INTRODUCING RESULTS-BASED APPROACHES INTO … · INTRODUCING RESULTS-BASED APPROACHES INTO PUBLIC SECTOR MANAGEMENT PROCESSES: The Philippine Experience ... Incentive Structure

INTRODUCING RESULTS-BASEDAPPROACHES INTO PUBLIC SECTOR

MANAGEMENT PROCESSES:The Philippine Experience

INTRODUCING RESULTSINTRODUCING RESULTS--BASEDBASEDAPPROACHES INTO PUBLIC SECTORAPPROACHES INTO PUBLIC SECTOR

MANAGEMENT PROCESSES:MANAGEMENT PROCESSES:The Philippine ExperienceThe Philippine Experience

A Paper Presentedby

SECRETARY EMILIA T. BONCODINDepartment of Budget and Management

Philippines

2nd International Roundtable on Managing for Development ResultsMarrakech, Morocco

05 February 2004

RESULTS-BASED APPROACH:Major Element of

Philippine Public Sector ManagementReform Program

RESULTSRESULTS--BASED APPROACH:BASED APPROACH:Major Element ofMajor Element of

Philippine Public Sector ManagementPhilippine Public Sector ManagementReform ProgramReform Program

Department of Budget and ManagementRepublic of the Philippines

PUBLIC SECTOR MANAGEMENT REFORM PROGRAM

PUBLIC SECTOR MANAGEMENT PUBLIC SECTOR MANAGEMENT REFORM PROGRAMREFORM PROGRAM

4 operational leakages

4 weak corporate and regulatory environment

4 weak public institutions and enforcement

4 poor incentive structures

4 slow response capability to changing situations and needs

4 inadequate resources for basic services

4 deteriorating fiscal position

4 slow and unstable growth

poverty

To address key dysfunctions:


PUBLIC EXPENDITURE MANAGEMENT:DESIRED RESULTS

PUBLIC EXPENDITURE MANAGEMENT:PUBLIC EXPENDITURE MANAGEMENT:DESIRED RESULTSDESIRED RESULTS

To reduce poverty by creating investment and job opportunities through:

a) Addressing the inadequacy of resources for basic services

b) Arresting the deteriorating fiscal position


PUBLIC EXPENDITURE MANAGEMENT:FOCUS ON RESULTS

PUBLIC EXPENDITURE MANAGEMENT:PUBLIC EXPENDITURE MANAGEMENT:FOCUS ON RESULTSFOCUS ON RESULTS

q Use of the budget as instrument for ensuring desired results

q Strengthening of existing incentive structures to advocate and implement reforms

q Active partnership with civil society in monitoring results

q Clear targets and assessment mechanisms


PUBLIC EXPENDITURE MANAGEMENTFRAMEWORK

PUBLIC EXPENDITURE MANAGEMENTPUBLIC EXPENDITURE MANAGEMENTFRAMEWORKFRAMEWORK

q Fiscal Discipline

q Allocative Efficiency

q Operational Efficiency


MAJOR REFORM INITIATIVESMAJOR REFORM INITIATIVESMAJOR REFORM INITIATIVES

OUTCOMEOUTCOME INSTRUMENTINSTRUMENT

Fiscal Discipline Medium Term Fiscal Plan (MTFP)

Assessment of contingent liabilities; fiscal risks

Allocative Efficiency Medium Term Public Investment Program (MTPIP)

Organizational Performance Indicator Framework (OPIF)


Major Reform Initiatives…Major Reform Initiatives…Major Reform Initiatives…

OUTCOMEOUTCOME INSTRUMENTINSTRUMENT

Operational Efficiency Sectoral Effectiveness and Efficiency Review (SEER)

Agency Performance Review (APR)

Procurement reform

Installation of new government accounting system and auditing procedures


OUTCOME INSTRUMENT

Compensation Review

Reengineering the bureaucracy

Strengthening key sector areas:

judicial reform; electoralcampaign reform; peace andorder campaign; regulatoryreform

