Full Discussion Notes

Opening and Keynote (chaired by Jargal Dambadarjaa)

1. Opening remarks by Bruce Purdue, Head of ADB’s Results Management Unit; Kishore Mahbubani, Dean of LKYSPP; Rolly Tungpalan, member of the CoP-MfDR Interim Coordinating Committee (ICC); and Lynne Henderson, DFID. Remarks centered on the progress of the CoP-MfDR, Singapore as an example of MfDR, and the common mission of capacity building in Asia-Pacific countries.

2. Keynote speech by Ravi Menon, Deputy Secretary of the Singapore Ministry of Finance. Themes of keynote speech:

  • Doing the right things: Are the results appropriate for people in a constantly changing world? Ravi Menon mentioned the trilemma in public policy, where trade-offs must be made to strike a balance between economic efficiency, social justice and individual liberty. In Singapore, the government has identified its three strategic outcomes to be: 1) opportunity; 2) community; and 3) security. This provides the backdrop for understanding results-based management especially in fiscal policy. The Balanced Scorecard Approach works because it makes the tradeoffs explicit. Singapore’s Whole of Government Balanced Scorecard focuses on operating outcomes that will benefit citizens: 1) processes (customer-centric, government, value for money, consultation with private sector); 2. people in public sector (forward-looking leadership, competent, incorruptible); 3. finance (med-term fiscal sustainability, balance).

The phases of Singapore’s economic growth were discussed in the context of doing the right things in an ever-changing world. Singapore uses the Blue Ocean approach: If the “Red Sea” is the world we live in or the existing market space, the country aims to move to the “Blue Ocean” by creating a new market, finding new customers, and competing on value rather than cost.

  • Doing things right: What is the most efficient, effective way? Discussion of the evolution of Singapore’s budgeting system from focusing on control and discipline (1970s-1980s) to performance and results (1990s) to flexibility and economy (2000s). Block vote budgeting was established in the 1990s, emphasizing performance and results. The budget management framework was set in 2000 under the following principles: 1) establish limits; 2) maximize discretion; 3) measure costs; and 4) manage for excellence. The budget management framework provides incentives to achieve savings, as well as resource management flexibility.
    Monitoring and evaluation takes place during: 1) annual strategic reviews at the beginning of each year to discuss each ministry’s strategies and needs; 2) sectoral budget meetings where ministries are brought together to discuss overlaps; and 3) budget review meetings.
  • Measure the right things and measure things right. Measurement is done using the Ministry Report Card, a template that, when filled out, summarizes each ministry’s performance on a sheet of A3 paper. The Report Card covers the following areas: 1) performance highlights, which focus on balanced scorecard strategic outcomes; 2) key performance indicators, which focus on the ministry’s own operating outcomes; 3) resource management or budget marksmanship; 4) organizational excellence; and 5) key strategies and initiatives for the future.

3. Questions and points raised:

  • What is the role of Parliament in planning and budgeting? In allowing innovations like net budgeting, where ministries are allowed to keep their savings and efficiency gains, did you face legal/constitutional complications? Parliament debates by going through each ministry’s expenditure estimates, but it does not have line-item veto powers like the US Congress. While each ministry has some leeway in terms of budget specifics, overall, it must make sense for Parliament. Parliament can also publicly criticize how some ministries spend their money, as in the case of very opulent government buildings, which in turn caused a mild public outcry and resulted in cost and space norms for public buildings. In the case of net budgeting, it is only allowed in instances where fees or charges are quite small, e.g. registration/licensing fees, where ministries can recover costs without overcharging or coercing the public. Net budgeting is not allowed for major revenue sources such as road taxes.
  • In the evolution of Singapore's budget systems, what are the attendant conditions going from one phase to the next? Is it necessary for less developed countries to go through each stage that Singapore did?

This depends on the conditions and capabilities in the country, both internal as well as external. For example, ministries need capabilities to exercise financial management skills; therefore, some amount of control is necessary before they can exercise greater freedom in budgeting, as in the case of block budgeting. Incentive structures must be in place, and frameworks need to be present. Even now, there are misplaced priorities in Singapore despite frameworks being present for block budgeting.

  • As your nation gets older, you seem to be very serious about not running a budget deficit. If you have resources to pay back public debt, why not go for deficit budget?
    The government believes that while the population is young and economic growth is rapid, the country must resist the temptation to spend on social expenditures—similar to the individual's life cycle of saving for retirement during one's working years. Because of this, Singapore has accumulated a fair amount of foreign assets/reserves that function as an endowment. There is actually always a deficit, but because investment income from these reserves is larger than the debt servicing cost, there’s an extra10% of GDP to cover the deficit. Singapore will probably run larger deficits in the future.
  • Regarding reinvestment funds and creating incentives for innovation in ministries, does the MoF have resources to lend out to ministries for developing innovative projects? How are these innovations kept in line with the priorities of the country?

