RBB Summary
CoP- MfDRAfrica–Francophone Group
Summary of the Second Discussion
Results-Based Budgeting
Started: August 4,2008Ended:November5, 2008
Number of contributors (excluding the facilitators): five members actively participated
Total number of the group: 23
On August 4, the facilitators opened the Francophone discussions on “Results-Based Budgeting” under “Results-Based Management (RBM).”
Most of the contributions were made in August. A number of responses were also received in October 2008.
The series of exchanges began with an introductory message from the facilitators. In this message, the facilitatorsdrew on the discussions in English on the same theme and presented a series of basic questions to encourage members to respond:
- Does the medium-term outlook (necessary for achievement of development results) also entail a medium-term allocation of resources?
- What has been your experience with the links between planning (National Development Plan) and budgeting (including synchronization between the two)?
- What has been your experience with regard to the skills required for results-based budgeting?
- Do you have specific experiences to share with your colleagues regarding results-based budgeting (case studies, especially at the country/national level)?
The summary of the discussion below follows these four questions.
- Does the medium-term outlook (necessary for achievement of development results) also entail a medium-term allocation of resources?
A number of the features of a rather traditional public finance management system in Africa (and elsewhere) mentioned by colleagues were as follows:
Routine in annual budgeting;
Financial services that determine resource allocation(without too much consideration given to the requirements ofthe ministries and technical institutions);
Budgetsand action plans considered to be separate components and prepared by either technical (planning) or financial (budget) specialists, but rarely both;
In accordance with the legislation in force, budgets include detailed appropriations based on administrative, economic, and/or functional (nomenclature) classification. Indications on the expected results are often not provided (classification: programbudgets).“In most African countries, budgets are prepared on the basis of previousexpenditures…Possible variations in budgets are not substantiated by work plans (or programs) prepared based onthe results to be achieved.”
It is therefore incumbent on the operators to manage with the allocated resources, which does not strengthen results-based management.
Public finance management reforms are currently underway in almost all Francophone African countries, including initiatives to develop the Medium-Term Expenditure Framework (MTEF) and program budgets.
Several contributors stressed the importance of these reforms for RBM:
“The development of the MTEF and the program budgets can help our States and our services achieve and adapt results-based management.”
It is clear that the experiences vary.
In a number of countries, RBM is at the stage where concepts, principles, and tools are being disseminated, with variousadoptions in a number of programs and institutions.
In Niger, initiatives to develop the MTEF based on the priority action plan of the Poverty Reduction Strategy are underway.However, difficulties exist because the priority sectors for this strategy lack sectoral policies and action plans. This undoubtedly hampers the development of program budgets.
RBM is relatively recent in Morocco (2002). While the Ministry of Finance plays a very important role, ownership on the part of the relevant departments is lacking.
These two experiences underscore the fact that as long as the various departments fail to rigorously adopt results-based planning (sectoral policies-sectoral strategies-programs/action plans), it will continue to be difficult to align RBM with resource allocation.
The adoption of this results-based planning process and the related budgeting approach is contingent on, among other things:
-Capable leadership to promote RBM within the departments;
-Ownership by the operators;
-An appropriate initial planningframework (tools, methods); and
-Sufficient flexibility and reprogramming meetings.
- What has been your experience with the links between planning (National Development Plan) and budgeting (including synchronization between the two)?
Although the adoption of results-based planning is a prerequisite for results-based budgeting, the budget is not always necessarily fully synchronized with the plan. The LUCOP (program to combat poverty in rural areas) program in Niger is an experience worthy of note in this context.
The LUCOP planning system is results-based. The program has clear and specific definitions of the expected development results for the entire program (12 years), as well as for each phase of an operation plan designed for each three-year phase and an overall budget for the program.
However, the program does not have a “very specific budget for the phases.” “As it is part of a program system, we have projections for the budget for each phase underway, but are in no way bound to necessarily adhere to this budget(flexibility!). In light of the view that the budget should not limit the required actions, the team possesses a certain flexibility to reallocate resources. In general, the budget team’s figure ranges from between 95 and 110 percent of annual consumption with respect to budget projections.”
While this approach could clearly be effective for a specific program, it is not easily applicable at the national level (public finance management: interdependence among the various ministries/departments!).
- What has been your experience with regard to the skills required for results-based budgeting?
In Niger, the RBM process is being launched by the Ministry of Economy and Finance through the General Directorate of Development Program Assessment [Direction Générale de l'Evaluation des Programmes de Développement]. This directorate is “a part of the RBM process” through monitoring and evaluation, which is perfectly compatible with its mandate. The budgeting stage is even more complex, especially at the central level, because it has a direct bearing on the level of preparation of the country’s budget law.
Moreover, as indicated by a number of colleagues, it would be difficult to develop a results-based MTEF, as long as the capacities of the technical ministries have not been strengthened in the area of results-based management, particularly with respect to planning and budgeting.
Planning Skills
The need for a results-based planning system (sectoral policies-sectoral strategies-programs/action plans) definitely requires relevant skills. Although the results chain is a simple concept, its definition is, at the same time, very complex. The complexity involved in the proper formulation of objectives, indicators, and so forthrequires planning skills. A good suggestion was made to increase sharing of objectives/indicatorsby sector.Although results-based planning is difficult, it does not appear to pose the key challenge.
Planning–budgeting links and the relevant skills
Given that the budget and action plan have long been considered individual components, budget preparation was separated from actual planning.
True results-based budgeting requires (re)linkage of the planning and budgeting process. Effectivenegotiations during this process areessential. To this end, it is necessary for the technical ministries in question to have technical experts, not only in the area of planning, but who also, at a minimum,have a general understanding of budgeting. At the same time, specialists from the Ministry of Finance should be capable of discussing budgetary issues with these technical experts. This knowledge of budgetary issues (results-based management framework: program budget) is needed to help steer discussions in the right direction during budget negotiations. This will therefore enable the operators to obtain resources for their policies or lower their expectations in a carefully thought-out manner.
- Do you have specific experience to share with your colleagues regarding results-based budgeting (case studies, especially at the country/national level)?
Various colleagues made the following observations:
Results-based planning, including budgeting,must be carried out by following the “results chain,” which establishes a top-down relationship for effects, outputs, activities, and then inputs.
First, this requires sound results-based planning (results chains for policies-strategies-programs/action plans) at the national level and in the technical departments.
Budgeting first takes place at the strategic level (indicative budgeting) and at the operational planning level (budgeting, by service/results to be provided, linked directly to the activities to be conducted).As emphasized above, effective negotiations between these two levels are essential.
This requires a dynamic and iterative bottom-up and top-down system. Management (policymakers) has the capacity to reconcile results with the resources to be put in place. And the decisions made by the operators are guided by objectivity and needs. They are the true coordinatorsworking within the limits of the tools at their disposal (including mobilizable resources).
Once the budget is approved, its implementation has significant dynamic aspects. RBM requires an approach that calls forregular reappraisals, sound risk management (which I find is still very underdeveloped with respect to development (cooperation) efforts!), and sufficient flexibility to reallocate resources when needed. Legislation as well as the procedures in place often complicate (or sometimes render impossible) this flexibility.
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