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

RESULTS-BASED APPROACH: Major Element of Philippine Public Sector Management Reform Program RESULTS-BASED APPROACH: Major Element of Philippine Public Sector Management Reform Program Department of Budget and Management Republic of the Philippines

PUBLIC SECTOR MANAGEMENT REFORM PROGRAM PUBLIC SECTOR MANAGEMENT REFORM 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

PUBLIC EXPENDITURE MANAGEMENT: DESIRED RESULTS PUBLIC EXPENDITURE MANAGEMENT: DESIRED 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

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

PUBLIC EXPENDITURE MANAGEMENT FRAMEWORK FRAMEWORK Fiscal Discipline Allocative Efficiency Operational Efficiency Department of Budget and Management Republic of the Philippines

MAJOR REFORM INITIATIVES OUTCOMEINSTRUMENT Fiscal DisciplineMedium Term Fiscal Plan (MTFP) Assessment of contingent liabilities; fiscal risks Allocative EfficiencyMedium Term Public Investment Program (MTPIP) Organizational Performance Indicator Framework (OPIF) Department of Budget and Management Republic of the Philippines

Major Reform Initiatives… OUTCOME INSTRUMENT Operational EfficiencySectoral 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

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… Department of Budget and Management Republic of the Philippines

MEDIUM-TERM EXPENDITURE FRAMEWORK FRAMEWORK Medium-Term Philippine Development Plan Medium-Term Fiscal Plan Annual Budget Medium-Term Public Investment Program Organizational Performance Indicator Framework Agency Performance Review Sectoral Effectiveness and Efficiency Review Incentive Structure FISCAL INVESTMENT

MEDIUM-TERM FISCAL PLAN: FEATURES 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 Department of Budget and Management Republic of the Philippines

MEDIUM-TERM FINANCIAL PLAN: HIGHLIGHTS HIGHLIGHTS Department of Budget and Management Republic of the Philippines

MEDIUM-TERM PUBLIC INVESTMENT PROGRAM MEDIUM-TERM 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

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

ORGANIZATIONAL PERFORMANCE INDICATOR FRAMEWORK: GOALS ORGANIZATIONAL PERFORMANCE INDICATOR 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

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

Organizational Performance Indicator Framework: Process… 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 Department of Budget and Management Republic of the Philippines

ORGANIZATIONAL PERFORMANCE INDICATOR FRAMEWORK: Example: LTO ORGANIZATIONAL PERFORMANCE INDICATOR FRAMEWORK: Example: 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

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

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

SECTORAL EFFECTIVENESS AND EFFICIENCY REVIEW: PROCESS PROCESS SECTORAL EFFECTIVENESS AND EFFICIENCY REVIEW: PROCESS PROCESS 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

SECTORAL EFFECTIVENESS AND EFFICIENCY REVIEW: Results SECTORAL EFFECTIVENESS AND EFFICIENCY REVIEW: Results 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

AGENCY 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

AGENCY PERFORMANCE REVIEW: RESULTS RESULTS 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

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) Department of Budget and Management Republic of the Philippines

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 Department of Budget and Management Republic of the Philippines

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 ( ) Workshops, Training Oversight agencies (18) Individual agencies (3 major, 17 minor) Department of Budget and Management Republic of the Philippines

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… Department of Budget and Management Republic of the Philippines

CHALLENGESCHALLENGES 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

MOVING FORWARD limited budget autonomy compensation review reengineering the bureaucracy expanded budget autonomy Initial implementation of compensation reform Reengineering the bureaucracy PEM substantially operations Alignment of agency with individual performance PEM fully operational Department of Budget and Management Republic of the Philippines

THANK YOU !!! Republic of the Philippines