Enhancing Accountability in Public Finance through Performance in Bangladesh


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Ranjit Kumar Chakraborty
Additional Secretary
Finance Division, Ministry of Finance, Bangladesh

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Enhancing Accountability in Public Finance through Performance in Bangladesh

  1. 1. Enhancing Accountability in Public Finance through Performance in Bangladesh Government of the People’s Republic of Bangladesh Washington D.C. Ranjit Kumar Chakraborty Additional Secretary Finance Division, Ministry of Finance, Bangladesh December 5, 2011
  2. 2. <ul><li>The idea of linking performance to accountability in Public Financial Management </li></ul><ul><li>The existing case of Bangladesh in performance and accountability in PFM </li></ul>Presentation Outline
  3. 3. <ul><li>Linking performance to accountability in Public Financial Management </li></ul>
  4. 4. <ul><li>Accountability in public financial management (PFM) is key to improving public service delivery. </li></ul><ul><li>The Ministry of Finance (MoF), the central PFM body often is singly held responsible for accountability in PFM. </li></ul><ul><li>Leaving out Line Ministries (LM), that are directly using resources and delivering service to citizens are often left out of PFM accountability chain. </li></ul><ul><li>A mechanism through which accountability in PFM is not left only to MoF but also to LM may help improve overall performance and accountability. </li></ul>Evolving Accountability in PFM
  5. 5. <ul><li>Establishing ownership of PFM as a matter that not only MoF but all concerned should take responsibility for. </li></ul><ul><li>Involving citizens’ and civil society’s active participation in budget process i.e. identifying needs and drawing opinions on what has been done well and what has not (i.e. service delivery level). </li></ul><ul><li>Linking feedback from civil society and citizens to actual PFM , through performance budgeting. </li></ul><ul><ul><li>strengthening monitoring capacity </li></ul></ul><ul><ul><li>enhancing systems </li></ul></ul><ul><ul><li>institutionalizing ‘public opinion survey’ in performance assessment. </li></ul></ul>Steps towards all encompassing accountability
  6. 6. <ul><li>Purpose: Preliminarily for political purposes </li></ul><ul><li>Local straw poll conducted by The Harrisburg Pennsylvanian in 1824. </li></ul><ul><li>Literary Digest and George Gallup late 1930s, Elmo Roper, Louis Harris, 1940s-political polls, spread to UK </li></ul>Origin of Public Opinion Survey
  7. 7. <ul><li>South Asia Democratic Forum (SADF):dialog platform between private and public institutions of the European Union and the South Asia Association for Regional Co-operation </li></ul><ul><ul><li>Nepali Public Opinion 2011: Gallup/SADF </li></ul></ul><ul><ul><li>Public opinion and nuclear options for South Asia </li></ul></ul><ul><li>Asia Foundation’s public opinion survey in Afghanistan on policy direction of the country </li></ul>Examples of Public Opinion Surveys, Globally
  8. 8. <ul><li>1988 Beijing Survey - political views and behavior of Beijing residents. </li></ul><ul><li>The Asia Barometer -daily lives of ordinary people (bumi putra) and their relationships to family, neighborhood, workplace, social and political institutions and market place </li></ul>Origin of Public Opinion Survey
  9. 9. <ul><li>American National Election Studies </li></ul><ul><li>Conducted biannually since 1952 - public sentiment on the political process, the role of government, and social and economic issues. </li></ul><ul><li>American Public Opinion and U.S. Foreign Policy </li></ul><ul><li>Conducted since 1974 - concerns of Americans regarding economic, political, and military engagement in foreign affairs. Parallel surveys in EU countries, Mexico, Korea,China and India in recent years. </li></ul>Examples of Public Opinion Surveys, Globally
  10. 10. <ul><li>Public opinion survey outcomes are insights into people’s: </li></ul><ul><li>Belief </li></ul><ul><li>Feeling </li></ul><ul><li>Action </li></ul><ul><li>Uses of the results from public opinion polls have so far been: </li></ul><ul><li>Early forecast of election results </li></ul><ul><li>Public reaction to a campaign </li></ul><ul><li>Influence on policy, but no means to measure this impact. </li></ul>Outcomes of Public Opinion Surveys
  11. 11. <ul><li>In order to influence policy, </li></ul><ul><li>Performance assessment systems must be in place </li></ul><ul><ul><li>Key Performance Indicators (KPIs) for each ministry linked to budget allocations and strategic objectives </li></ul></ul><ul><ul><li>Two tiered assessment mechanism that draws </li></ul></ul><ul><ul><ul><li>70% of the total score from performance according to KPIs, by thecentral government Performance Auditor </li></ul></ul></ul><ul><ul><ul><li>30% of the total score from public opinion survey </li></ul></ul></ul>Impact of Public Opinion Surveys on Policy
  12. 12. <ul><li>Sample : population above 18, validated through a national identity document. </li></ul><ul><li>Media : Internet, mobile phone ‘sms’ campaign of voting for ranking main sectors in terms of performance and priority. </li></ul><ul><li>Scope of bias : Only population with access to or comfortable with mentioned media will be giving opinions; high scope of bias in South Asian and Sub Saharan African countries </li></ul><ul><li>Frequency : Annual, before final budget allocations to ministries/sectors. </li></ul>Design of Public Opinion Survey on PFM performance
