1. in the Russian Federation
Program Budgeting
in the Russian Federation
Nikolay Begchin
Ministry of Finance of the Russian Federation
March 2018

2. Presentation outline
Program budgeting implementation in Russia: history and general context. (slides 3-6)
The current program budgeting framework. (slides 7-12)
Implementation of Government Programs: initial lessons and outcomes. (slides 13-18)
Future work ideas. (slides 19-24)

3. Program Budgeting Implementation in Russia:
History and General Context

4. Program-based approach implementation in Russia
Possibility to establish federal targeted programs (starting from 1995) or similar subnational or municipal programs:
To address high-priority socio-economic, defense, scientific, environmental and other key issues, normally of cross-sectoral nature
Socio-economic development programs.
Sectoral development programs.
A concept to reform the budget process in :
goals, objectives and indicators for all types of activities performed by bodies of executive power;
departmental targeted programs.
RF Government program to boost budget expenditures efficiency for
Implementation of government programs and migration to program-based federal budget;
Legislative framework to support program-based budgets within the budget system;
a new way to manage government services providers (instead of financial estimates – public contract with agencies’ performance indicators).

5. Background for the advent of government programs – 2010
expenditures during 2000es increased dramatically, but often without alignment with priorities; bargaining for resources and weakening of budget discipline;
incentives to increase budget expenditures persist; no conditions for achieving a higher budget expenditures efficiency;
a weak connection between strategic planning and budgeting; a poor link between expenditures mix/dynamics and government policy goals;
majority of active programs’ documents are not reflected in the budget;
no assessment of the impact produced by all government policy instruments (budget, fiscal, tariff, customs, regulatory).

6. A desired model of strategic performance-based planning
Long-term development strategy (concept)
Goal setting
Sectoral strategies
Long-term socio-economic development projections
Long-term budget projection
Conditions
Socio-economic development projections for 3 years
3-year budget
Gov’t programs
what?
who?
how?
Authority and instruments

7. The Current Program Budgeting Framework

8. Selecting budget format (starting from budgets for 2016-2018)
Federal budget
Program-based
Agency-based +
Subnational (constituents’) budgets
Program-based
Agency-based +
The right to choose between
Program-based
Agency-based + OR
Local budgets
Function-based
Agency-based +
Program-based
Agency-based +

9. Federal budget expenditures to support implementation
of government programs in
(billion rubles)
 Title
2017
2018
2019
2020
Amount
% in total expenditures
% in total expenditures 1 2 3 4 5 6 7 8 9 10
Federal budget expenditures, TOTAL
16,728.4
100
16,529.2
16,373.7
17,155.3
of which:
Expenditures to support implementation of RF Government Programs, total
8,953.7
53.5
9,108.5
55.1
8,720.8
53.3
8,842.0
51.5
Expenditures to support implementation of non-programmatic areas
7,774.7
46.5
7,420.7
44.9
7,652.9
46.7
8,313.3
48.5
Non-programmatic areas:
Judiciary
Presidential Executive Office
Office of the Government
State Duma
Council of the Federation
Public Prosecution Office
Investigation Committee
Chamber of Audits
Elections Commission
Pension system
Defense

10. Program-based budget classification
Federal budget for ,
Chapter
Section
Sub-section
Special-purpose item
Expenditure type
PASOC
CA (analysis) GP SP
Item of expenditure 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 - Х
Starting from federal budget for
Chapter
Section
Sub-section
Special-purpose item
Expenditure type
PASOC (accounting and reporting) GP SP CA
Item of expenditure 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 - Х
GP - government program
SP - subprogram
CA – core activity

11. Program-based expenditures structure: example
Bln rubles
Title GP SP CA
2017
RF Government Program “Health Care” 01
311.3
"Prevention of diseases and formation of healthy lifestyle. Development of primary healthcare " 1
125.0
“Prevention of infectious diseases, including immunoprophylaxis " 02
17.1
“Prevention of HIV, viral hepatitis B and C" 03
17.8
“Improving mechanisms of medical products provision” 05
89.2
"Improving the provision of specialized medical aid and emergency aid" 2
46.5
“Improving the system of medical care provision to TB patients”
5.2
“Improving the system of medical care provision to patients with mental and behavioral disorders” 04
4.8
“improving the system of medical care provision to patients with vascular diseases"
1.1
“Improving high-tech medical care" 10
6.7
“Development of blood banking" 11
4.1
"Development and introduction of innovation methods of diagnosis, prevention, and treatment and fundamentals of personalized medicine” 3
26.8
“Development of nuclear medicine”
2.3
“Development of fundamental, translational and personalized medicine"
19.3
“Medical aid provided in the course of clinical testing of methods of diagnosis, prevention, treatment and rehabilitation”

12. AIS “Government Programs”
Information Exchange
E-Budget
AIS “Government Programs”
Government program structure
Expenditures classification components
Inputs for government program
Expenditure allocation according to BCC during budgeting
Performance indicators, nature of activities
Budget,
consolidated quarterly budget breakdown
Government program amendment proposals
Financing parameters
Approved/specified government program
Cash execution of the budget on the expenditure side
Annual report  consolidated annual report on government programs
Annual report on budget execution
The package submitted to the State Duma (Lower House)

13. Implementation of Government Programs: Initial Lessons and Outcomes

14. Government Programs implementation: positive outcomes
A more transparent and easy-to-understand composition of the federal budget expenditures.
Improved discipline and understanding of the need to achieve specific outcomes.
Broader opportunities for analysis: previously unnoticed issues tend to draw attention.
Possibility to formalize the relationship between activities pursued by the federal authorities and regional/subnational authorities action.

