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INTRODUCING RESULTS-BASED INTRODUCING RESULTS-BASED APPROACHES INTO PUBLIC SECTOR APPROACHES INTO PUBLIC SECTOR MANAGEMENT PROCESSES: MANAGEMENT PROCESSES: The Philippine Experience 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 Marrakech, Morocco 05 February 2004

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Page 1: INTRODUCING RESULTS-BASED APPROACHES INTO PUBLIC SECTOR MANAGEMENT PROCESSES: The Philippine Experience INTRODUCING RESULTS-BASED APPROACHES INTO PUBLIC

INTRODUCING RESULTS-BASEDINTRODUCING RESULTS-BASEDAPPROACHES INTO PUBLIC SECTORAPPROACHES INTO PUBLIC SECTOR

MANAGEMENT PROCESSES:MANAGEMENT PROCESSES:The Philippine ExperienceThe Philippine Experience

INTRODUCING RESULTS-BASEDINTRODUCING RESULTS-BASEDAPPROACHES INTO PUBLIC SECTORAPPROACHES INTO PUBLIC SECTOR

MANAGEMENT PROCESSES:MANAGEMENT PROCESSES:The Philippine ExperienceThe Philippine Experience

A Paper Presented by

SECRETARY EMILIA T. BONCODINDepartment of Budget and Management

Philippines

2nd International Roundtable on Managing for Development ResultsMarrakech, Morocco

05 February 2004

Page 2: INTRODUCING RESULTS-BASED APPROACHES INTO PUBLIC SECTOR MANAGEMENT PROCESSES: The Philippine Experience INTRODUCING RESULTS-BASED APPROACHES INTO PUBLIC

RESULTS-BASED APPROACH:RESULTS-BASED APPROACH:Major Element ofMajor Element of

Philippine Public Sector ManagementPhilippine Public Sector Management

Reform ProgramReform Program

RESULTS-BASED APPROACH:RESULTS-BASED APPROACH:Major Element ofMajor Element of

Philippine Public Sector ManagementPhilippine Public Sector Management

Reform ProgramReform Program

Department of Budget and Management

Republic of the Philippines

Page 3: INTRODUCING RESULTS-BASED APPROACHES INTO PUBLIC SECTOR MANAGEMENT PROCESSES: The Philippine Experience INTRODUCING RESULTS-BASED APPROACHES INTO PUBLIC

PUBLIC SECTOR MANAGEMENT PUBLIC SECTOR MANAGEMENT REFORM PROGRAMREFORM PROGRAM

PUBLIC SECTOR MANAGEMENT PUBLIC SECTOR MANAGEMENT REFORM PROGRAMREFORM PROGRAM

operational leakages

weak corporate and regulatory environment

weak public institutions and enforcement

poor incentive structures

slow response capability to changing situations and needs

inadequate resources for basic services

deteriorating fiscal position

slow and unstable growth

poverty

To address key dysfunctions:

Department of Budget and Management

Republic of the Philippines

Page 4: INTRODUCING RESULTS-BASED APPROACHES INTO PUBLIC SECTOR MANAGEMENT PROCESSES: The Philippine Experience INTRODUCING RESULTS-BASED APPROACHES INTO PUBLIC

PUBLIC EXPENDITURE MANAGEMENT:PUBLIC EXPENDITURE MANAGEMENT:DESIRED RESULTSDESIRED RESULTS

PUBLIC EXPENDITURE MANAGEMENT:PUBLIC EXPENDITURE MANAGEMENT:DESIRED RESULTSDESIRED RESULTS

To reduce poverty by creating investment and job opportunities through:

a) Addressing the inadequacy of resources for basic services

b) Arresting the deteriorating fiscal position

Department of Budget and Management

Republic of the Philippines

Page 5: INTRODUCING RESULTS-BASED APPROACHES INTO PUBLIC SECTOR MANAGEMENT PROCESSES: The Philippine Experience INTRODUCING RESULTS-BASED APPROACHES INTO PUBLIC

