Alexandra Smirnova, Ministry of Finance of the Russian Federation

1
Alexandra Smirnova, Ministry of Finance of the
Russian Federation

• APEC FISCAL SPACE SEMINAR
• REVIEWING, ASSESSING AND PRIORITISING GOVERNMENT
  EXPENDITURE

Performance Budgeting
2
Fiscal Space Does Performance Budgeting help

• To create it?
• To use it properly?
• PB is not first and easiest way to create fiscal
  space
• PB does not create much fiscal space
• PB certainly helps to use fiscal space
  efficiently
• PB is only helpful at the certain level of fiscal
  space available

3
PB is not first and easiest way to create fiscal
space ALLAN SCHICKS PRINCIPLES OF BUDGET
REFORM SEQUENCING

• Foster an environment that supports and demands
  performance before introduction of performance
  and outcome budgeting
• Control inputs before seeking to control outputs
• Budget for work to be done before budgeting for
  results to be achieved
• Enforce formal contracts in the market sector
  before introducing performance contracts in the
  public sector
• Have effective financial auditing before moving
  to performance auditing
• Adopt and implement predictable budgets before
  insisting that managers efficiently use the
  resources entrusted to them

4
Russian Budget reforms of 2000s

• Results-based medium-term budgeting (from 2008)
• Long-term budget stability and sustainability
• Revenue and expenditure assignments for federal,
  regional and local budgets
• Meduim-term budget planning
• Performance budgeting
• Public sector restructuring

• Input-based short-term budgeting (1991 - 2000)
• establishment of budget procedures and regulation
  (organic budget law - Budget Code (2000)
• cash execution
• Federal Treasury
• fiscal dicsipline and expenditure control
• equalization transfers

• 2001-2007

5
PB does not create much fiscal space
1. Gain on allocative efficiency
Zero-based Budgeting All expenditure items are
revised every budget period
Incrementalist Approach Only new commitments are
discussed (5-10 of total expenditure every
budget period, only of which is inefficient)
VS
2. Gain on technical efficiency
Spending bodies efficiency gains are usually not
more than the inflation rate
6
Factoring of Public Expenditure Commitments into
the Mid-term Budget
Expenditure limits
Resource for new commitments
Investment objects
Acting commitments
Register of the expenditure commitments
Long-term Targeted Programs
State Arms program (till 2015)
Salaries and emoluments, Military pay and
allowance
Pensions and benefits (Public liabilities)
2015
2014
2011
2012
2008
2009
2010
2007
2013
3-year budget
7
Russias case Structure of Expenditure
commitments in 2008
8
Acting and new commitments

• New commitments (5-10)
• new legislation
• new programs
• approval
• inclusion in the budget

• Acting commitments (90-95)
• public transfers (calculation)
• debt service (schedule)
• governance, maintenance
• of the facilities (indexation)
• acting programs (plan)

9
Russias case Sequence of budget planning
10
Models of Performance Budgeting
Expenditure
Traditional
Economy
Inputs
Activities
Technical efficiency
Technical efficiency
Efficiency
Output budgeting
Output
Effectiveness
Outcome budgeting
Intermediate outcome
Outcome
11
Russias case Policy area - Transportation
Implementation
Results
12
Russias case Policy area - Transportation
Implementation
Results
13
Russias case Policy area - Competition policy
Implementation
Results
14
Russias case Performance budgeting tools
15
Russias case Performance budgeting tools
Budget programs, Justifications of budget
appropriations (public, assessed by
MoF)
Traditional budget supporting documents
(confidential, presented to MoF)
Expenditure
Inputs
Activities
Line Ministries Results and Activities Reports
(public, approved by Government)
Output
Intermediate outcome
Long-term Economic Program (public, approved by
Parliament)
Outcome
16

Performance Budgeting on all the stages of
budget cycle
Revenue policy
Medium-term planning
Macroeconomic Planning
Debt policy
Performance audit
Outcome planning
Oversight
Budget Preparation
Internal audit
Delegation and accountability
Accounting and Reporting
Budget implementation
Outcome reporting
Management accounting
Budget programs
17
Platforms of Performance Budgeting implementation
18
PB is only helpful at the certain level of
fiscal space available
During last budget cycle Russian Federal Budget
expenditure been raised by 28 without any
efficiency assessment
19
So the question is Whether to implement
Performance Budgeting?
Yes Because if you dont set the rules you could
not use it when the time comes
20
Russias case Budget Reform Matrix3 waves for
decentralization of public finance management
21
Russias place in Worlds Budget Reform
Medium-term Budgeting

• Australia

• New Zealand, Great Britain,
• Nederland, Sweden

Russia (2008)
France 2006

• USA

Vietnam 2006

Russia (2006)

• Bulgaria

• Russia (2003)

Performance Budgeting

• Ukraine

22
Alexandra Smirnova asmirnova_at_minfin.ru

• APEC FISCAL SPACE SEMINAR
• REVIEWING, ASSESSING AND PRIORITISING GOVERNMENT
  EXPENDITURE

Thank you for your attention