Investment in IT and IT-based services

Major Reform Initiatives…Major Reform Initiatives…Major Reform Initiatives…


MEDIUM-TERM EXPENDITURE FRAMEWORK

MEDIUMMEDIUM--TERM EXPENDITURE TERM EXPENDITURE FRAMEWORKFRAMEWORK

Medium-TermPhilippine Development

Plan

Medium-TermFiscal Plan

Annual Budget

Medium-TermPublic Investment

Program

OrganizationalPerformance Indicator

Framework

AgencyPerformance

Review

SectoralEffectiveness and Efficiency

Review

Incentive Structure

FISCAL INVESTMENT

MEDIUM-TERM FISCAL PLAN:FEATURES

MEDIUMMEDIUM--TERM FISCAL PLAN:TERM FISCAL PLAN:FEATURESFEATURES

q Explicit medium term fiscal targets:deficit reduction strategy; revenue and disbursement targets; debt management strategy

q Medium term estimates of cost of ongoing and committed programs (baseline +)

q Proposed revenue enhancing measures over the medium term

q Clear rules for updating revenue and cost estimates

q Fiscal Responsibility Bill


MEDIUM-TERM FINANCIAL PLAN:HIGHLIGHTS

MEDIUMMEDIUM--TERM FINANCIAL PLAN:TERM FINANCIAL PLAN:HIGHLIGHTSHIGHLIGHTS


2003 2004 2005 2006 2007 2008 2009

NG Deficit (% of GDP) 4.6 4.2 3.6 2.9 2.1 1.2 0.2

Public Investment (% of GDP)(Capital projects) 2.7 2.2 1.8 2.0 1.9 2.1 2.2

Public Debt to GDP ratio (NG Outstanding Debt) 69.1 66.9 65.1 63.1 61.5 58.1 55.0

Particulars

MEDIUM-TERM PUBLIC INVESTMENT PROGRAM

MEDIUMMEDIUM--TERM TERM PUBLIC INVESTMENT PROGRAMPUBLIC INVESTMENT PROGRAM

q Sectoral investment requirements over 6 years

q Published major sectoral investment programs

q Alternative financing modes for specific projects


MEDIUM-TERM PUBLIC INVESTMENT PROGRAM

MEDIUMMEDIUM--TERM TERM PUBLIC INVESTMENT PROGRAMPUBLIC INVESTMENT PROGRAM


0

50

100

150

200

2003 2004 2005 2006 2007 2008 2009

In B

illio

n P

eso

s

Total CO ODA Others

ORGANIZATIONAL PERFORMANCEINDICATOR FRAMEWORK: GOALSORGANIZATIONAL PERFORMANCEORGANIZATIONAL PERFORMANCEINDICATOR FRAMEWORK: GOALSINDICATOR FRAMEWORK: GOALS

q Shift to output/outcome performance indicators

q Clarify expected performance and accountability of government agencies

q Encourage agencies to focus efforts on the delivery of outputs relevant to goal

q Establish integrated performance management system where organizational performance targets cascaded down to lower level units and used as basis of performance-based compensation

q Report to public and Congress in clear terms output of departments/agencies


ORGANIZATIONAL PERFORMANCEINDICATOR FRAMEWORK:

PROCESS

ORGANIZATIONAL PERFORMANCEORGANIZATIONAL PERFORMANCEINDICATOR FRAMEWORK:INDICATOR FRAMEWORK:

PROCESSPROCESS

q Identification of desired outputs and outcomes

a Agency; Oversight

a MAJOR FINAL OUTPUTS (MFOs), in terms of quantity, quality, timeliness, cost (QQTC)

q Harmonization: Agency with Oversight (DBM, NEDA)

q Identification of programs/projects contributing to the accomplishment of MFOs


Organizational Performance IndicatorFramework: Process…Organizational Performance IndicatorOrganizational Performance IndicatorFramework: Process…Framework: Process…

q Establishment of Performance Indicators

4 PI to determine whether program/projects contributed to MFO

4 PI must be verifiable in a quick, accurate and cost-effective manner



Example: LTO


Example: LTOExample: LTO

Outcome - Road safety (less incidence of road accidents)

MFO - Licensing services (Drivers)

Performance indicators:

Quality - % of licenses issued in accordance with operating standards; client satisfaction

Timeliness - % of licenses issued in accordance with timeliness standards



STATUS


STATUSSTATUSAgencies in advance stage of the OPIF process

4 Agriculture sector agencies (Agriculture, Agrarian Reform, Environment and Natural Resources)

4 Social Welfare

4 Labor and Employment,

4 Education

Agencies in intermediate stage of OPIF

4 Health

4 Internal Revenue

4 Customs

Agencies in the early stage

4 Infrastructure agencies


SECTOR EFFECTIVESS AND EFFICIENCY REVIEW:

FEATURES

SECTOR EFFECTIVESS AND SECTOR EFFECTIVESS AND EFFICIENCY REVIEW: EFFICIENCY REVIEW:

