1. Strategic Planning Systems and Budgeting Innovation
Martus Tavares
Nora Berretta
Report prepared for the
Inter-American Development Bank
(PRODEV)
Regional Policy Dialogue
April 2006

2. Presentation …is extremely fragile. The causality relationship among
government strategic priorities,
budgetary fund allocation, and
results
…is extremely fragile.
The purpose of this report is to discuss the possibilities of making progress in coordinating government strategic programming through the allocation and implementation of public budgetary resources, taking into consideration some experiences in Brazil, Colombia, Guatemala, Mexico and Uruguay.

3. Budgeting is a stressful instance
The Budget
Rules of the Game
Defenders of the programs
Agency political and technical heads (some of them supporting the Government, others opposing).
Treasury Guardians
Executive Branch
Ministry of Finance (MF)
Office of Planning (OP)
The actors
Executive Branch
The Legislature
Public Servants
Pressure Groups (holdings, unions, NGOs)

4. The innovations introduced in budgeting systems can be classified in three different types
Innovations at the macro level:
medium-term expenditure framework
fiscal accountability rules
integral budgeting.
Innovations at the meso level/strategic budgetary allocation:
Allocation flexibility
Strategic objectives are chosen based on political, rather than technical criteria.
Management results are expected to have an impact.
Innovations at the micro level / inherent to budget and its expected outcome, efficiency, effectiveness and quality of management:
Budget is to provide information on quantity, quality and actual cost of the products and services offered to citizens.
Citizens will, in turn, evaluate the administration’s performance based on the public services they are offered.

5. How are the government plan and the budget integrated? - 1
All countries show progress in achieving greater links between the budget and the plan.
An enhanced strategic clarity has resulted in improved dynamics between the State’s management and its results.
Links have been greater in number during budgeting than during budget execution.
Accordingly, result-based budgeting:
has no impact on the following year’s budgetary allocation.
has no impact on agencies, their directors or their officials.
does not cause the Congress to use information extensively.

6. How are the government plan and the budget integrated? - 2
The largest value management systems currently bear is that they disseminate administrations’ successful policies.
Weak links are evidenced by the fact that systems are oriented to disclosing goal achievements (coverage indicators), rather than goal cost, quality of service or impact.
The significance of the existence and implementation of a common denominator may not be disregarded.

7. TABLE 1 General Features
Brazil
Colombia
Guatemala
Mexico
Uruguay
Are there any fiscal accountability standards in place?
Yes
Fiscal Accountability Law
Budgetary Directives Law
Fiscal Accountability and Transparency Law No
Yes.
Chapter II of the Federal Budget and Fiscal Responsibility Law 2006
In the budget.
Is there a common denominator for all the organizations included in the budget?
Yes, at federal level.
Is there a common denominator for all the public agencies? NO SI
Yes, at a federal level, except for Banco de México.
Is there an integrated system that supports reporting on public expenditures in its entirety?
Under implementation.
Integral Public Expenditure and Revenue Information System.

8. Characteristics of the strategic plans in the five countries
TABLE 2
Characteristics of the strategic plans in the five countries
Brazil
Colombia
Guatemala
Mexico
Uruguay
Planning system
Planning and Budgeting System
Multiannual Plans (PPA)
Government Goals System (SIGOB) National Development Plan (PND)
Presidential Goals System
(SIGOB)
Presidential Goals System National Development Plan and National Development Financing Program (PRONAFIDE)
Management Evaluation System and Strategic System Management Plans SEV - PEG
Managing agency
Ministry of Planning, Budgeting and Management
National Planning Department
SINERGIA Planning and Budgeting Secretariat.
President’s Office for Government Innovation.
President’s Office for Planning and Budgeting
Are management goal costs quantified?
No, only when they depend on an investment project.
Yes, PND estimated value is quantified.
A multiannual budget that links the plan to the budget will be implemented as of 2006.
Fund allocation occurs at institutional activity level, rather than at related objectives, goals and indicators level.
Budgeting considered the cost of 100 goals. The resulting estimated value will be compared against the execution cost later.
Outcome Evaluation and Rating
Yes. PPA per project, agency and sector evaluation system. NO
Yes
Partial. Only concerning innovation and quality
Partial. Only at one executing unit.
Management outcome implications
Information published on the agencies with successful performance
Not explicitly.
The President addresses outcome owners directly.
Only if provided under Performance Agreements.
Rewards and Acknowledgement to Quality and Innovation in Public Management.
Individual rewards by local IRS to goal achievement by executing unit.

