CAPACITY BUILDING : LITHUANIA ’S EXPERIENCE S FROM 10 YEAR S OF REFORM

1. CAPACITYBUILDING:LITHUANIA’S EXPERIENCES FROM 10YEARS OF REFORM Vilnius, Lithuania 20-21 March, 2007

2. PRESENTATION OUTLINE • PREREQUISITES OF THE REFORM • GOALS AND IMPLEMENTATION STAGES • REFORM SWOT ANALYSIS

3. SITUATION BEFORE • POOR STATE FINANCIAL SITUATION IN 1998-1999 • CURRENT ACCOUNT DEFICIT – 12 % • FISCAL DEFICIT – 8 % in 1999 • GOVERNMENT BORROWING INTEREST RATE- 12–14 % • LARGE AMOUNT OF EXTRABUDGETARY FUNDS • NO LINKS BETWEEN POLICY FORMATION AND BUDGETING • POOR DECISION MAKING PROCESS • NO FISCAL RELATIONS ACROSS LEVELS OF GOVERNMENT

4. FACTORS STIMULATED REFORMS • STRONG POLITICAL WILL • ASPIRATION FOR EUROPEAN-ATLANTIC INTEGRATION • ATTITUDE OF SOCIETY TOWARDS PUBLIC ADMINISTRATION • POOR FINANCIAL SITUATION

5. GOALS OF THE BUDGET REFORM • CONSOLIDATION OF PUBLIC FINANCIAL RESOURCES • PRIORITY BASED PLANNING • RESULT ORIENTED ACTIVITIES • RESPONSIBILITY AND ACCOUNTABILITY • TRANSPARENCY

6. IMPLEMENTATION STAGES:1998 →REFORM INITIATIVE • THE SEIMAS RESOLUTION ON THE BUDGET STRUCTURE • REFORM CONCEPTION: - THREE-YEAR PLANNING; - PROGRAMME BUDGET; - CONSOLIDATION OF RESOURCES; - TRANSPARENCY

7. IMPLEMENTATION STAGES:1998→REFORM OF MUNICIPAL BUDGET FORMATION PRINCIPLES – STAGE I • THE LAW ON THE METHODOLOGY FOR DETERMINATION OF MUNICIPAL BUDGETARY REVENUE • MUNICIPAL BUDGETS FORMATION PRINCIPLE– TO OBSERVE THE REVENUE EQUALISATION PRINCIPLE TO CARRY OUT ALL FUNCTIONS OF MUNICIPALITIES

8. IMPLEMENTATION STAGES:1999→PROGRAMME BUDGET • THE DRAFT OF STATE BUDGET WAS PREPARED BY PROGRAMMES AND SUBMITED TO THE SEIMAS FOR IT’S CONSIDERATION AND APPROVAL • PROGRAMMING BUDGETING IS OBLIGATORY TO ALL APPROPRIATION MANAGERS

9. IMPLEMENTATION STAGES:2000→GOVERNMENT STRATEGIC PLANNING SYSTEM • STRATEGIC PLANNING METHODOLOGY IS OBLIGATORY TO ALL STATE BUDGET APPROPRIATION MANAGERS • RECOMENDED TO MUNICIPALITIES • THE INTEGRATED PLANNING MODEL AND THE LONG-TERM DEVELOPMENT STRATEGY WAS ESTABLISHED • THE LAW ON THE GOVERNMENT AND THE LAW ON THE BUDGET STRUCTURE EMBED THE STRATEGIC PLANNING AS A MEASURE FOR ORGANISATION OF ACTIVITIES AND FINANCING PLANNING

10. IMPLEMENTATION STAGES:2001→ REFORM OF MUNICIPAL BUDGET FORMATION PRINCIPLES – STAGE II THE ESSENCE OF THE REFORM: • TO USE THE REVENUE EQUALISATION PRINCIPLE ONLY FOR CARRYING OUT INDEPENDENT FUNCTIONS OF MUNICIPALITIES • TO ALLOCATE GRANTS FROM THE STATE BUDGET FOR IMPLEMENTATION OF THE FUNCTIONS DELEGATED BY THE GOVERNMENT

