This document summarizes challenges that countries face in implementing effective performance budgeting systems and proposes recommendations for a next generation approach. Some of the key challenges identified are setting clear objectives, producing too many performance metrics, and overestimating implementation capacities. The document recommends that countries focus on strategic priorities, program managers as users, and take a long-term incremental approach to build experience and capacity over multiple reform efforts.

2. Study background
Middle and lower income countries aspiring to
international best practices in budgeting.
In Eastern Europe early reformers have struggled to
make performance budgeting effective.
What can aspiring countries learn from their
neighbours experiences and those of advanced
reformers in OECD countries?

3. Methodology:
Common questionnaire
Seven in depth country case studies; Australia,
Estonia, France, Netherlands, Poland, Russia, USA
Studies prepared 2014-15, by national experts and
academics closely involved in reform efforts
Peer reviewers; Neil Cole (CABRI), Teresa Curristine
(IMF), Allen Schick (UMD), Nicola Smithers (WB),
Mark Ahern (WB)

4. We define performance budgeting by our aspirations
for it
OECD definition: “Performance budgeting is the use
of performance information to link funding with
results with the purpose of increasing efficiency,
effectiveness, transparency and accountability”
The gap between our aspirations and the observed
effects of performance systems are usually large,
resulting in disappointment

5. Challenges in Performance Budgeting

6. Setting Objectives: A primary challenge for
governments is to decide the purpose of performance
budgeting
Looking Beyond the Budget: Managers are the most
likely users of performance information

8. Capacity Constraints: Governments underestimate
the costs of a performance budgeting system
successfully.
Information Overload: Countries typically produce too
many metrics.

9. Prioritizing Strategic Goals: Metrics for the most
salient service delivery areas are more likely to be
used.
Managing Performance Perversity: Too much
emphasis on performance can motivate gaming
behavior.

10. Routinizing Performance Information Use: through
program evaluation, audit, and learning routines

11. Changing Behavior: The pace and ambition of
changes should reflect difficulty of building a
performance culture.
Balancing Political and Bureaucratic Support: A
political champion brings pros and cons

12. Be clear about the objectives of the reform
Rather than standardized reporting, focus on
most crucial service delivery areas and
strategic policy priorities
Rather than rely on budget process, part of
comprehensive approach to policy analysis &
management
Focus on program managers as most likely
users
NEXT GENERATION APPROACH

13. Make performance budgeting system
consistent with capacities
Long-term approach values consistency across
multiple reform efforts and incremental
adaptive change based on experience
NEXT GENERATION APPROACH

14. Thank you