PUBLIC EXPENDITURE MANAGEMENT:PUBLIC EXPENDITURE MANAGEMENT:FOCUS ON RESULTSFOCUS ON RESULTS

PUBLIC EXPENDITURE MANAGEMENT:PUBLIC EXPENDITURE MANAGEMENT:FOCUS ON RESULTSFOCUS 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

Department of Budget and Management

Republic of the Philippines

Page 6: INTRODUCING RESULTS-BASED APPROACHES INTO PUBLIC SECTOR MANAGEMENT PROCESSES: The Philippine Experience INTRODUCING RESULTS-BASED APPROACHES INTO PUBLIC

PUBLIC EXPENDITURE MANAGEMENTPUBLIC EXPENDITURE MANAGEMENTFRAMEWORKFRAMEWORK

PUBLIC EXPENDITURE MANAGEMENTPUBLIC EXPENDITURE MANAGEMENTFRAMEWORKFRAMEWORK

Fiscal Discipline

Allocative Efficiency

Operational Efficiency

Department of Budget and Management

Republic of the Philippines

Page 7: INTRODUCING RESULTS-BASED APPROACHES INTO PUBLIC SECTOR MANAGEMENT PROCESSES: The Philippine Experience INTRODUCING RESULTS-BASED APPROACHES INTO PUBLIC

MAJOR REFORM INITIATIVESMAJOR REFORM INITIATIVESMAJOR REFORM INITIATIVESMAJOR REFORM INITIATIVES

OUTCOMEOUTCOME

INSTRUMENTINSTRUMENT

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)

Department of Budget and Management

Republic of the Philippines

Page 8: INTRODUCING RESULTS-BASED APPROACHES INTO PUBLIC SECTOR MANAGEMENT PROCESSES: The Philippine Experience INTRODUCING RESULTS-BASED APPROACHES INTO PUBLIC

Major Reform Initiatives…Major Reform Initiatives…Major Reform Initiatives…Major Reform Initiatives…

OUTCOMEOUTCOME

INSTRUMENTINSTRUMENT

Operational Efficiency Sectoral Effectiveness and Efficiency Review (SEER)

Agency Performance Review (APR)

Procurement reform

Installation of new government accounting system and auditing procedures

Department of Budget and Management

Republic of the Philippines

Page 9: INTRODUCING RESULTS-BASED APPROACHES INTO PUBLIC SECTOR MANAGEMENT PROCESSES: The Philippine Experience INTRODUCING RESULTS-BASED APPROACHES INTO PUBLIC

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

Major Reform Initiatives…Major Reform Initiatives…Major Reform Initiatives…Major Reform Initiatives…

Department of Budget and Management

Republic of the Philippines

Page 10: INTRODUCING RESULTS-BASED APPROACHES INTO PUBLIC SECTOR MANAGEMENT PROCESSES: The Philippine Experience INTRODUCING RESULTS-BASED APPROACHES INTO PUBLIC

MEDIUM-TERM EXPENDITURE MEDIUM-TERM EXPENDITURE FRAMEWORKFRAMEWORK

MEDIUM-TERM EXPENDITURE MEDIUM-TERM EXPENDITURE FRAMEWORKFRAMEWORK

Medium-TermPhilippine

Development Plan

Medium-TermFiscal Plan

Annual Budget

Medium-TermPublic Investment

Program

OrganizationalPerformance

Indicator Framework

AgencyPerformanc

eReview

SectoralEffectivenes

s and Efficiency Review

Incentive Structure

FISCAL INVESTMENT

Page 11: INTRODUCING RESULTS-BASED APPROACHES INTO PUBLIC SECTOR MANAGEMENT PROCESSES: The Philippine Experience INTRODUCING RESULTS-BASED APPROACHES INTO PUBLIC

MEDIUM-TERM FISCAL PLAN:MEDIUM-TERM FISCAL PLAN:FEATURESFEATURES

MEDIUM-TERM FISCAL PLAN:MEDIUM-TERM FISCAL PLAN:FEATURESFEATURES

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 BillDepartment of Budget and Management

Republic of the Philippines

Page 12: INTRODUCING RESULTS-BASED APPROACHES INTO PUBLIC SECTOR MANAGEMENT PROCESSES: The Philippine Experience INTRODUCING RESULTS-BASED APPROACHES INTO PUBLIC