FEATURESFEATURES

q Periodic review of ongoing programs and projects in terms of relevance, performance, cost/benefit

q System for establishing and updating strategic priorities over the medium term

q Allows the redirection of resources to strategic programs


SECTORAL EFFECTIVENESS ANDEFFICIENCY REVIEW:

PROCESS

SECTORAL EFFECTIVENESS ANDSECTORAL EFFECTIVENESS ANDEFFICIENCY REVIEW:EFFICIENCY REVIEW:

PROCESSPROCESS

q Consultations: agencies; stakeholders; funding agencies

q Presentation of Results and Recommendations

q Approval of Cabinet Committee

q Input to Updated Development Plan, Public Investment Program, Budget


SECTORAL EFFECTIVENESS ANDEFFICIENCY REVIEW:

Results

SECTORAL EFFECTIVENESS ANDSECTORAL EFFECTIVENESS ANDEFFICIENCY REVIEW:EFFICIENCY REVIEW:

ResultsResults

q Cancel excess financing (6)

q Terminate projects or remaining components of projects (1)

q Restructure projects, including loans (30)

q Proceed (68)


AGENCY PERFORMANCE REVIEWAGENCY PERFORMANCE REVIEWAGENCY PERFORMANCE REVIEW

q Short term review of revenue and expenditure performance vis-à-vis budget targets

q Ranking of Agency Budget Performance and public reporting


AGENCY PERFORMANCE REVIEW:RESULTS

AGENCY PERFORMANCE REVIEW:AGENCY PERFORMANCE REVIEW:RESULTSRESULTS

CY 2002 - All agencies of the National Government underwent APR

Most got outstanding rating; review was based on agency-determined targets

CY 2003 - Low-budget agencies were exempted from the APR

Most got satisfactory rating


INCENTIVE STRUCTURESINCENTIVE STRUCTURESINCENTIVE STRUCTURES

q Greater flexibility in exchange for financial discipline hurdles

4 Use of budget savings from procurement and streamlining activities

4 Creation of one-liner budgets

4 Expenditure autonomy for low-budget agencies

q Performance-based management

4 Performance-based compensation

4 Collective negotiation agreements (CNA)


KEY ACCOMPLISHMENTS TO DATEKEY ACCOMPLISHMENTS TO DATEKEY ACCOMPLISHMENTS TO DATEA. Planning/Budget Processes

4 Linked Budget to Planning starting in 1999

4 Changed from input-based to outcome-based budgeting in 2002 Budget Call

4 Formulated budget strategy as precondition to approval of new foreign loans in 2001

4 Conducted first Sectoral Effectiveness and Efficiency Review (SEER) 2001

4 Conducted first Agency Performance Reviews (APRs) in 2002

4 Conducted ODA Portfolio Review in 2003


Key Accomplishments to Date…Key Accomplishments to Date…Key Accomplishments to Date…

B. Reengineering the Bureaucracy

4 Formulated Reengineering Plan for the Bureaucracy

4 Reengineered key regulatory agencies: financial markets, energy, ICT

C. Capability Building (1999-2003) Workshops, Training

4 Oversight agencies (18)

4 Individual agencies (3 major, 17 minor)


D. Assessments and Documentation

4 2001 Budget Preparation, Performance Orientation,

4 Public Expenditure Management Manual

4 Documentation of 2002 APR

4 Public Expenditure, Procurement and Financial Management Review with World Bank (WB) and Asian Development Bank (ADB)

Key Accomplishments to Date…Key Accomplishments to Date…Key Accomplishments to Date…


CHALLENGESCHALLENGESCHALLENGES


q Refining multi-year resource constrained planning

q Completing inventory of contingent liabilities

q Enhancing the predictability of revenues

q Cascading performance management system down to personnel appraisal

q Shifting to a performance based compensation system

q Advocating PEM reforms in Congress

MOVING FORWARDMOVING FORWARDMOVING FORWARD

2004 2005 2006 2007

4limitedbudgetautonomy

4compensationreview

4reengineeringthe bureaucracy

4expandedbudget autonomy

4Initial implementationof compensationreform

4Reengineeringthe bureaucracy

4PEM substantially operations

4Alignment of agency with individual performance

4PEM fullyoperational


THANK YOU !!!THANK YOU !!!THANK YOU !!!

Republic of the Philippines

INTRODUCING RESULTS-BASED APPROACHES INTO … · INTRODUCING RESULTS-BASED APPROACHES INTO PUBLIC SECTOR MANAGEMENT PROCESSES: The Philippine Experience ... Incentive Structure

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