11. IMPLEMENTATION STAGES:2003→EVALUATION OF BUDGET IMPLEMENTATION • THE INTERNAL AUDIT’S FUNCTIONS: TO EVALUATE THE ECONOMY, EFFECTIVENESS AND EFFICIENCY OF THE PROGRAMS, WAS IMPLEMENTED IN PUBLIC INSTITUTIONS • THE EXTERNAL AUDIT INTITUTION’S FUNCTIONS: TO EVALUATE WHETHER APPROPRIATIONS ALLOCATED HAVE BEEN USED FOR THE GOALS SET IN THE PROGRAMMES; TO EVALUATE WHETHER APPROPRIATIONS HAVE BEEN USED AT THE HIGHEST POSSIBLE EXTENT OF ECONOMY AND IN THE MOST EFFECTIVE MANNER

12. IMPLEMENTATION STAGES:2003-2004→DECISION IMPACT ASSESSMENT • ADOPTION OF THE DECISION IMPACT ASSESSMENT METHODOLOGY ON: -AN ADEQUATE AREA - ECONOMICS - PUBLIC FINANCES - SOCIAL ENVIRONMENT - CORRUPTION EXTENT - ENVIRONMENT

13. IMPLEMENTATION STAGES:2005→PERFORMANCE ASSESSMENT CRITERIA SYSTEM • OUTCOME / IMPACT CRITERION – AN ASSESSMENT CRITERION FOR ACHIEVEMENT OF THE INSTITUTION’S STRATEGIC GOAL • RESULT CRITERION – AN ASSESSMENT CRITERION FOR THE FULFILMENT OF THE PROGRAMME OBJECTIVE • OUTPUT CRITERION – AN ACTIVITY IMPLEMENTATION ASSESSMENT CRITERION

14. REFORM SWOT ANALYSIS:STRENGTHS • A UNIFORM STRATEGIC PLANNING METHODOLOGY • INSTITUTION’S ACTIVITIES BASED ON SYSTEMATICAL PLANNING AND LINKING WITH FINANCING • COMPREHENSIVELY REGULATED PLANNING PROCESS • A POSSIBILITY TO ANALYSE AND TO ASSESS AN INSTITUTION AS A SYSTEM IN PURSUIT OF THE GOALS SET • INSTITUTIONS ARE ENCOURAGED TO ORIENT THEIR ACTIVITIES TOWARDS THE RESULTS • MORE RATIONAL DISTRIBUTION OF FINANCIAL, MATERIAL AND HUMAN RESOURCES • PUBLICITY OF PROVIDING INFORMATION AND ITS COMPREHENSIVENESS TO THE PUBLIC

15. REFORM SWOT ANALYSIS:WEAKNESSES • INADEQUATE INSTITUTIONAL HUMAN RESOURCES AND CAPACITIES • FORMULATION OF STRATEGIC GOALS OF AN INSTITUTION RESTS WITH THE INSTITUTION ITSELF • STRATEGIC PLANNING IS APPLIED NOT IN ALL ADMINISTRATION LEVELS • STRATEGIC PLANNING IS HIGHLY FORMALISED

16. REFORM SWOT ANALYSIS:OPPORTUNITIES • DEVELOPMENT OF THE PLANNING SYSTEM IN CONNECTION WITH ACCOUNTABILITY • FURTHER CAPACITY BUILDING OF PUBLIC SERVANTS IN THE FIELD OF STRATEGIC PLANNING • LESS FORMALISED STRATEGIC PLANS WOULD BE MORE COMPREHENSIBLE AND USEFUL TO THE PUBLIC AND POLITICIANS

17. REFORM SWOT ANALYSIS:THREATS • STRATEGIC PLANNING SYSTEM MAY BECOME DECLARATORY AND FORMAL • SEGREGATION OF STRATEGIC PLANNING AND BUDGETING PROCESSES • NON-PERCEPTION OF THE IMPORTANCE OF STRATEGIC PLANNING MAY POSE THREATS TO ITS REDUNDANCY IN THE FUTURE

18. FINDINGS • CAPACITY BUILDING IN ALL LEVELS OF PUBLIC ADMINISTRATION • SYSTEM SHALL BE UNIQUE IN DECISION MAKING AND BUDGETING PROCESS • “HUMANISATION” OF THE SYSTEM • LEARNING “STRATEGIC THINKING”