A good part of reinvestment fund is used to promote pilot projects where the ministry is not sure if idea will work, but it’s exciting, new, and scalable. An example is a centralized database medical records for the citizenry, Which is being piloted in a small location with limited pool of people.

  • Regarding public-private partnerships, are ministries populated by people who understand and promote this?

People are not yet experts in this area. This is quite new even in other countries at the forefront of the concept. Singapore's position on this is to learn by doing, staring with one or two contracts to see how it can be applied to other projects. It has been necessary to employ consultants, especially in the legal field to deal with legal risks. Looking at the experience of other countries, legal risks are larger than financial ones because banks already have a sophisticated credit assessment system. An example is a public-private partnership for a water desalinization plant where some quality conditions may be difficult to foresee far into the future. Also, there are varying degrees of enthusiasm in different ministries. In the case of a proposed PPP for a hospital, for example, it was decided that there were too many details to control for a PPP to work.

  • Since capacity building and RBM is a gradual process, how do you design the right sequencing of RBM?
    KPIs must not be evergreen and must be reviewed periodically. KPIs that are consistently green are dropped either because they are irrelevant or have become part and parcel of the ministry's basic function. As an example, the infant mortality rate is now one of the lowest in the world and is no longer a meaningful KPI. This needed to be changed to health-adjusted life expectancy; i.e. how long in your life are you healthy? This became more meaningful in light of the health cost implications of unhealthy citizens.
  • What are the procedures and regulations that govern Singapore's principle of maximizing discretion within established limits?

Ministries practice a 90-110% cost recovery ratio, and if there is a subsidy (as in the case of burial sites), the subsidy has to be explicit and reflected separately.

  • How does the government ensure accountability and control?

The MoF may pull back funding from projects that don't work. Any program that involves a subsidy or grant also has to return to the MoF. There are cost and space norms for public buildings. In the case of large development projects, anything above a certain amount comes in for line-item budgeting. The MoF assesses whether a project is "worthy" for funding; otherwise, the ministry is told to find funding within its block budget. An example is the request for a retractable room for a sports stadium being constructed. The MoF asked for a justification of the additional cost in the projected number of rainy days per year. However, there is no point in trying to control every last dollar. This is the job of the implementing ministry. There are annual strategic meetings where they account for their KPIs.

  • Does the MoF have a website that provides more information and learning resources?
    The MoF has a website, but it is not dedicated to learning. Will check will colleagues where users can go for descriptions of framework, etc.

Theme 1: Linking Planning and Budgeting (chaired by Juanita Amatong)

  1. Summary. The chair summarized the discussion on this topic that took place in the CoP-MfDR website. The discussion focused on the following key areas: 1) role delineation between planning and budgeting organizations; 2) establishing linkages between monitoring and evaluation findings and annual programming; 3) the purchaser-provider concept; 4) civil service reform; 5) incentives; 6) accountability; and 7) country experiences.

2. Presentation: Teertha Dhakal then encapsulated Nepal’s entire process of linking planning and budgeting before tackling the specific process in the education sector. He presented an overview of Nepal’s results initiatives, including government leadership, introduction of tools, pilot projects, and regular redefinition.

  • In Nepal, the main instruments that link planning (done by the National Planning Commission) and budgeting (done by the Ministry of Finance) are the Medium Term Expenditure Framework (MTEF) and the business plan. These instruments have been able to link project outputs with Nepal’s Poverty Reduction Strategy Paper (PSRP) outcomes, aid in prioritizing projects, develop more predictable and realistic budgets, increase per-project allocations, and create a more participatory environment.
  • The education sector was then presented as an example, showing an increase in the education sector budget over five years. The education sector business plan, with indicators and provisions for harmonizing donor support, establishes the link between project level outputs/outcomes with the PSRP.
  • Results monitoring is done through two large household surveys, and an information management system is being strengthened for this purpose.
  • There are sectoral and institutional incentives in place, but individual incentive remains the missing link.
  • In terms of capacity, the MTEF only covered five ministries, but after three years grew to cover all ministries. Working groups are being formed to create institutional memory, along with in-country trainings.
  • Challenges and risks were identified to include the disruption of the MTEF when donor funding does not come in as planned; protectionism; poor internalization of the business plan; and low commitment at the policy level due to political instability.

3. Panel discussion: Panelist Arastoo Khan made the following observations about the presentation: Nepal’s MTEF looks stable and sustainable, and pro-poor expenditure as a percentage of GDP has increased; parallel planning should be eliminated; coordination between departments should be strengthened to lower the risk of ring-fencing.

