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PERFORMANCEBASED BUDGETING

IN LATIN AMERICA

Mario F. Sangins

Inter-American Development BankWinter Conference

International Consortium on Government Financial Management

Washington DC, 2 December 2009

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WHAT IS PERFORMANCE-BASED

BUDGETING?

Budgeting system and processes capable ofincluding considerations on performance to thedecision-making process

PERFORMANCE is not understood only as the finalimpact of programs, but also contributions allalong the public value engineering chain

PERFORMANCE-BASED budgeting does not meanroutinely determining resource allocations; suffice

it to have a budgeting discussion which includesperformance information

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COMPONENTS OF PERFORMANCE-BUDGETING

1. performance information Precondition for PBB

Organized into monitoring and assessment

2. Use in the budgetary process

decision-making process Decisions informed according to available information

Key stages: planning, formulation, execution

3. Incentives to managers Management is institutions

Budget as repetitive game, generates incentives, learning

4. Assigning duties to managers Budget as financial restriction and

Key areas: cash flow, redeployments, transfers

Accountability and trust

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Some good reasons:

To bring the budget in line with strategic planning, to

harmonize the short-term with the mid-termTo increase ? the and focus of public expenditureTo facilitate accountability to society for performanceTo improve the quality of public sector servicesTo be MORE EFFICIENT

WHY IMPLEMENT PBB?

4

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Source: Perry Guillermo, Arias Omar, et al. Poverty Reduction and Growth: Virtuous and Vicious

Circles, p. 31 of Spanish version. World Bank, 2006

NEEDS VS RESOURCES

otal tax revenue over per capita income(%Total tax revenue of

)GDPLAC Selected

countries

GDP per capitalog

United States

Italy

France

Spain

DominicanRepublic

Brazil

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ndice de Desarrollo Humano y Gasto Pblico

como % del PIB (salud y educacin)

Fuente: Elaboracin propia en base a los datos del Informe de Desarrollo

Humano, 2005, PNUD

Gasto Pblico como % del PIB -salud y educacin-

181614121086420

ndicedeDesarrolloHumano(2004)

1.00

.90

.80

.70

.60

.50

.40

Amrica Latina

PIB per cpita >a 23413 US PPP

PIB per cpita

GDP per capita