1. 1 STRATEGIC PLANNING AND BUDGET PRIORITISATION IN CROATIA Francois-Roger Cazala, Rimantas Veckys SIGMA - Lithuanian Ministry of Finance

2. 2 Presentation outline Some information on Lithuanian system for strategic planning and budget prioritisation Main findings Recommendations for policy formation process Prerequisites for budget prioritization

3. 3 Lithuanian case : Situation before the reform More then 200 different strategic documents Approved at different levels (Parliament, Government, Ministry) Different period of planning No link between the documents and budget

4. 4 Lithuanian case : Reform stages and key initiatives  1999-2002: implementation of strategic planning as a tool to manage finance and results  1999 – pilot projects in 5 ministries  2000 and later – budgeting process follows the principles of strategic planning and program budgeting across all public institutions  1999-2001: implementation of Sunset and Sunrise Commission initiatives  2003-2004: implementation of impact assessment as an aid to decision-making process  before 2003 – positive and negative impacts of proposals submitted to the Strategic Planning Committee, EU legislation, concept papers  2003 onwards – impact of all Government proposals assessed following the recommendations of the impact assessment manual

5. 5 Integrated Planning Model Strategic Activity Plan Program No.1 Program No… Strategic Activity Plan Program No.1 Program No… Strategic Activity Plan Program No.1 Program No… Long-Term Goals (vision) (more than 6 years) Mid-Term Goals (3 to 6 years) Short-Term Goals (1 to 3 years) Strategic Framework Documents: Single Programming Document Economic Strategy Regions’ development plans Fiscal Strategy and Ministry Ceilings Government’s Strategic Priorities Sector Strategy Long-Term State Development Strategy Geopolitical situation Long-term priorities Long-term vision for sectors

6. 6 Decision making process: Integrating planning and budget preparation Strategic planning committee Government Ministry of Finance State chancellery: Planning division Line ministries new

7. 7 Lithuanian case : Strategic planning committee Approves budget priorities Approves strategies and strategic framework documents Approves fiscal policy plan Approves ministry strategic action plans

8. 8 Lithuanian case : Budget Prioritisation (1) First step in annual budget cycle- budget priority setting for 3 years Budget priorities shall reflect goals of main mid-term Strategic documents Fiscal policy expenditure targets based on budget priorities

9. 9 Lithuanian case : Budget Prioritisation (2) Links of ministry strategic action plans to budget and sector priorities Links of horizontal programs to budget and sector priorities Links of measures inside ministry programs to budget and sector priorities

10. 10 Main findings :Sectoral strategic planning Quite well developed sectoral planning documents and their implementation systems, but: Strategic documents in most cases remain as departmental planning documents, without links between each other and clear hierarchy; Implementation of these strategies organised by own institutional procedures; Adoption procedures are not uniform.

11. 11 Main findings : Sectoral strategic planning Strategies and their implementation systems are possible as separated exercises, but: If strategy adopted by Parliament, as usually, reporting is also addressed to the same institution; It may create difficulties for the Government to pursue monitoring of strategy implementation; It is difficult to set up priorities because of absence of hierarchy

12. 12 Main findings : Strategy formation actors Actors: Parliament; Government (cabinet) Central Office for Development Strategy; Ministries; Some Government Agencies

13. 13 Main findings : Strategic documents Strategic Coherence Framework; Pre-accession economic programme; National Strategy for Regional Development (draft); Sector strategies, programmes, plans

14. 14 Recommendations: management improvements Appoint bodies responsible for coordination of strategic planning across Government; Strengthening and formalising the role of appointed bodies in the Government decision making process; Strengthening units responsible for process coordination in the appointed bodies.

15. 15 Decision making process: Coordination of strategic planning Government Ministry of Finance Central Office for Development Strategy Line ministries

16. 16 Recommendations: methodology implementation Setting-up a working group to draft strategic planning and implementation methodology Suggested group members : representatives from CODS, MoF, some line ministries, independent experts

17. 17 Recommendations: legal improvements Amendments to legal framework in order to implement strategic planning in the decision making process and budget management: Law on Government or equivalent; Government Rules of Procedures; Organic Budget Law; Budget manuals, rules

18. 18 Recommendations: budget management improvements Ministries to provide priority initiatives for the preparation of spring fiscal guidelines, and to be reflected into the budget instructions Reduction of number of line items to allow for more flexibility in execution More rights for budget users to reallocate funds during budget execution

19. 19 General recommendations In order to improve Governance and budget management - to develop integrated and unified strategic planning and implementation system and to build strategic and analytical capacities in budget users.

20. 20 Integrated Strategic Planning and Implementation Model Ministry Strategic Plan Program No.1 Sub-program Program No… Sub-program Ministry Strategic Plan Program No.1 Sub-program Program No… Sub-program Ministry Strategic Plan Program No.1 Sub-program Program No… Sub-program Mid-Term Goals (3 to 7 years) Short-Term Goals (1 to 3 years) Inter - sectoral Strategic Documents: Strategic Coherence Framework National Strategy for Regional Development Pre-accession Economic Program Fiscal Strategy and Ministry Ceilings Sector Strategy