MEDIUM-TERM FINANCIAL PLAN:MEDIUM-TERM FINANCIAL PLAN:HIGHLIGHTSHIGHLIGHTS

MEDIUM-TERM FINANCIAL PLAN:MEDIUM-TERM FINANCIAL PLAN:HIGHLIGHTSHIGHLIGHTS

Department of Budget and Management

Republic of the Philippines

2003 2004 2005 2006 2007 2008 2009

NG Deficit (% of GDP) 4.6 4.2 3.6 2.9 2.1 1.2 0.2

Public Investment (% of GDP)(Capital projects) 2.7 2.2 1.8 2.0 1.9 2.1 2.2

Public Debt to GDP ratio (NG Outstanding Debt) 69.1 66.9 65.1 63.1 61.5 58.1 55.0

Particulars

Page 13: INTRODUCING RESULTS-BASED APPROACHES INTO PUBLIC SECTOR MANAGEMENT PROCESSES: The Philippine Experience INTRODUCING RESULTS-BASED APPROACHES INTO PUBLIC

MEDIUM-TERM MEDIUM-TERM PUBLIC INVESTMENT PROGRAMPUBLIC INVESTMENT PROGRAM

MEDIUM-TERM MEDIUM-TERM PUBLIC INVESTMENT PROGRAMPUBLIC INVESTMENT PROGRAM

Sectoral investment requirements over 6 years

Published major sectoral investment programs

Alternative financing modes for specific projects

Department of Budget and Management

Republic of the Philippines

Page 14: INTRODUCING RESULTS-BASED APPROACHES INTO PUBLIC SECTOR MANAGEMENT PROCESSES: The Philippine Experience INTRODUCING RESULTS-BASED APPROACHES INTO PUBLIC

MEDIUM-TERM MEDIUM-TERM PUBLIC INVESTMENT PROGRAMPUBLIC INVESTMENT PROGRAM

MEDIUM-TERM MEDIUM-TERM PUBLIC INVESTMENT PROGRAMPUBLIC INVESTMENT PROGRAM

Department of Budget and Management

Republic of the Philippines

0

50

100

150

200

2003 2004 2005 2006 2007 2008 2009

In B

illio

n P

es

os

Total CO ODA Others

Page 15: INTRODUCING RESULTS-BASED APPROACHES INTO PUBLIC SECTOR MANAGEMENT PROCESSES: The Philippine Experience INTRODUCING RESULTS-BASED APPROACHES INTO PUBLIC

ORGANIZATIONAL PERFORMANCEORGANIZATIONAL PERFORMANCEINDICATOR FRAMEWORK: GOALSINDICATOR FRAMEWORK: GOALSORGANIZATIONAL PERFORMANCEORGANIZATIONAL PERFORMANCEINDICATOR FRAMEWORK: GOALSINDICATOR 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

Department of Budget and Management

Republic of the Philippines

Page 16: INTRODUCING RESULTS-BASED APPROACHES INTO PUBLIC SECTOR MANAGEMENT PROCESSES: The Philippine Experience INTRODUCING RESULTS-BASED APPROACHES INTO PUBLIC

ORGANIZATIONAL PERFORMANCEORGANIZATIONAL PERFORMANCEINDICATOR FRAMEWORK:INDICATOR FRAMEWORK:

PROCESSPROCESS

ORGANIZATIONAL PERFORMANCEORGANIZATIONAL PERFORMANCEINDICATOR FRAMEWORK:INDICATOR FRAMEWORK:

PROCESSPROCESS

Identification of desired outputs and outcomes

Agency; Oversight

MAJOR 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 MFOsDepartment of Budget and Management

Republic of the Philippines

Page 17: INTRODUCING RESULTS-BASED APPROACHES INTO PUBLIC SECTOR MANAGEMENT PROCESSES: The Philippine Experience INTRODUCING RESULTS-BASED APPROACHES INTO PUBLIC

Organizational Performance IndicatorOrganizational Performance IndicatorFramework: Process…Framework: Process…Organizational Performance IndicatorOrganizational Performance IndicatorFramework: Process…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

