Enhancing Accountability in Public Finance through Performance

in Bangladesh

Government of the People’s Republic of Bangladesh

Washington D.C.

Ranjit Kumar ChakrabortyAdditional Secretary

Finance Division, Ministry of Finance, Bangladesh

December 5, 2011

I. The idea of linking performance to accountability in Public Financial Management

II. The existing case of Bangladesh in performance and accountability in PFM

Presentation Outline

Linking performance to accountability in Public Financial Management

Accountability in public financial management (PFM) is key to improving public service delivery.

The Ministry of Finance (MoF), the central PFM body often is singly held responsible for accountability in PFM.

Leaving out Line Ministries (LM), that are directly using resources and delivering service to citizens are often left out of PFM accountability chain.

A mechanism through which accountability in PFM is not left only to MoF but also to LM may help improve overall performance and accountability.

Evolving Accountability in PFM

Establishing ownership of PFM as a matter that not only MoF but all concerned should take responsibility for.

Involving citizens’ and civil society’s active participation in budget process i.e. identifying needs and drawing opinions on what has been done well and what has not (i.e. service delivery level).

Linking feedback from civil society and citizens to actual PFM, through performance budgeting. strengthening monitoring capacityenhancing systems institutionalizing ‘public opinion survey’ in performance

assessment.

Steps towards all encompassing accountability

Purpose: Preliminarily for political purposesLocal straw poll conducted by The Harrisburg

Pennsylvanian in 1824. Literary Digest and George Gallup late 1930s, Elmo

Roper, Louis Harris, 1940s-political polls, spread to UK

Origin of Public Opinion Survey

South Asia Democratic Forum (SADF):dialog platform between private and public institutions of the European Union and the South Asia Association for Regional Co-operationNepali Public Opinion 2011: Gallup/SADF Public opinion and nuclear options for South Asia

Asia Foundation’s public opinion survey in Afghanistan on policy direction of the country

Examples of Public Opinion Surveys, Globally

1988 Beijing Survey - political views and behavior of Beijing residents.

The Asia Barometer-daily lives of ordinary people (bumi putra) and their relationships to family, neighborhood, workplace, social and political institutions and market place

Origin of Public Opinion Survey

American National Election Studies Conducted biannually since 1952 - public sentiment on the

political process, the role of government, and social and economic issues.

American Public Opinion and U.S. Foreign Policy Conducted since 1974 - concerns of Americans regarding

economic, political, and military engagement in foreign affairs. Parallel surveys in EU countries, Mexico, Korea,China and India in recent years.

Examples of Public Opinion Surveys, Globally

Public opinion survey outcomes are insights into people’s:BeliefFeelingActionUses of the results from public opinion polls have so far

been:Early forecast of election resultsPublic reaction to a campaignInfluence on policy, but no means to measure this

impact.

Outcomes of Public Opinion Surveys

In order to influence policy, Performance assessment systems must be in place

Key Performance Indicators (KPIs) for each ministry linked to budget allocations and strategic objectives

Two tiered assessment mechanism that draws70% of the total score from performance according to KPIs, by

thecentral government Performance Auditor30% of the total score from public opinion survey

Impact of Public Opinion Surveyson Policy

Sample: population above 18, validated through a national identity document.

Media: Internet, mobile phone ‘sms’ campaign of voting for ranking main sectors in terms of performance and priority.

Scope of bias: Only population with access to or comfortable with mentioned media will be giving opinions; high scope of bias in South Asian and Sub Saharan African countries

Frequency: Annual, before final budget allocations to ministries/sectors.

Design of Public Opinion Survey on PFM performance

The case of Bangladesh in performance and accountability in PFM

Public Financial

Management and

Development In Bangladesh

• Macro/fiscal discipline and stability– Support economic growth and stability

(and reduce poverty)– Avoid public finance crises

• Strategic allocation of resources– Match government policy with

programs, objectives• And assure social safety nets, and

promote growth

• Technical efficiency– Getting the most from each taka spent

• And just delivering core services

Steady economic growth, fiscal discipline, increasing focus on enhancement of public financial management…

…towards higher accountability with public resources..

Public Financial Management and Development in

Bangladesh

Debt Management

TreasuryManagement

Macro economic

frameworkInstitutional support for the planning and

budgeting process

Gender

poverty andissuesandissues

Budget Call notice supportBudget Call

notice support

Performance Monitoring

Performance Monitoring

Budget Management Committees

Budget Management Committees

Ministry Planning Functions

Ministry Planning Functions

auditauditInternal

Support to District & Upazilla

Accounting Offices

Computerisation of the accounting

system

Institutional support for the Controller

General of Accounts

Systems maintenance

Institutional support for the

Comptroller and Auditor General

Systems based financial auditing

Social performance

auditing

TrainingCapacity Building

InformationTechnology

PFM Reforms in Bangladesh

Reform Agenda initiated with some Progresses

15

Better equipped to be more accountable…

Moving to digitized PFM…

Updating and consolidation of financial rules and regulations

Introduction of new classification structure

Computerized accounts consolidation

Computerization of the budgeting system in the Finance Division.

Financial Management Information System (iBAS):

facilitating faster transfer of information and data for greater accuracy and

timeliness

Milestones of 15 years of PFM reform in Bangladesh till SPEMP

Separation of Accounts and Audit function – Accounts under MOF, not the Auditor General

Establishment of Financial Management Academy (FIMA)

Formal Comptroller and Auditor General (C&AG) system for supporting Public Accounts Committee (PAC) functions

PAC chaired by a Member of Parliament, not by Minister

Strengthened External Audit and Parliamentary Oversight Functions

New Treasury Rules, Accounts Code, expenditure control and Accounting Manual for development projects

Introduction of system-based audits in selected line ministries

Comprehensive training program on Management, Finance, Budgeting, IT, Economics including International post-

graduate training

Milestones of 15 years of PFM reform in Bangladesh till SPEMP…

cont’d

Strengthened macro-economic modeling capacity to underpin more robust budgeting.

Enhanced Debt management capacity in Finance Division.

Advanced budgeting and expenditure management through MTBF.

Strengthened ministry-level capacities in budget preparation.

Qualitative review of audit report by PAC

Bangladesh’s steps towards enhanced performance for better

accountability

Given the progress described, public opinion poll in the context of Bangladesh is not yet a reality due to the following reasons:

– Limited public awareness about public financial management/budget /planning process- uninformed opinions may not provide valid directions or assessments

– Nascent stage of performance budgetinf with recent completion of MTBF roll out across government, and less than perfect KPIs to measure performance

– No performance monitoring mechanism in place yet; performance audit begun for the first time in only 5 ministries on pilot basis in FY11.

Bangladesh’s steps towards enhanced performance for better

accountability

Intermediate steps being undertaken towards greater performance orientation for accountability:

• Evolving need felt for inclusion of beneficiary/civil society opinion in the budget process:– Pre-budget consultations held by MoF with:

• Members of the Parliamentary Standing Committees,• Representatives from Economic Reporters Forum and NGOs• Editors of electronic and print media• Economists and Professionals • Secretaries of all Ministries/Divisions.

Bangladesh’s steps towards enhanced performance for better

accountability

• Intensive training and ‘champions’ in ministries – Introduction of MTBF, evolving KPIs, and active monitoring– Leadership programs to get top-level engagement on performance: reform/training

programs e.g. Managing at the Top (MAT)

• Strengthening and spread of IFMIS to line ministries to enhance accountability

• Annual monitoring of the progress of the Five Year Plan involving all ministries and economists.

• Quarterly review of the utilization of the Annual Development Programme (ADP) which is the development budget; still consistently underutilized due to implementation problems.