Bangladesh, like most South Asian countries, has similar planning and budgeting arrangements as the Soviet Union central planning system. Like Nepal, it also faces the challenge of inadequate resources, especially with regards to foreign assistance. Other obstacles include inadequate capacity, separation of organizations, and the need for ownership by top management. Despite these, the country has established the following initiatives to link planning and budgeting:

  • Medium-term public expenditure management system
  • National strategy for accelerated poverty reduction (now a published document)
  • Medium Term Budget Framework (MTBF), which addresses many issues in traditional budgeting systems
  • Budget working committee that prepares ministry budget frameworks and links policies to resource allocations to frameworks
  • Medium-term macro framework to ensure fiscal discipline

Second panelist Winston Tan discussed the fundamental reality of resource management: there will never be enough money. Instead of saying “we don’t have enough money,” officials should instead answer the question “how can we achieve our goals given the amount of money we do have?” In Singapore, the Ministry of Finance takes a very strategic role and clarifies outcomes at the beginning of each year before the release of funds. Best practices in linking planning and budgeting include:

  • Not linking budgets to outputs
  • Building in processes to ensure that all expenditure goes towards achieving outcomes
  • Balanced scorecard approach and other effective private sector tools (e.g. ISO, Six Sigma)

The country follows a simple strategy for translating inputs to outcomes: each ministry lists down all initiatives and only receives funding for a percentage of the total. This forces ministries to prioritize and divert savings to essential projects.

Third panelist Ronnie Dasgupta noted that the accountability system in most countries is the key stumbling block. Easy ways to improve accountability, even for countries not used to systems, include: NGO or university-run customer surveys; establishing a supreme audit institution; and introducing budget caps at the start of any spending ministry’s medium-term planning.

The second problem is that spending ministries, while concerned about the effectiveness of their spending, are not cost efficient. Based on Singapore’s experience, the lesson is that ministries should focus on processes: managing for excellence, best-sourcing and examining public-private partnerships.

In response to the Nepal presentation, Dasgupta was struck by an early statement on “sunk costs” making it difficult to close projects. Economic principles dictate that sunk costs should not matter; instead, the focus should be on what current resources can provide you.

3. Questions and points raised:

  • Role of donors: In many low-income countries, major policies are set not by the government but by donors. Donors are not necessarily coordinated themselves and have different conditions and mechanisms. How to link country’s own resources with donor resources?
  • The credibility of the country system is important; donors need to be confident that plans will work as intended. Pertinent to capacity development, the CoP can act as a conduit in countries to help develop systems that will increase donor confidence.
  • Practice of developed countries may not apply to developing countries, which may not be able to finance its own projects. How to strike a balance between what is attainable and what is aspirational?
  • What role does the financial institution play in monitoring results?
  • In saying that the budget should not be linked to outputs, what is meant is that budget should be linked to results management, with accountability kicking in during the planning cycle.
  • Many issues continue to be unresolved; linking planning and budgeting depends on the country’s development stage, system of government, available capacity, and the role of government audit agencies.

Theme 2: Results-based Monitoring and Evaluation (chaired by Teertha Dhakal)

1. Summary. The chair summarized the discussion on this topic that took place in the CoP-MfDR website. The discussion focused on the following key areas: 1) the quality and quantity of indicators; 2) the usefulness of indicators; 3) the whole results chain; 4) linking planning and budgeting; 5) crucial factors in sustainability.

2. Presentations. The presentations of Tran Thi Hanh and Nguyen Linh Chi presented Vietnam’s progress on results-based management, especially in the field of results-based monitoring and evaluation. Vietnam is now piloting a system from PMU to ODA level that successfully captures information at each stage.

  • With strong commitment from top leadership, and laws in place for MfDR, the country has localized the Paris Declaration in the Hanoi Core Statement, and the Millennium Development Goals into Vietnam Development Goals. It has developed the Comprehensive Poverty Reduction and Growth Strategies (CPRGS). There is also government and donor harmonization in that the donor-side results-based country strategy paper (RB-CSP) has been developed in consistency with the government’s Social and Economic Development Plan (SEDP).
  • Appropriate M&E systems are being established at project, program and sector levels, with auditing requirements being promoted in all public projects. The Vietnam Australia Monitoring and Evaluation Strengthening Project (VAMES) is introducing M&E frameworks, indicators, guidelines, software data collection and reporting systems into development projects. Vietnam’s ODA monitoring system is a learning process, with IT playing a large role in tool development. It is guided by the need for ease of use, and feeding information back into the grass-roots level. Whereas tools used to monitor only disbursements, they now also monitor processes and performance.
  • RBM incentives: government and donor commitment; decentralization in state management; new aid instruments; and clarity of expected results.
  • Capacity issues: lack of technical capacity is being addressed by donors and government; champion network being established to find more experts in monitoring and not just evaluation; organizational capacity being improved by law and pilot “bloc grant” project for funding certain agencies; behavior capacity is the weakest aspect.

3. Panel discussion: Panelist Xue Yan discussed China’s project to develop a national results-based monitoring and evaluation system for key projects in the country, which was piloted in eight different sectoral projects. Frameworks were presented summarizing how a project would achieve results from input to output, and how outputs would contribute to outcomes and impact. Case studies were presented, and issues on data collection raised. China is seen as having high potential for RB-M&E as it transitions from planned to market economy.