Department of Budget and Management

Republic of the Philippines

Page 18: INTRODUCING RESULTS-BASED APPROACHES INTO PUBLIC SECTOR MANAGEMENT PROCESSES: The Philippine Experience INTRODUCING RESULTS-BASED APPROACHES INTO PUBLIC

ORGANIZATIONAL PERFORMANCEORGANIZATIONAL PERFORMANCEINDICATOR FRAMEWORK:INDICATOR FRAMEWORK:

Example: LTOExample: LTO

ORGANIZATIONAL PERFORMANCEORGANIZATIONAL PERFORMANCEINDICATOR FRAMEWORK:INDICATOR FRAMEWORK:

Example: LTOExample: 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

Department of Budget and Management

Republic of the Philippines

Page 19: INTRODUCING RESULTS-BASED APPROACHES INTO PUBLIC SECTOR MANAGEMENT PROCESSES: The Philippine Experience INTRODUCING RESULTS-BASED APPROACHES INTO PUBLIC

ORGANIZATIONAL PERFORMANCEORGANIZATIONAL PERFORMANCEINDICATOR FRAMEWORK:INDICATOR FRAMEWORK:

STATUSSTATUS

ORGANIZATIONAL PERFORMANCEORGANIZATIONAL PERFORMANCEINDICATOR FRAMEWORK:INDICATOR FRAMEWORK:

STATUSSTATUSAgencies 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

Department of Budget and Management

Republic of the Philippines

Page 20: INTRODUCING RESULTS-BASED APPROACHES INTO PUBLIC SECTOR MANAGEMENT PROCESSES: The Philippine Experience INTRODUCING RESULTS-BASED APPROACHES INTO PUBLIC

SECTOR EFFECTIVESS AND SECTOR EFFECTIVESS AND EFFICIENCY REVIEW: EFFICIENCY REVIEW:

FEATURESFEATURES

SECTOR EFFECTIVESS AND SECTOR EFFECTIVESS AND EFFICIENCY REVIEW: EFFICIENCY REVIEW:

FEATURESFEATURES

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

Department of Budget and Management

Republic of the Philippines

Page 21: INTRODUCING RESULTS-BASED APPROACHES INTO PUBLIC SECTOR MANAGEMENT PROCESSES: The Philippine Experience INTRODUCING RESULTS-BASED APPROACHES INTO PUBLIC

SECTORAL EFFECTIVENESS ANDSECTORAL EFFECTIVENESS ANDEFFICIENCY REVIEW:EFFICIENCY REVIEW:

PROCESSPROCESS

SECTORAL EFFECTIVENESS ANDSECTORAL EFFECTIVENESS ANDEFFICIENCY REVIEW:EFFICIENCY REVIEW:

PROCESSPROCESS

Consultations: agencies; stakeholders; funding agencies

Presentation of Results and Recommendations

Approval of Cabinet Committee

Input to Updated Development Plan, Public Investment Program, Budget

Department of Budget and Management

Republic of the Philippines

Page 22: INTRODUCING RESULTS-BASED APPROACHES INTO PUBLIC SECTOR MANAGEMENT PROCESSES: The Philippine Experience INTRODUCING RESULTS-BASED APPROACHES INTO PUBLIC

SECTORAL EFFECTIVENESS ANDSECTORAL EFFECTIVENESS ANDEFFICIENCY REVIEW:EFFICIENCY REVIEW:

ResultsResults

SECTORAL EFFECTIVENESS ANDSECTORAL EFFECTIVENESS ANDEFFICIENCY REVIEW:EFFICIENCY REVIEW:

ResultsResults

Cancel excess financing (6)

Terminate projects or remaining components of projects (1)

Restructure projects, including loans (30)

Proceed (68)

Department of Budget and Management

Republic of the Philippines

Page 23: INTRODUCING RESULTS-BASED APPROACHES INTO PUBLIC SECTOR MANAGEMENT PROCESSES: The Philippine Experience INTRODUCING RESULTS-BASED APPROACHES INTO PUBLIC

