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INTRODUCING RESULTS-BASED APPROACHES INTO PUBLIC SECTOR MANAGEMENT PROCESSES: The Philippine Experience. A Paper Presented by SECRETARY EMILIA T. BONCODIN Department of Budget and Management Philippines 2 nd International Roundtable on Managing for Development Results

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slide1

INTRODUCING RESULTS-BASED

APPROACHES INTO PUBLIC SECTOR

MANAGEMENT PROCESSES:

The Philippine Experience

A Paper Presented

by

SECRETARY EMILIA T. BONCODIN

Department of Budget and Management

Philippines

2nd International Roundtable on Managing for Development Results

Marrakech, Morocco

05 February 2004

slide2

RESULTS-BASED APPROACH:

Major Element of

Philippine Public Sector Management

Reform Program

Republic of the Philippines

Department of Budget and Management

slide3

PUBLIC SECTOR MANAGEMENT

REFORM PROGRAM

To address key dysfunctions:

  • inadequate resources for basic services
  • deteriorating fiscal position
  • slow and unstable growth
  • operational leakages
  • weak corporate and regulatory environment
  • weak public institutions and enforcement
  • poor incentive structures
  • slow response capability to changing situations and needs

poverty

Republic of the Philippines

Department of Budget and Management

slide4

PUBLIC EXPENDITURE MANAGEMENT:

DESIRED RESULTS

To reduce poverty by creating investment and job opportunities through:

  • Addressing the inadequacy of resources for basic services

b) Arresting the deteriorating fiscal position

Republic of the Philippines

Department of Budget and Management

slide5

PUBLIC EXPENDITURE MANAGEMENT:

FOCUS ON RESULTS

  • Use of the budget as instrument for ensuring desired results
  • Strengthening of existing incentive structures to advocate and implement reforms
  • Active partnership with civil society in monitoring results
  • Clear targets and assessment mechanisms

Republic of the Philippines

Department of Budget and Management

slide6

PUBLIC EXPENDITURE MANAGEMENT

FRAMEWORK

  • Fiscal Discipline
  • Allocative Efficiency
  • Operational Efficiency

Republic of the Philippines

Department of Budget and Management

slide7

MAJOR REFORM INITIATIVES

OUTCOMEINSTRUMENT

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)

Republic of the Philippines

Department of Budget and Management

slide8

Major Reform Initiatives…

OUTCOMEINSTRUMENT

Operational Efficiency Sectoral Effectiveness and Efficiency Review (SEER)

Agency Performance Review (APR)

Procurement reform

Installation of new government accounting system and auditing procedures

Republic of the Philippines

Department of Budget and Management

slide9

Major Reform Initiatives…

OUTCOMEINSTRUMENT

Compensation Review

Reengineering the bureaucracy

Strengthening key sector areas:

judicial reform; electoral

campaign reform; peace and

order campaign; regulatory

reform

Investment in IT and IT-based services

Republic of the Philippines

Department of Budget and Management

slide10

Medium-Term

Philippine Development Plan

FISCAL

INVESTMENT

Medium-Term

Public Investment

Program

Medium-Term

Fiscal Plan

Organizational

Performance Indicator

Framework

Annual Budget

Sectoral

Effectiveness and Efficiency Review

Agency

Performance

Review

Incentive Structure

MEDIUM-TERM EXPENDITURE

FRAMEWORK

slide11

MEDIUM-TERM FISCAL PLAN:

FEATURES

  • Explicit medium term fiscal targets:deficit reduction strategy; revenue and disbursement targets; debt management strategy
  • Medium term estimates of cost of ongoing and committed programs (baseline +)
  • Proposed revenue enhancing measures over the medium term
  • Clear rules for updating revenue and cost estimates
  • Fiscal Responsibility Bill

Republic of the Philippines

Department of Budget and Management

slide12

MEDIUM-TERM FINANCIAL PLAN:

HIGHLIGHTS

Republic of the Philippines

Department of Budget and Management

slide13

MEDIUM-TERM

PUBLIC INVESTMENT PROGRAM

  • Sectoral investment requirements over 6 years
  • Published major sectoral investment programs
  • Alternative financing modes for specific projects

Republic of the Philippines

Department of Budget and Management

slide14

MEDIUM-TERM

PUBLIC INVESTMENT PROGRAM

Republic of the Philippines

Department of Budget and Management

slide15

ORGANIZATIONAL PERFORMANCE

INDICATOR FRAMEWORK: GOALS

  • Shift to output/outcome performance indicators
  • Clarify expected performance and accountability of government agencies
  • Encourage agencies to focus efforts on the delivery of outputs relevant to goal
  • Establish integrated performance management system where organizational performance targets cascaded down to lower level units and used as basis of performance-based compensation
  • Report to public and Congress in clear terms output of departments/agencies

Republic of the Philippines

Department of Budget and Management

slide16

ORGANIZATIONAL PERFORMANCE

INDICATOR FRAMEWORK:

