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Ministry of Finance of the Kyrgyz Republic
PROGRAM BUDGETING IN THE KYRGYZ
REPUBLIC
Bishkek, 2017
Program Budgeting—Definition
Program budgeting attempts to apply cost-benefit analysis to the allocation
decision, allocate expenditures by program, and assess results of programs
in relation to objectives.
IMF, Manual on Fiscal Transparency, 2007
Key Features
 Resources are allocated by programs;
 Lower control over spending items in the economic classification;
 Performance information is used to inform decisions on allocating public
expenditures.
Design of program classification of expenditures
Reform components:
Managerial and financial flexibility and performance budgeting
Aligning medium-term expenditure projections with program
budgeting
Adopting IT systems to gather information on performance
indicators
Aligning accounting with outputs
Integrating performance information with resource allocation
decisions
Introducing Program Budgeting in the Kyrgyz
Republic – Objectives
 Closer alignment between medium-term budget forecast and annual budget;
 Defining spending priorities;
 Enhancing spending efficiency;
 Enhancing performance of government agencies;
 Improving public service delivery.
Historic Background
1997 – 2004 – initial theoretic background;
2005 – 2010 – first instruction materials and their practical application;
2011 – 2017– a more balanced approach adapted to the budget framework in
the Kyrgyz Republic; design and implementation of a comprehensive
methodology, gradual increase in the number of agencies covered.
Initial Challenges
• Lack of political will coupled with resistance to reforms and a
formalistic approach to program budgeting among line
ministries/agencies;
• Absence of a regulatory framework underpinning program budgeting;
• Lack of technical knowledge on program budgeting;
• Low quality of information inputs;
• Absence of program classification;
• Absence of program budget monitoring.
Selected Approach to Implementation
76
80
75
75
70
60
50
40
28
30
20
10
15
6
15
6
6
2011
2012
20
20
20
0
2013
2014
2015
2016
Number of ministries and agencies who submitted program budgets for the
following year
Number of ministries and agencies who submittedmedium-term expenditure
strategies for the following year
Program Framework
Sector Goal
Objective 2
Objective 1
Program 1
Program 2
Program 3
Program 4
Action 1
Action 1
Action 1
Action 1
Action 2
Action 2
Action 2
Action 3
Objective 3
Steps Taken
Improving budget
legislation, inter alia, on
program budgeting
Continuous
improvement of
instruction materials
Continuous capacity
building among civil
servants
Introducing program
budget monitoring
Regulatory Framework
Budget Code of
the Kyrgyz
Republic (2017)
Methodological
Guidelines for
Medium-Term
Expenditure
Strategies
(2012)
Program
Budgeting
Rulebook
(2007)
Instruction on
Submitting
Performance
Reports (2013)
Measures to Enforce Program Budget Execution
Integrating program classification in the Treasury Automated System
4 pilot ministries to produce reports on program classification
Mapping organizational charts to corresponding budget programs
Example
Center for Grain Evaluation
(МСХ и М) performs Evaluation
of Grain and Grain Products
under the Government Program
for Crop Farming Support, and
this action is mapped to the
corresponding action and program
Funding for the Center for Grain
Evaluation is treated as a program
expense and is captured in the
Performance Report.
Current Status
 Regulatory framework is in place;
 Unified methodological framework is in place;
 87% of budget expenditures are covered by the program format;
 Program budgets are presented in the Budget Law;
 Applying agency approach;
 Performance information is not used to inform decision-making on resource
allocation;
 Presentation format for program budgeting.
Outstanding Issues
Weak motivation among government agencies;
Lack of technical knowledge on program budgeting among
line ministries and agencies;
Uneven quality of information;
Lack of automated and integrated information systems;
No database for performance indicators;
Weak spending revision mechanism.
Plans Going Forward

Improving regulatory framework and instruction materials for program
budgeting;

Capacity building for ministerial and agency staff;

Improving program classification;

Improving monitoring of program budget execution;

Introducing performance evaluation of budget programs.
Thank you!