AGENCY PERFORMANCE REVIEWAGENCY PERFORMANCE REVIEWAGENCY PERFORMANCE REVIEWAGENCY PERFORMANCE REVIEW

Short term review of revenue and expenditure performance vis-à-vis budget targets

Ranking of Agency Budget Performance and public reporting

Department of Budget and Management

Republic of the Philippines

Page 24: INTRODUCING RESULTS-BASED APPROACHES INTO PUBLIC SECTOR MANAGEMENT PROCESSES: The Philippine Experience INTRODUCING RESULTS-BASED APPROACHES INTO PUBLIC

AGENCY PERFORMANCE REVIEW:AGENCY PERFORMANCE REVIEW:RESULTSRESULTS

AGENCY PERFORMANCE REVIEW:AGENCY PERFORMANCE REVIEW:RESULTSRESULTS

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

Department of Budget and Management

Republic of the Philippines

Page 25: INTRODUCING RESULTS-BASED APPROACHES INTO PUBLIC SECTOR MANAGEMENT PROCESSES: The Philippine Experience INTRODUCING RESULTS-BASED APPROACHES INTO PUBLIC

INCENTIVE STRUCTURESINCENTIVE STRUCTURESINCENTIVE STRUCTURESINCENTIVE 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)

Department of Budget and Management

Republic of the Philippines

Page 26: INTRODUCING RESULTS-BASED APPROACHES INTO PUBLIC SECTOR MANAGEMENT PROCESSES: The Philippine Experience INTRODUCING RESULTS-BASED APPROACHES INTO PUBLIC

KEY ACCOMPLISHMENTS TO DATEKEY ACCOMPLISHMENTS TO DATEKEY ACCOMPLISHMENTS TO DATEKEY ACCOMPLISHMENTS TO DATEA. 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

Department of Budget and Management

Republic of the Philippines

Page 27: INTRODUCING RESULTS-BASED APPROACHES INTO PUBLIC SECTOR MANAGEMENT PROCESSES: The Philippine Experience INTRODUCING RESULTS-BASED APPROACHES INTO PUBLIC

Key Accomplishments to Date…Key Accomplishments to Date…Key Accomplishments to Date…Key Accomplishments to Date…

B. 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)

Department of Budget and Management

Republic of the Philippines

Page 28: INTRODUCING RESULTS-BASED APPROACHES INTO PUBLIC SECTOR MANAGEMENT PROCESSES: The Philippine Experience INTRODUCING RESULTS-BASED APPROACHES INTO PUBLIC

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)

Key Accomplishments to Date…Key Accomplishments to Date…Key Accomplishments to Date…Key Accomplishments to Date…

Department of Budget and Management

Republic of the Philippines

Page 29: INTRODUCING RESULTS-BASED APPROACHES INTO PUBLIC SECTOR MANAGEMENT PROCESSES: The Philippine Experience INTRODUCING RESULTS-BASED APPROACHES INTO PUBLIC

CHALLENGESCHALLENGESCHALLENGESCHALLENGES

Department of Budget and Management

Republic of the Philippines

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

Page 30: INTRODUCING RESULTS-BASED APPROACHES INTO PUBLIC SECTOR MANAGEMENT PROCESSES: The Philippine Experience INTRODUCING RESULTS-BASED APPROACHES INTO PUBLIC

MOVING FORWARDMOVING FORWARDMOVING FORWARDMOVING FORWARD

2004 2005 2006 2007

limitedbudgetautonomy

compensationreview

reengineeringthe bureaucracy

expandedbudget autonomy

Initial implementationof

compensationreform

Reengineeringthe bureaucracy

PEM substantially operations

Alignment of agency with individual

performance

PEM fully

operational

Department of Budget and Management

Republic of the Philippines

Page 31: INTRODUCING RESULTS-BASED APPROACHES INTO PUBLIC SECTOR MANAGEMENT PROCESSES: The Philippine Experience INTRODUCING RESULTS-BASED APPROACHES INTO PUBLIC

THANK YOU !!!THANK YOU !!!THANK YOU !!!THANK YOU !!!

Republic of the Philippines