcomes, special management arrangements) and processes (continuous or perpetual in nature, no unique outcome). 2. Grouping of projects (can change in the course of their implementation): Agency-level projects: are approved and supervised by the government program’s executing body, i.e. a departmental steering committee. Federal projects (earlier, priority projects) as part of national projects: are approved and supervised by project committees created for each national project by the Presidium of the Presidential Council for Strategic Development and National Projects. 3. Processes – agency-level targeted programs.
  8. 8. М ]фМ ]ф Contribution of project and process activities to the attainment of social and economic development goals (government program goals) 2017 2018 2019 2020 2021 2022 2023 2024 Indicator values Years National project Projects Processes (agency-level targeted programs) Agency-level projects Processes 8
  9. 9. М ]фМ ]ф Types of national projects National project included in the structure of one government program Sectoral national project National project included in the structure of several government programs Cross-sectoral national project National project 1 Government program 1 National project 2 Government program 2 Government program 3 Government program 4 Government program 5 9
  10. 10. М ]фМ ]ф 10 Correlation between national projects (programs) and RF government programs Title of national project (program) Government programs under which national projects (programs) are carried out Number Title Health 1 Healthcare Development Education 6 Education Development; Employment Promotion; Development of External Economic Activities, etc. Housing and Urban Environment 1 Providing Affordable and Comfortable Housing and Utilities for Russian Federation Citizens Environment 7 Environmental Protection; Reproduction and Use of Natural Resources; Forestry Development; Developing Industry and Improving Its Competitiveness; Developing Nuclear Power Generation System, etc. Safe and Quality Roads 3 Ensuring Public Order and Combating Crime; Transport System Development; Strengthening National Defense Capacity Science 2 Science and Technology Development; Developing Industry and Improving Its Competitiveness Small and Medium Business and Support of Individual Entrepreneurial Initiative 2 Economic Development and Innovative Economy; Government Program for Agriculture Development and Regulation of Markets for Agricultural Products, Raw Materials, and Food Productivity and Employment Support 2 Employment Promotion; Economic Development and Innovative Economy Digital Economy 10 Information Society; Economic Development and Innovative Economy, etc. Demography 8 Physical Culture and Sports; Education Development; Social Safety Nets; Employment Promotion; Providing Affordable and Comfortable Housing and Utilities for Russian Federation Citizens, etc. Culture 2 Culture and Tourism Development; Education Development International Cooperation and Export 5 Aviation Industry Development; External Economic Activities; Developing Industry and Improving Its Competitiveness; Agriculture Development and Regulation of Markets for Agricultural Products, Raw Materials, and Food; Culture and Tourism Development
  11. 11. An example of segregating “projects” and “processes” within a government program Making housing more affordable for citizens (housing affordability ratio) Provision of housing for certain categories of citizens Developing a regulatory framework for owner-financed housing construction Resettling people from dilapidated / damaged dwellings “projects” “processes” Housing stock renovation • Division of activities into “projects” and “processes” is conventional and can change with time. • Similarly to “project” activities, “process” activities should have output indicators, and their contribution to the high-level ultimate goal should be evaluated (this can be done as part of agency-level targeted programs). have definite implementation periods; lead to a unique result and/or quality changes in processes. are continuous or perpetual; are implemented in accordance with well- established procedures. National (federal) projects, agency projects Agency-level targeted programs, individual activities
  12. 12. М ]фМ ]ф 12 Reflection of “projects” in the budget classification Government program Subprogram (area) Agencytargeted program Subprogram (area) ХХ Government program code Х Subprogram code ... Government program structure Earmarked item ХХ Key activity code ... Activities... ... Agency-levelproject Federalproject Federalproject GХ Federal project code Keyactivity Agency-levelproject GХХХХ Spending area code
  13. 13. М ]фМ ]ф 13 Conditions for effective implementation of programming-for-results principles I. Creating a unified information system that consolidates information on the progress in implementing government programs and national (federal) projects and enables citizens to access such information online. II. Ensuring that expected outcomes from government programs and national (federal) projects are directly linked to the amounts of budgetary allocations at the budget classification level. III. Ensuring complete traceability of financial flows and the course of implementing individual activities. IV. Intensively involving Russian Federation regions in implementation of national (federal) projects and developing program and performance budgeting instruments on the ground.
  14. 14. М ]фМ ]ф Thank you for listening!