15. Government Programs: disappointed expectations
No prioritization of activities and budget allocations has been achieved: programs are made by reshuffling the existing activities.
No alignment of budget appropriations with outcomes has been achieved – despite the fact that the budget is based on government programs, their subprograms and core activities.
Implementation outcomes and performance evaluations are not considered in budgeting for future periods.
No change in current governance procedures: government programs are regarded as additional burden on top of regular workload.
Government programs have failed to become a tool for sector management and a fully fledged component of budgeting process.

16. Reasons for the failures (1)
I. Poor quality of goal-setting and indicators:
lack of “top-level” indicators (no socio-economic development strategy);
indicators and their values are developed by government programs implementers (no external verification);
too many indicators with no hierarchy (outcome indicators lumped together with technical indicators);
actual values for many indicators are generated too late;
sector-based approach to designing GPs prevails over goal-setting logic;
no (or weak) connection with subnational and local programs indicators;
no uniform approach to dealing with cross-functional indicators.

17. Reasons for the failures (2)
II. Inadequate integration of GPs into the budget process:
GP performance evaluation outcomes are not considered in the course of budgeting;
unclear authority of the agency in charge of GP in the budget process;
no flexibility in the course of budget execution;
the programs’ substance does not generate sufficient interest on the part of the Federal Assembly during draft budget review.

18. Components of some GPs vs. their implementation performance
Indicators
The Government Program “Health Care”
1. Mortality due to all causes.
2. Life expectancy at birth The Government Program “Health Care Development”
Subprogram “Prevention of diseases and formation of healthy lifestyle and development of primary healthcare”
1. Coverage of adults by health screening.
2. Coverage of children with preventive medical examinations.
3. Percentage of patients with known malignant tumors at stages I-II
Core activity “Development of primary care, an early disease detection system including administration of medical examinations and health screenings”
1.Number of designated population.
2. Number of visits 
The Government Program “Education”
Relative share of the graduates of organizations of vocational training of the latest year who were placed in a job they were trained for
Subprogram “Delivery of Vocational Education Programs”
Share of individuals admitted to practice-oriented programs in the total number of students admitted to bachelors’ programs
Core activity “Delivery of education programs at universities”
Number of students

19. Future Work Ideas

20. (launched in 2017 in “pilot” government programs)
Suggested changes (1)
(launched in 2017 in “pilot” government programs)
Develop a goal-setting system for government programs (identify strategic development (1-2) and the government program proper (not more than 5) indicators, with an emphasis on socially important outcomes) – slide20.
Streamline GP format (diversify levels for decision-making, indicators setting and monitoring) – slide 21.
Consolidate within GP all budget appropriations that are related to a specific sector and impact expected outcomes.
Develop projects that help to achieve GP goals (based on project ranking model). Transform processes into sectoral targeted programs.
Include into GP mechanisms to coordinate constituents’ GPs and action programs (development programs, investment programs) pursued by legal entities.

21. (launched in 2017 in “pilot” government programs)
Suggested changes (2)
(launched in 2017 in “pilot” government programs)
Include into GP mechanisms to coordinate constituents’ GPs and action programs (development programs, investment programs) pursued by legal entities.
Clarify approaches to building budget classification and ensure comparability of budget indicators over time
Expand the authority of responsible entities regarding GP inputs management.
Develop a single information resource enabling access to complete information on GP parameters in real time.
Assign GPs the status of the main instrument for planning and reporting outcomes of federal bodies of executive power activity.

22. Establishing a GP goal-setting system
Level of goal-setting
Institutional form
Socio-economic development goal
Strategy
Indicator 1
Indicator 2
Government programs
Value, by year
Value, by year
Indicator 1.1
Indicator 1.2
Indicator 2.1
Indicator 2.2
Sectoral targeted programs
Sectoral
projects
Service
contracts
Service
contracts
KPI oi implementer
KPI of implementer
KPI of implementer
KPI oi implementer
KPI oi implementer
KPI oi implementer
KPI oi implementer
KPI oi implementer
KPI oi implementer
KPI oi implementer
KPI oi implementer
KPI oi implementer
KPII oi implementer
KPI of implementer

23. Streamlining GP format Government Program (GP)
(current format)
Government Program (GP)
(new format)
GP description
GP description
List of capital structures (enlarged investment projects)
Subprograms descriptions
GP approved by the Government
Rules for grants provision
Rules for grants provision
Approved by the Government
(1 resolution)
List of indicators and their values
Approved by Presidium of the Council on Strategic Development
Priority projects descriptions
Sectoral projects descriptions
List of core activities
Approved by entity responsible for GP implementation
Budget appropriations
Budget appropriations
Approved in Federal Law on Budget, budget projections
Implementation plan
Approved by Project Committees
Approved by the Government
(a separate resolution)
Project implementation plans
FTP
Approved by responsible entity (co-implementer, participant)
Agency programs
Approved by responsible entity
Detailed schedule

24. ? Development of a Single Information Resource GOVERNMENT PROGRAM
Budget appropriations, grant agreements, consolidated indicators of government contracts
E-budget ?
GOVERNMENT PROGRAM
AIS “Government Programs”
AIS for project activity
GP indicators, composition
Projects and implementation plans

25. Questions? Suggestions? Nikolay.Begchin@minfin.ru Nikolay Begchin,
Deputy Director,
Department of Budget Policy and Strategic Planning,
Ministry of Finance of the Russian Federation