PROCESS

  • Identification of desired outputs and outcomes
    • aAgency; Oversight
    • aMAJOR FINAL OUTPUTS (MFOs), in terms of quantity, quality, timeliness, cost (QQTC)
  • Harmonization: Agency with Oversight(DBM, NEDA)
  • Identification of programs/projects contributing to the accomplishment of MFOs

Republic of the Philippines

Department of Budget and Management

slide17

Organizational Performance Indicator

Framework: Process…

  • Establishment of Performance Indicators
    • PI to determine whether program/projects contributed to MFO
    • PI must be verifiable in a quick, accurate and cost-effective manner

Republic of the Philippines

Department of Budget and Management

slide18

ORGANIZATIONAL PERFORMANCE

INDICATOR FRAMEWORK:

Example: 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

Republic of the Philippines

Department of Budget and Management

slide19

ORGANIZATIONAL PERFORMANCE

INDICATOR FRAMEWORK:

STATUS

Agencies in advance stage of the OPIF process

  • Agriculture sector agencies (Agriculture, Agrarian Reform, Environment and Natural Resources)
  • Social Welfare
  • Labor and Employment,
  • Education

Agencies in intermediate stage of OPIF

  • Health
  • Internal Revenue
  • Customs

Agencies in the early stage

  • Infrastructure agencies

Republic of the Philippines

Department of Budget and Management

slide20

SECTOR EFFECTIVESS AND

EFFICIENCY REVIEW:

FEATURES

  • Periodic review of ongoing programs and projects in terms of relevance, performance, cost/benefit
  • System for establishing and updating strategic priorities over the medium term
  • Allows the redirection of resources to strategic programs

Republic of the Philippines

Department of Budget and Management

slide21

SECTORAL EFFECTIVENESS AND

EFFICIENCY REVIEW:

PROCESS

  • Consultations: agencies; stakeholders; funding agencies
  • Presentation of Results and Recommendations
  • Approval of Cabinet Committee
  • Input to Updated Development Plan, Public Investment Program, Budget

Republic of the Philippines

Department of Budget and Management

slide22

SECTORAL EFFECTIVENESS AND

EFFICIENCY REVIEW:

Results

  • Cancel excess financing (6)
  • Terminate projects or remaining components of projects (1)
  • Restructure projects, including loans (30)
  • Proceed (68)

Republic of the Philippines

Department of Budget and Management

slide23

AGENCY PERFORMANCE REVIEW

  • Short term review of revenue and expenditure performance vis-à-vis budget targets
  • Ranking of Agency Budget Performance and public reporting

Republic of the Philippines

Department of Budget and Management

slide24

AGENCY PERFORMANCE REVIEW:

RESULTS

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

Republic of the Philippines

Department of Budget and Management

slide25

INCENTIVE STRUCTURES

  • Greater flexibility in exchange for financial discipline hurdles
    • Use of budget savings from procurement and streamlining activities
    • Creation of one-liner budgets
    • Expenditure autonomy for low-budget agencies
  • Performance-based management
    • Performance-based compensation
    • Collective negotiation agreements (CNA)

Republic of the Philippines

Department of Budget and Management

slide26

KEY ACCOMPLISHMENTS TO DATE

A. Planning/Budget Processes

  • Linked Budget to Planning starting in 1999
  • Changed from input-based to outcome-based budgeting in 2002 Budget Call
  • Formulated budget strategy as precondition to approval of new foreign loans in 2001
  • Conducted first Sectoral Effectiveness and Efficiency Review (SEER) 2001
  • Conducted first Agency Performance Reviews (APRs) in 2002
  • Conducted ODA Portfolio Review in 2003

Republic of the Philippines

Department of Budget and Management

slide27

Key Accomplishments to Date…

  • Reengineering the Bureaucracy
    • Formulated Reengineering Plan for the Bureaucracy
    • Reengineered key regulatory agencies: financial markets, energy, ICT

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

    • Oversight agencies (18)
    • Individual agencies (3 major, 17 minor)

Republic of the Philippines

Department of Budget and Management

slide28

Key Accomplishments to Date…

D. Assessments and Documentation

  • 2001 Budget Preparation, Performance Orientation,
  • Public Expenditure Management Manual
  • Documentation of 2002 APR
  • Public Expenditure, Procurement and Financial Management Review with World Bank (WB) and Asian Development Bank (ADB)

Republic of the Philippines

Department of Budget and Management

slide29

CHALLENGES

  • Refining multi-year resource constrained planning
  • Completing inventory of contingent liabilities
  • Enhancing the predictability of revenues
  • Cascading performance management system down to personnel appraisal
  • Shifting to a performance based compensation system
  • Advocating PEM reforms in Congress

Republic of the Philippines

Department of Budget and Management

slide30

2004 2005 2006 2007

  • PEM fully operational
  • PEM substantially operations
  • Alignment of agency with individual performance
  • limited

budget

autonomy

  • compensation

review

  • reengineering

the bureaucracy

  • expanded

budget

autonomy

  • Initial

implementation

of compensation

reform

  • Reengineering

the bureaucracy

MOVING FORWARD

Republic of the Philippines

Department of Budget and Management

slide31

THANK YOU !!!

Republic of the Philippines