INTRODUCING RESULTSBASED

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INTRODUCING RESULTS-BASED APPROACHES INTO PUBLIC
SECTOR MANAGEMENT PROCESSES The Philippine Expe
rience
A Paper Presented by SECRETARY EMILIA T. BONC
ODIN Department of Budget and Management Philipp
ines 2nd International Roundtable on Managing f
or Development Results Marrakech, Morocco 05 F
ebruary 2004
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RESULTS-BASED APPROACH Major Element of Philipp
ine Public Sector Management
Reform Program
Republic of the Philippines
Department of Budget and Management
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PUBLIC SECTOR MANAGEMENT REFORM PROGRAM
To address key dysfunctions

• inadequate resources for basic services
• deteriorating fiscal position
• slow and unstable growth

• operational leakages
• weak corporate and regulatory environment
• weak public institutions and enforcement
• poor incentive structures
• slow response capability to changing situations
  and needs

poverty
Republic of the Philippines
Department of Budget and Management
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PUBLIC EXPENDITURE MANAGEMENT DESIRED RESULTS

• To reduce poverty by creating investment and job
  opportunities through
  
• Addressing the inadequacy of resources for basic
  services
  
• b) Arresting the deteriorating fiscal position

Republic of the Philippines
Department of Budget and Management
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PUBLIC EXPENDITURE MANAGEMENT FOCUS 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

Republic of the Philippines
Department of Budget and Management
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PUBLIC EXPENDITURE MANAGEMENT FRAMEWORK

• Fiscal Discipline
• Allocative Efficiency
• Operational Efficiency

Republic of the Philippines
Department of Budget and Management
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MAJOR REFORM INITIATIVES
OUTCOME INSTRUMENT Fiscal Discipline Medium T
erm Fiscal Plan (MTFP) Assessment of contingent
liabilities fiscal risks Allocative Efficiency
Medium Term Public Investment Program (MTPIP)
Organizational Performance Indicator Framework
(OPIF)
Republic of the Philippines
Department of Budget and Management
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Major Reform Initiatives
OUTCOME INSTRUMENT Operational Effici
ency Sectoral Effectiveness and Efficiency Review
(SEER) Agency Performance Review (APR) Procu
rement reform Installation of new government ac
counting system and auditing procedures
Republic of the Philippines
Department of Budget and Management
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Major Reform Initiatives
OUTCOME INSTRUMENT Compensation Review
Reengineering the bureaucracy Strengthening key
sector areas judicial reform electoral
campaign reform peace and order campaign reg
ulatory reform Investment in IT and IT-base
d services
Republic of the Philippines
Department of Budget and Management
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MEDIUM-TERM EXPENDITURE FRAMEWORK
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MEDIUM-TERM FISCAL PLAN FEATURES

• 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 Bill

Republic of the Philippines
Department of Budget and Management
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MEDIUM-TERM FINANCIAL PLAN HIGHLIGHTS
Republic of the Philippines
Department of Budget and Management
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MEDIUM-TERM PUBLIC INVESTMENT PROGRAM

• Sectoral investment requirements over 6 years
• Published major sectoral investment programs
• Alternative financing modes for specific projects

Republic of the Philippines
Department of Budget and Management
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MEDIUM-TERM PUBLIC INVESTMENT PROGRAM
Republic of the Philippines
Department of Budget and Management
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ORGANIZATIONAL PERFORMANCE INDICATOR FRAMEWORK G
OALS

• 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

Republic of the Philippines
Department of Budget and Management
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ORGANIZATIONAL PERFORMANCE INDICATOR FRAMEWORK
PROCESS

• Identification of desired outputs and outcomes
• a Agency Oversight
• a 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 MFOs

Republic of the Philippines
Department of Budget and Management
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Organizational Performance Indicator
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
  

Republic of the Philippines
Department of Budget and Management
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ORGANIZATIONAL PERFORMANCE INDICATOR FRAMEWORK
Example LTO
Outcome - Road safety (less incidence of road
accidents) MFO - Licensing services (Drivers
) Performance indicators Quality - of lic
enses issued in accordance with operating
standards client satisfaction
Timeliness - of licenses issued in accordance
with timeliness standards
Republic of the Philippines
Department of Budget and Management
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ORGANIZATIONAL PERFORMANCE INDICATOR FRAMEWORK
STATUS

• Agencies 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

Republic of the Philippines
Department of Budget and Management
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SECTOR EFFECTIVESS AND EFFICIENCY REVIEW FEAT
URES

• 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

Republic of the Philippines
Department of Budget and Management
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SECTORAL EFFECTIVENESS AND EFFICIENCY REVIEW P
ROCESS

• Consultations agencies stakeholders funding
  agencies
  
• Presentation of Results and Recommendations
• Approval of Cabinet Committee
• Input to Updated Development Plan, Public
  Investment Program, Budget

Republic of the Philippines
Department of Budget and Management
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SECTORAL EFFECTIVENESS AND EFFICIENCY REVIEW Re
sults

• Cancel excess financing (6)
• Terminate projects or remaining components of
  projects (1)
  
• Restructure projects, including loans (30)
• Proceed (68)

Republic of the Philippines
Department of Budget and Management
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AGENCY PERFORMANCE REVIEW

• Short term review of revenue and expenditure
  performance vis-à-vis budget targets
  
• Ranking of Agency Budget Performance and public
  reporting

Republic of the Philippines
Department of Budget and Management
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AGENCY PERFORMANCE REVIEW RESULTS
CY 2002 - All agencies of the National Government
underwent APR Most got outstanding rating revi
ew was based on agency-determined targets
CY 2003 - Low-budget agencies were exempted from
the APR Most got satisfactory rating
Republic of the Philippines
Department of Budget and Management
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INCENTIVE 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)

Republic of the Philippines
Department of Budget and Management
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KEY ACCOMPLISHMENTS TO DATE

• A. 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

Republic of the Philippines
Department of Budget and Management
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Key Accomplishments to Date

• 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)

Republic of the Philippines
Department of Budget and Management
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Key Accomplishments to Date

• 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)

Republic of the Philippines
Department of Budget and Management
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CHALLENGES

• 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

Republic of the Philippines
Department of Budget and Management
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MOVING FORWARD
Republic of the Philippines
Department of Budget and Management
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THANK YOU !!!
Republic of the Philippines