9. TABLE 3 Investment projects and their outcomes
Brazil
Colombia
Guatemala
Mexico
Uruguay
Investment project information systems
Planning and Management Information System (SIG Plan)
Investment Project Follow-up (SPI)
National Public Investment System (SNIP)
Investment Program and Project Portfolio (PPI)
Investment information and follow-up system (SISI)
Managing agency
Ministry of Planning, Budgeting and Management
National Planning Department
SINERGIA President’s Office Planning and Budgeting Secretariat
Investment Department of the Ministry of Finance and Public Credit
President’s Office for Planning and Budgeting
Information
Organisms, sectors, regions
Evaluation
Yes, material progress
Output and outcome efficiency and effectiveness
Efficiency
Ex Post cost/benefit ratio
Effectiveness
Material progress
Evaluation results
Success highlighted
Annual budget plan and focus redefinition NO

10. TABLE 4 Operational Budget
Brazil
Guatemala
Colombia
Mexico
Uruguay
Organization(s) that prepare and lead budget formulation and execution
Ministry of Planning, Budget and Management, through the Secretariat of Federal Budge .
Ministry of Public Finance
Ministry of Finance and Public Credit – (Debt performance and service) and the National Planning Department, DNP (investment)
Ministry of Finance and Public Credit (SHCP) through the vice-ministry of expenditures (SSE)
Ministry of Economy and Finance (MEF) and Planning and Budget Office (OPP)
Instances for joint analysis of the information on public management and expenditure
At least not formally
There is an internal evaluation by the central government (coordinated by the president).
Instances where the information on management results is used for altering the budget
Results fuel annual budget, but the instances are not formal

11. Major innovations in the five countries - 1
Brazil and Mexico have successfully included all public agencies in their budgets; hence, they have managed to disclose execution of the public expenditure in its entirety on a timely basis.
Brazil has succeeded in preparing a national development plan linked to the budget through investment projects.
Guatemala and Colombia have improved coordination among the agencies in charge of planning and budgeting.
In Brazil, Mexico and Colombia, the investment project monitoring and evaluation systems play a major role in strategic planning, thus fostering public management sectoral and regional analysis.

12. Major innovations in the five countries – 2
Reforms aimed at causing the implementation of performance-based budgeting have occurred in Guatemala and Uruguay (Allen Shick). This type of budget offers information on the number of outputs (and activities) generated by the various offices and the cost thereof:
Guatemala through SIAF (Integrated System of Financial Administration)
Uruguay through SDG (Expenditure Distribution System).
Management results are going to be used in Uruguay to reward a executing agency’s officials’ performance.

13. Do changes in agencies play a decisive role ?
Which is the preferred model?
Centralized planning agency (Brazil).
Jointly-coordinated agencies (Guatemala, Colombia).
Investment in the planning agency (Colombia).
Budget based on products, activities and services (Guatemala and Uruguay).

14. The role of international agencies - 2
Over the past few years, international agencies have fostered the adoption of medium-term fiscal regulations and State reform programs.
They have boosted the development of integrated budgeting systems and strategic management systems aimed at assessing both results and impact.
Nevertheless, sometimes, countries need to meet some pre-conditions before implanting a management system. ->

15. The role of international agencies - 2
International agencies might help generate those pre-conditions by:
Supporting the implementation of systems to monitor the quantity, cost and quality of the services offered to citizens.
Supporting the improvement of systems to:
monitor investment projects, based on their effect at a regional level and the impact of partnering with the private sector.
recruit, promote and train human resources.
foster systems of incentives associated to management results.
Supporting the strengthening of the agencies in charge of planning and budgeting.

16. Wrap-up
The reforms that bring about real effects are those that succeed in changing people’s behavior and agencies’ culture.
If organizational outcomes have no impact on the expenditure allocation, little change will be brought to public culture, changes will be heavily ritualistic and even a drawback may occur.
Paying attention to institutions and incentives implies that interventions to the budget reforms are required in order to secure compliance with certain rules determining that evaluations will generate implications.