  13. 13. <ul><li>The case of Bangladesh in performance and accountability in PFM </li></ul>
  14. 14. Public Financial Management and Development In Bangladesh <ul><li>Macro/fiscal discipline and stability </li></ul><ul><ul><li>Support economic growth and stability (and reduce poverty) </li></ul></ul><ul><ul><li>Avoid public finance crises </li></ul></ul><ul><li>Strategic allocation of resources </li></ul><ul><ul><li>Match government policy with programs, objectives </li></ul></ul><ul><ul><ul><li>And assure social safety nets, and promote growth </li></ul></ul></ul><ul><li>Technical efficiency </li></ul><ul><ul><li>Getting the most from each taka spent </li></ul></ul><ul><ul><ul><li>And just delivering core services </li></ul></ul></ul>Steady economic growth, fiscal discipline, increasing focus on enhancement of public financial management… … towards higher accountability with public resources.. Public Financial Management and Development in Bangladesh
  15. 15. PFM Reforms in Bangladesh Reform Agenda initiated with some Progresses Audit and Evaluation Budget Execution Budget Preparation under MTBF Policy & Economic Planning Training Capacity Building Information Technology Debt Management Treasury Management Macro economic framework Institutional support for the planning and budgeting process Gender poverty and issues Budget Call notice support Performance Monitoring Budget Management Committees Ministry Planning Functions audit Internal Support to District & Upazilla Accounting Offices Computerisation of the accounting system Institutional support for the Controller General of Accounts Systems maintenance Institutional support for the Comptroller and Auditor General Systems based financial auditing Social performance auditing
  16. 16. <ul><li>Better equipped to be more accountable… </li></ul><ul><li>Moving to digitized PFM… </li></ul>Updating and consolidation of financial rules and regulations Introduction of new classification structure Computerized accounts consolidation Computerization of the budgeting system in the Finance Division. Financial Management Information System (iBAS): facilitating faster transfer of information and data for greater accuracy and timeliness Milestones of 15 years of PFM reform in Bangladesh till SPEMP Separation of Accounts and Audit function – Accounts under MOF, not the Auditor General Establishment of Financial Management Academy (FIMA) Formal Comptroller and Auditor General (C&AG) system for supporting Public Accounts Committee (PAC) functions PAC chaired by a Member of Parliament, not by Minister Strengthened External Audit and Parliamentary Oversight Functions
  17. 17. New Treasury Rules, Accounts Code, expenditure control and Accounting Manual for development projects Introduction of system - based audits in selected line ministries Comprehensive training program on Management, Finance, Budgeting, IT, Economics including International post-graduate training Milestones of 15 years of PFM reform in Bangladesh till SPEMP…cont’d Strengthened macro-economic modeling capacity to underpin more robust budgeting. Enhanced Debt management capacity in Finance Division. Advanced budgeting and expenditure management through MTBF. Strengthened ministry-level capacities in budget preparation. Qualitative review of audit report by PAC
  18. 18. <ul><li>Given the progress described, public opinion poll in the context of Bangladesh is not yet a reality due to the following reasons: </li></ul><ul><ul><li>Limited public awareness about public financial management/budget /planning process- uninformed opinions may not provide valid directions or assessments </li></ul></ul><ul><ul><li>Nascent stage of performance budgetinf with recent completion of MTBF roll out across government, and less than perfect KPIs to measure performance </li></ul></ul><ul><ul><li>No performance monitoring mechanism in place yet; performance audit begun for the first time in only 5 ministries on pilot basis in FY11. </li></ul></ul>Bangladesh’s steps towards enhanced performance for better accountability
  19. 19. <ul><li>Intermediate steps being undertaken towards greater performance orientation for accountability: </li></ul><ul><li>Evolving need felt for inclusion of beneficiary/civil society opinion in the budget process: </li></ul><ul><ul><li>Pre-budget consultations held by MoF with: </li></ul></ul><ul><ul><ul><li>M embers of the Parliamentary Standing Committees, </li></ul></ul></ul><ul><ul><ul><li>Representatives from Economic Reporters Forum and NGOs </li></ul></ul></ul><ul><ul><ul><li>Editors of electronic and print media </li></ul></ul></ul><ul><ul><ul><li>Economists and Professionals </li></ul></ul></ul><ul><ul><ul><li>Secretaries of all Ministries/Divisions. </li></ul></ul></ul>Bangladesh’s steps towards enhanced performance for better accountability
  20. 20. <ul><li>Intensive training and ‘champions’ in ministries </li></ul><ul><ul><li>Introduction of MTBF, evolving KPIs, and active monitoring </li></ul></ul><ul><ul><li>Leadership programs to get top-level engagement on performance: reform/training programs e.g. Managing at the Top (MAT) </li></ul></ul><ul><li>Strengthening and spread of IFMIS to line ministries to enhance accountability </li></ul><ul><li>Annual monitoring of the progress of the Five Year Plan involving all ministries and economists. </li></ul><ul><li>Quarterly review of the utilization of the Annual Development Programme (ADP) which is the development budget; still consistently underutilized due to implementation problems. </li></ul>Bangladesh’s steps towards enhanced performance for better accountability