Making Performance Budgeting Work: New IMF Book

October 04, 2007

    Member countries will find valuable advice on how to reform their budgeting practices to improve the effectiveness and efficiency of public expenditure in a major new work on performance budgeting produced by the Fiscal Affairs Department. The book, Performance Budgeting: Linking Funding and Results (500pp), came off the presses of the top UK publisher Palgrave Macmillan in September.
    Edited by FAD staff member Marc Robinson, the book contains a comprehensive treatment of contemporary performance budgeting practice and theory. In a series of thematic chapters and case studies, the book discusses:
    - The key forms of performance budgeting which [TO IMPLEMENT] around the world - how they differ, and what they have in common points.
    - Lessons from the experience of governments around the world - ranging from OECD nations to developing, middle-income and transition countries - about what forms of performance budgeting work, under what circumstances, and with what implementation strategies.
    - How successful performance budgeting can improve aggregate fiscal discipline.
    - The information requirements of performance budgeting, and
    - The links between performance budgeting and other budgeting and public management reforms.
    Many of the contributors to this work are leaders in performance budgeting implementation in their countries. Others are respected academics and technical experts from the International Monetary Fund and other international organizations. Countries covered in the case studies include the UK, USA, Australia, France, Chile, Spain, Russia, Colombia and Ethiopia.
    One major focus of the book is performance budgeting as a tool for improved expenditure prioritization - that is, for helping to shift limited public resources to the services of greatest social benefit. A key finding is that this type of performance budgeting will only work if the budget process is fundamentally changed so that top politicians and bureaucrats systematically consider expenditure priorities when formulating the budget. This means more than just considering the priorities for new spending. It requires also having mechanisms to systematically review existing spending programs to identify what is ineffective and low priority and can, therefore, be cut. This is what countries such as Chile and the United Kingdom have successfully done, and the United States is currently attempting to achieve with its Program Assessment Rating Tool instrument. Conversely, it is a mistake to believe that merely changing the budget classification and developing performance indicators will in itself improve the allocation of resources in the budget.

(Adapted from http://blog-pfm.imf.org/pfmblog/2007/10/making-performa.html)